Products September 14, 2011

Putnam Offers Plan Level Lifetime Income Tool

To empower employers and provide them with actionable information about their plan participants’ retirement readiness, Putnam Investments is making its Lifetime Income Score available more broadly to the defined contribution marketplace.
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Putnam released its Lifetime Income Score, which allows an individual to measure his individual retirement income replacement rate, earlier this year (see “Putnam Finds Discipline Can Matter as Much as Earnings”). Putnam is now building off that tool and providing employers with a view of how well their plan is working in the aggregate, as well as specific areas of focus to lead to greater plan success. Plan sponsors and their advisers will have the ability to review participant readiness by demographic groups to pinpoint those most at risk, develop targeted and measurable campaigns to educate and engage least prepared employees, showcase income calculations at the forefront of participant communications and introduce tools to help participants calculate income goals and gaps, and measure usage.

In the survey of 3,290 working adults, ages 18 to 65, earlier this year the median LIS was 64%, meaning that the average U.S. household can expect to replace 64% of its current income in retirement (including Social Security).  

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“Clearly there remains a lot of work to be done to help get individuals on a more solid track to replace their current income in retirement,” said Edmund F. Murphy, III, Head of Defined Contribution, Putnam Investments. “We believe that by providing action-oriented tools, resources and information to the retirement savings community, significant inroads can be made to close the existing gap and deliver much stronger outcomes for working Americans.”

The Putnam Lifetime Income Score takes a holistic view of behavioral tendencies, demographic and mortality factors, current household income, savings and future contributions from a plan participant’s age today through age 65. The Putnam-developed methodology translates current assets, asset allocation mix, future saving deferrals, company match and Social Security, into estimated monthly retirement income, reflected in a Lifetime Income Score that helps plan participants know where they stand on retirement readiness.

“There is a rising expectation in the marketplace that plan sponsors will take a greater role in helping their participants adequately prepare for retirement,” said Murphy. “To do that, they need to know whether their employees are on track, from a future income perspective, to enjoy a dignified retirement, and how well their plans are working in readying their workers for retirement.

The Putnam Lifetime Income Score plan-level results will be available to 401(k) plan sponsor clients of Putnam and their advisers on an ongoing, real-time basis. All qualified plan sponsors—and their consultants—regardless of their client status, are eligible to receive a complimentary overview assessment if requested.
 

In Practice September 13, 2011

PANC 2011: Business Development for the Next Decade

Is social media the next step in marketing? Or is it a means to connect with participants? These and other questions were discussed at the PLANADVISER National Conference in Orlando this week.  
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The idea of using social media to grow a retirement plan advisory business was the focal point for a panel moderated by John Wilcox, an adviser with Mayflower Advisors, with panelists including George Revoir, Senior Vice President – Distribution, John Hancock Financial Services and Fred Stewart, Managing Director Southeast Region, Portfolio Evaluations, Inc. The “Business Development for the Next Decade” discussion analyzed LinkedIn, Twitter, and Facebook, as well as aggregator sites such as HootSuite.

The fact is, social media as a tool for business development is still in its infancy, the panelists said; it can go in several different directions over the next few years. But if someone can start a revolution and overthrow a government using Facebook, surely an adviser can sell a 401(k) plan using the medium? (An idea shared by one of the panelists was deemed clever enough by one of the attendees who posted it on Twitter during the discussion…search for the hashtag #panc).

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Advisers are still largely hesitant to use social media on a regular basis. Only a handful of attendees said they are on Twitter, about half have a Facebook account (but less than half have a Facebook account for their business), and most attendees have a LinkedIn profile.  When Revoir saw how few advisers had a Facebook page for their business, he asked them, “If every Fortune 500 company is on Facebook, why shouldn’t you be?”

Social media for networking 

Even though most advisers in attendance are on LinkedIn, that is not the norm according to one attendee who is in the marketing department at Nationwide.  She said that LinkedIn is the number one social media site used by professional services firms; 49%. But according to Nationwide, only 19% of advisers are using LinkedIn.   

Revoir agreed that LinkedIn is not being used to its fullest potential by many advisers. The average age of a LinkedIn user is 41, he said. You probably won’t connect with participants on the site, but it’s a great place to network with plan sponsors. Stewart pointed out that the potential for referrals – always a key to growing an advisory business – is a fantastic function of LinkedIn. Sponsors are talking to other sponsors on the site, and advisers can easily bring themselves into that conversation.

Social media for marketing 

Every business has a Web-based reputation, whether you intend to have one or not, the panelists said. When a sponsor is researching different advisers, your online presence can make a huge difference: does your business just have a static Web site? Or is there a vibrant LinkedIn profile or links to thought-provoking articles posted on Twitter?

No one can control their entire online reputation, noted Stewart; it’s one of the intrinsic risks to using social media. But the panelists agreed that it’s better to have a presence online than having none at all, and the more present you are, the more able you are to control the message.

Revoir asked the attendees how many of them have a formal social media plan, answering questions such as “Are we trying to gain more clients by using this site, or is the goal to connect with participants?” for example. One or two hands went up.  When asked how many have a formal marketing plan, every hand went up. Revoir challenged the audience to try folding social media into the formal marketing plan.

Social media challenges persist 

Several advisers in the audience said their biggest problem with social media is the amount of time it takes to maintain an online presence; by the time everything is updated, it can be easy to forget about the “real work” that needs to get done.  The panelists recognized this as a potential problem – getting “sucked in” so to speak. But if having a strong brand is important to you (and it should be, they said), the time it takes will be worth it in the long run.

Revoir pointed out that retirement plan advisers need to communicate with people (participants and sponsors) in whichever forum the people go to naturally – we can’t try to change them. He referred to his own family – his son will answer his cell phone if he calls, but his daughter will only text. If he has an important message to share with them, he has to keep these nuances in mind.

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