PLANSPONSOR - October/November 2019 - 42

In its new report " Shifts for the DC [Defined Contribution]
Organization of Tomorrow, " Willis Towers Watson's Thinking
Ahead Institute maintains that defined contribution plans
have continued to evolve and that DC plans - version 2.0 are
just now starting to consider retirement income solutions. DC
plans - version 3.0 will offer customization for each participant
through technology and factor in all of their holdings, maintains
Bob Collie, head of research at the institute. He foresees participants
appreciating a more holistic assessment of their financial
standing and becoming willing to share all of their financial
information and goals in order to reach those goals.
For the time being, before plans arrive at v. 3.0, the best way
for a plan sponsor to assess its participants' readiness and their
financial picture is to educate them about the benefits of sharing
complete information, Collinson says.
But there is a fine line, she adds. " It's important for sponsors
to make the resources available to employees and encourage them
to look at the full picture, to have that foundation in place, " she
says. At the same time, " sponsors have to be respectful of their
employees' privacy if they don't want to opt into that. "
In fact, many experts say participants also hesitate to share
their personal financial information on a platform they fear
their employers can access, even though privacy policies forbid
employers from seeing it.
Account Aggregation Tools
Some recordkeepers and advisers are succeeding, though, at
convincing participants to be more revealing. For instance, when
participants first onboard to Betterment for Business' account
aggregation platform, they are asked to list other, external, holdings
and accounts, including retirement accounts, and to give
access information. On the whole, they are comfortable providing
the data, says Amy Ouellette, the company's director of retirement
services, in New York City.
Betterment is in the process of culling plan-wide information
on the participants of sponsor clients, to equip those sponsors
with an overview of their plan's health. " We are working on how
we provide these figures in a more comprehensive way, " Ouellette
says. Betterment expects that the information will guide sponsors
in their decisions about default deferral rates and escalation rates,
undoubtedly persuading many to increase those.
In addition, at the participant level, aggregating the saver's
DATA AS A ROUTE TO
ASSESSING WELLNESS
P
lan-level data can be used for purposes beyond just gauging retirement
readiness. For one, it can help plan sponsors create a financial wellness
program tailored to their particular workforce, says Marc Howell of
Prudential. Offering such programs can be as important as focusing on retirement
readiness because they have a direct impact on whether that readiness gets
achieved, Howell says.
Plan sponsors need to understand that connection and then act on it, he
suggests. The sponsor begins by assessing its plan data-based on demographics,
for instance-to see where its employees might have needs. Acting might be to
offer student loan debt education or assistance programs, Howell says.
And sponsors need to consider more than just participation and average
deferral rates, he notes. The various data available can tell the sponsor different
things. " We encourage the [client] to look at some of the details recordkeepers
can provide, such as savings rates combined with loan activity. That might indicate
that participants aren't budgeting properly, " Howell says. " [Sponsors] should
also look at average account balances versus median account balances. "
Sponsors gain, right along with participants, from helping with personal
finance in this way, he observes. It is " not just the right thing to do on the retirement
outcome side, but leads to more productive workers. "
Yet another valuable use of plan data is to help the sponsor predict patterns
in its workforce. For example, it could foresee a large-scale bump in retirements-
then prepare for it by adopting a phased retirement program, Howell says. -LB
financial data helps advisers who give
investment advice. Having this knowledge
enables them to provide the
most personalized and effective advice
possible, Ouellette says.
Mark Howell, vice president of custom
retirement solutions at Prudential in
Philadelphia, says, " A better understanding
of a workforce's financial situation
will result in a better application of limited
benefit dollars and time spent by the
sponsor. Too often, benefit programs-
retirement and otherwise-are viewed
on a 'one-size-fits-all' basis. "
To obtain holistic, participantspecific
information at the plans he
manages, Mark Anthony Grimaldi,
co-founder of Grimaldi Portfolio
Solutions in Wappinger's Falls, New
York, provides one-on-one meetings.
He says his clients appreciate having
the full view. " We make it clear to them
that it's to their advantage to disclose
all of their assets, " Grimaldi says.
To the same end, Unified Trust Co.
asks participants to be thorough when
inputting information into its retirement
calculator, says Diana Jordan,
senior retirement consultant at the firm,
in Springfield, Illinois. " Forty percent of
42 PLANSPONSOR.com October - November 2019

http://www.plansponsordigital.com/plansponsor/october-november_2019/TrackLink.action?pageName=42&exitLink=http%3A%2F%2FPLANSPONSOR.com

PLANSPONSOR - October/November 2019

Table of Contents for the Digital Edition of PLANSPONSOR - October/November 2019