Client Service December 30, 2015

10 Technological Developments of 2015

Mobile application development figured largely throughout the year.
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Technological developments continue to augment the retirement planning industry, and 2015 was no exception.

Mobile applications. Recordkeepers are focused on technological developments, particularly more mobile transaction capabilities. The aim is to allow participants to do more with their portfolios instantaneously. Of particular interest is a focus on creating one-click enrollment via mobile apps.

Robo advisers. More practices are offering digital advice delivered by robo advisers. According to Cerulli, this is a great way to introduce a client to a new firm at a low cost.

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Technological edge. Technology gives advisers a tremendous edge, according to Fidelity Clearing & Custody. Technologically savvy advisers have nearly 40% more assets under management, attract more Gen X and Gen Y advisers and are more adept at expanding their geographic reach, according to Fidelity. To become technologically savvy, Fidelity says advisers need to rely more on social media, email alerts and text messages to communicate with clients and prospects. They also need to use video conferences, more software and platforms, data aggregation, cloud-based storage and e-statements.

Integration. As advisers adopt more software and platforms, they need to make the effort to ensure that they are integrated, according to Celent. For instance, a customer relationship management (CRM) system, automated portfolio rebalancing and retirement income projections could be tied together. As well, front and back office systems need to be paired.

iPads. Advisers can use iPads preloaded with information and materials to hold webinars, instead of individual client meetings.

NEXT: Retirement income calculators

Retirement income calculators. Retirement income calculators are very useful for participants and help advisers have more meaningful conversations and relationships with participants—particularly calculators that ask participants about savings vehicles other than their 401(k) plan. Calculators should also permit users to adjust projections by changing savings rates or their projected date for retirement.

Electronic delivery of statements. Electronic delivery of plan information—notices, disclosures and statements—can benefit plan participants and lower plan costs due to the elimination of printing and mailing, according to SPARK. In fact, SPARK estimates that switching to electronic delivery as the default would save plans $200 million to $500 million annually. Furthermore, information delivered electronically can be more easily customized.

Simplifying rollovers. Making roll-ins automatic would prevent participants from cashing out when they move to a new employer, according to Retirement Clearinghouse. The organization says it takes 19 hours to complete all the steps of rolling money over from one plan to another and can take five to six weeks to complete.

Investment automation. Investment automation could provide customized diversification and rebalancing, which would lead to better returns, Transamerica says.

Targeted communication. Advisers can rely on technology to created targeted communication for participants based on their age, life stage and circumstances. Customized communication should also be directed at times participants are more likely to act, such as when they plan to take a loan, at life stage changes such as getting married, when taxes are filed or after they have attended an education meeting.
Data & Research December 29, 2015

Participants Need Nudge to Focus on Finances in 2016

There are actions plan advisers and their sponsor clients can take to help participants focus on budgeting and saving.

 

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In 2016, other than faith and family, Americans have their sights set on wellness above all else according to the 7th annual New Year’s Resolution Survey from Allianz Life Insurance Company of North America.

Forty-four percent of respondents reported their top focus for 2016 will be on health/wellness, with financial stability trailing at 29% of those surveyed.

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Allianz Life Vice President of Consumer Insights Katie Libbe tells PLANSPONSOR the survey didn’t ask specifically about retirement savings; however, plan sponsors can tie in their communications with employee’s New Year’s resolutions about achieving financial stability.

When asked which New Year’s resolutions they are most likely to make and actually keep, health and finances ranked almost equally. Forty-three percent of those surveyed said they are most likely to make and keep their resolution of diet/exercise, and 41% resolve to manage money better. Yet, nearly one in three respondents didn’t include financial planning in their resolutions because they “don’t make enough money to worry about it.”

“Regardless of income level, it’s imperative that people build a successful financial plan. Keep in mind that financial stability helps improve wellness overall,” says Libbe.

Aligning with their New Year’s resolutions, respondents are more open to getting help with their financial decisions despite the fact that their top focus is wellness. If given free access to professional guidance, more respondents chose a financial professional (37%) than a nutritionist/dietician (28%) or a personal trainer (23%).

“We think this is because the perceived value of a financial professional is a lot higher than other professionals, but also some people don’t qualify for professional financial advice, so the idea of free access is appealing,” Libbe says. She adds that plan sponsors and advisers need to think about how to give employees access to free or low-cost advice for retirement savings and investing.

NEXT: Addressing bad habits and debt

Respondents believe the top three things that could improve their finances in 2016 are building their savings for emergencies, paying off credit card debt and making a budget.

Respondents in this year’s survey admit to having bad financial habits to overcome, including:

  • Spending too much money on things “I don’t need” (29%);
  • Saving some money, “but not as much as I could” (28%);
  • Not saving any money (26%); and
  • Spending “more than I make” (19%).                  

“Everyone in the [retirement plan] industry is seeing that automatic enrollment really works to get employees to save, and a lot of employers are considering making the default contribution rate higher than 3%,” Libbe says. “The notion of paying yourself first resonates with employees. If employers make it easier for employees to direct part of their paychecks to savings, even if outside of the employer retirement plan, that will help.” She also suggests offering employees a way to automatically increase contributions to savings when they get salary increases.

Libbe also contends that the idea of offering student loan repayment benefits will become more popular as employers try to attract and retain Millennial employees and help them save for retirement. “Student loan debt is a constant theme in our surveys about why employees aren’t saving,” she notes.

Allianz Life Insurance Company of North America conducted the survey in November 2015, through Ipsos, with 1,006 respondents.

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