Financial professionals Courtenay Shipley at Retirement Planology, Kristen Deevy at Pensionmark, Katrina Bell at Zuna, and Deane Mayerhofer at Strategic Retirement Partners reflect on mentors, challenges, and the 401(k) industry.
By Allison Brecher
We’ve all seen the stats about female representation in the financial services industry. Almost half of financial services employees are women, which sounds pretty good. But if you take a closer look, you’ll notice that as we climb the career ladder, women become underrepresented. In 2018, only 33.5% of advisors were female and a mere 15% of executive leaders were women. When we focus on women who specialize in the retirement sector, their confidence in their career trajectories mirrors these results. According to Women in Pensions Network, only half agree their career path looks promising, and one in three don’t believe they have enough education to advance.
The need for change is way overdue. And given that March is Women’s History Month, I wanted to highlight the important role women continue to play in the 401(k) space by honoring some of the incredible female advisors we get to work with every day at Vestwell.
Earlier this month, I had the opportunity to sit down with Courtenay Shipley at Retirement Planology, Kristen Deevy at Pensionmark, Katrina Bell at Zuna, and Deane Mayerhofer at Strategic Retirement Partners to understand what drew them to retirement, who inspires them, and what advice they have for others.
It’s important for plan sponsors to define plan goals and what they are going to measure, and the defined metrics should be things they can influence.
Plan sponsors might not know how to measure the success of their retirement plans.
According to Vestwell’s “2020 Retirement Trends Report,” plan advisers and sponsors use different metrics to determine the success of retirement plans. Advisers were more focused on plan participation rates (61% listed it as a top factor versus 39% of plan sponsors), while sponsors were more focused on the administrative side, citing no administration errors as their top priority 60% of the time and minimal time managing a plan 59% of the time.
Having no operational and administrative errors is important, says John Doyle, senior retirement strategist at Capital Group, but if the plan sponsor’s goal is to attract and retain talent or get employees prepared for retirement, it’s not a success measure. “Having no operational and administrative errors should be a success measure for recordkeepers. Plan administration is separate and distinct, unless it has an impact on how participants are using the plan,” he says.
Richard Tatum, president, retirement services, at Vestwell, similarly says having no operational and administrative errors is table stakes. “Your retirement plan is meant to be a benefit and not a burden, and there are many attributes you can look for when selecting a recordkeeper to ensure a more seamless plan experience,” he says.
While 2020 was a landmark year of class action ERISA litigation, Vestwell General Counsel Allison Brecher shares these practical steps that protect companies from common exposures
By Allison Brecher
2020 turned out to be another landmark year in a growing trend of ERISA class action litigation involving 401k plans.
These cases, which generally allege plan sponsors breached their fiduciary duty by charging participants excessive fees, also spilled over into 403(b) plans sponsored by prominent universities, resulting in significant settlements. These lawsuits can be costly to litigate and often last for several years, prompting many of them to settle. Large corporations paid out more than $6.2 billion in ERISA class-action settlements of these cases, and at least 15 corporations had total ERISA payouts of $100 million or more.
Though there is no vaccine against litigation, there are practical steps plan sponsors can take to protect themselves if they are sued.
The law has implications for retirement savings and taxes for workers and retirees.
The Setting Every Community Up for Retirement Enhancement (SECURE) Act was passed in December 2019 and became a law as of Jan. 1, 2020. The legislation created changes for long-term retirement savings and has financial impacts for Americans at every age.
What is the secure act?
The SECURE Act changed a variety of retirement account rules, including who is eligible to contribute to retirement accounts and when withdrawals are required. The new legislation also adds a new exception to the early withdrawal penalty.
Important retirement account changes from the SECURE Act include:
- The required minimum distribution age increases to 72, up from 70 1/2.
- The age limit for IRA contributions has been removed.
- Inherited retirement account distributions must be taken within 10 years.
- New parents can take penalty-free withdrawals.
- Long-term part-time employees may now be eligible for 401(k) plans.
Here’s an in-depth look at the SECURE Act and how it may affect you.
Managed accounts offer DCIOs the opportunity to be a more active and important part of the DC ecosystem. It moves them from being dependent on record keepers, advisers and plan sponsors to create the strategy to help participants, to being an advice provider of customized investment solutions.
The recent announcement of Franklin Templeton’s Goals Optimization Engine, initially in partnership with Vestwell, may mark the next evolution for defined-contribution investment-only providers searching for a new role and identity in the DC world.
The role of mutual funds in the DC market has evolved. In the 1990s, they were dominant, and providers’ relationships with advisers helped get products into smaller and midsize plans. Now fund providers have to curry favor with the record keepers, advisers, broker-dealers and aggregators that control plan sales. Add the move to indexing and packaged products like target-date funds, many of which are propriety and emphasize asset allocation and not securities selection, and it’s no wonder that all but the top 10 DCIOs have been doing some serious soul-searching.
“We have to de-commoditize our business,” said Yaqub Ahmed, Franklin’s head of U.S. retirement and insurance. “We have to move from chasing returns to goal-based products.”
Franklin Templeton has partnered with digital recordkeeping platform Vestwell to build an advisor managed account experience that will reset the bar on how advisors engage with clients. The new offering combines Franklin Templeton’s proprietary Goals Optimization Engine (GOE™) methodology with Vestwell’s modern recordkeeping infrastructure to create an entirely digital, open-architecture and cost-effective managed account solution. The offering will live natively in Vestwell’s platform, with the ability to automatically enroll participants into a personalized investment strategy.
Read our full press release here and check out some of the coverage below.
Key trends in the retirement plan business were the subject of a recent webinar hosted by Vestwell, a digital retirement platform. Although looking at 401(k)s in particular, the group of industry experts saw ways the advisory industry will keep expanding and changing, especially in retirement plan area.
Here are four highlights of the session.
Because no two participants are alike.
By Joshua Forstater
For the majority of Americans, long-term savings begins in the workplace. Which is why there is a massive opportunity for retirement plan advisors to add value beyond setting companies up with a quality 401(k). In addition to building the right plan design with the right investments for the company, many advisors want to help participants better engage with their plans. And because no two participants are alike, managed accounts are a great way to get there.
So why, despite having been around for almost two decades, are managed accounts only now gaining significant attention?
For perspective, in 2009, only 26% of defined contribution plans offered a managed account option. Just 10 years later, that number was up to 66%. And according to a recent Vestwell survey, 27% of advisors said they plan on incorporating managed accounts into their offering in the next 12 months, which does not account for advisors who already offer them.
That said, it’s worth noting that while the focus is high, participant adoption remains low.
Pooled employer plans and the changes they will bring to the industry will lead many of the trends retirement advisors face in 2021, according to a panel of industry experts. Vestwell hosted a webinar on Tuesday featuring CEO Aaron Schumm; David Stofer, founder and president of Mariner Retirement Advisors; and Fred Barstein, founder and editor in chief of 401kTV. The discussion was moderated by Mary Beth Franklin of Investment News.
By Allison Brecher
This past year has been unpredictable, at best, but as we move into 2021, there is one thing we can be certain of: more change is coming. The SECURE Act included a number of provisions to retirement plans, several of which go into effect this month. To best plan for these imminent changes, here’s a look at what lies ahead.