Products February 28, 2017

Institute Educates Plan Advisers About Litigation and Governance

MainStay’s Retirement Institute provides resources for advisers to use as they help their plan sponsor clients and prospects navigate the governance landscape.
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MainStay Investments has launched MainStay’s Retirement Institute, created to assist plan advisers and plan sponsors as they navigate today’s evolving governance landscape.

As part of MainStay’s Retirement Institute efforts, the team has partnered with Employee Retirement Income Security Act (ERISA) experts at Groom Law Group to understand trends in ERISA litigation. The team has also engaged with Don Trone, author, founder of 3Ethos and leading authority on governance, to leverage the concept of behavioral and inspirational governance (BIG) to help the defined contribution community understand leadership practices.

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Current programs available through MainStay’s Retirement Institute include:

  • Fiduciary Physics 101: Best Practices & How to Avoid Unintended Consequences – Applying Newton’s 3rd Law to Fiduciary Best Practices – This continuing education (CE)-approved presentation responds to the increasing pressure on investment committees by offering an overview of core elements that comprise ethical and prudent plan governance.
  • Recent Trends in ERISA Litigation – This program, developed in partnership with Groom Law Group, aims at helping large plan advisers and other fiduciaries understand the changing legal landscape, avoid pitfalls, learn best practices and take prudent next steps.
  • Fiduciary Liability Insurance (FLI) – This initiative includes an FLI-focused presentation, whitepaper and checklist that offer discussion points for advisers to use with plan sponsors as they consider FLI as part of a comprehensive risk management program.
  • Fiduciary Governance Training – This educational content was created for advisers pursuing the Certified 401(k) Professional, C(k)P, designation awarded by The Retirement Advisor University (TRAU) in collaboration with the UCLA Anderson School of Management Executive Education. Plan sponsors can also access this information through The Plan Sponsor University (TPSU), an affiliate of TRAU.

Spearheading these efforts is Jonathan Blaze, national sales director for retirement plans at MainStay, who frequently speaks about fiduciary best practices. According to Blaze, “Money managers have an important part to play in helping make reliable, practical information available to the retirement plan community to assist in creating a culture of inspired governance. With our Retirement Institute, MainStay has made a commitment to continually provide timely and relevant insights to the plan sponsor and defined contribution investment only (DCIO) communities. We aim to provide actionable resources for advisers to use as they assist their plan sponsor clients and prospects to help them navigate the governance landscape.”

Client Service February 28, 2017

Advisers and Sponsors Together Can Boost Hispanic Workers’ Retirement Savings

Hispanic workers born outside of the United States have the lowest retirement plan participation rate of all other workers, but several strategies can help reverse the trend. 
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While among one of the fastest growing population demographics in the country, studies have shown Hispanic workers face major challenges in allocating enough towards retirement savings.

In a 2016 study conducted by The Urban Institute, it was reported that immigrant Hispanic retirees age 65 and older held a far worse chance of being satisfied with retirement than non-Hispanic whites. Instead, Hispanic retirees were about twice as likely to be “less gratified during their retirement.” Furthermore, a Principal study found Hispanic workers born outside of the United States have the lowest retirement plan participation rate of all other workers, often due to language barriers and cultural influences.

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Why? Well, there’s a list of factors. For starters, Carlos Rojas, director of Consumer and Cultural Engagement at Principal, believes the problem can be attributed to little knowledge in the concept of saving for retirement.  “It’s not a lack of discipline, but just an understanding of the system,” he says.

While Hispanic workers may have trouble in allotting enough for retirement, Rojas explains that the issue does not lie with saving in itself. Instead, it runs on several other factors impacting workers, including caring for family back in their native country; a distrust of institutions and employers; and even plans to retire in their homeland.

“There’s definitely an absence of financial literacy but not in financial discipline,” says Rojas. “Their ability to send money back home; that actually highlights the fact that they have the ability to purposely save for a reason.”

Regarding a sense of mistrust towards employers, Rojas found that the concern can be addressed by highlighting the generosity of matching contributions. Many employers, according to Rojas, “have noticed how workers would fail to realize the amount paid into the plan by the sponsor as well.”

“When we started paying attention, observing their behavior, they didn’t [realize],” he says. “They really missed it, and when we delve deep into it, they really had this distrust that comes from a very rooted concept where they would say, ‘why would my employer even care to do this for me?’”

NEXT: Focusing on cultural issues

 

To combat these underlying issues, Rojas suggests plan sponsors should focus on the cultural needs of Hispanic workers, instead of concentrating on fixing the language barriers involved. Whereas bilingual representatives can play a vital role in educating workers on participation, employers need to take time to focus on the “right levels of commitment towards a 401(k) education,” says Rojas. “We need to be bicultural, not just bilingual.”

In order to do so, Principal’s Hispanic Market Program utilizes several solutions targeting culturally engaged participants, focused on providing better context in written educational materials rather than the word-for-word translation.

Sean Jordan, vice president of Participant Development at MassMutual, believes engagement—not literacy—should be the driving force in bringing Hispanic workers into retirement savings programs.

“We want to understand, first, the sort of behavior they need to adopt. This is half the battle. They need to understand what they need to adopt to get to a better outcome,” he says.  

Jordan notes that while language barriers are an issue, the real conflict often lies in the cultural difference between a representative and worker. In order to break down these barriers, at MassMutual, representatives who assist Hispanic employees are most of the time, Hispanic themselves. To Jordan, this allows workers to feel a better sense of comfortability and easiness.

“It helps, culturally, not just to have the language skills, but also to have the member of the culture saying, ‘hey folks, let me explain this to you in a different way, or let me represent it in a different way, than you might otherwise get.’ It’s part language, part cultural,” he says.

Currently, between 20% to 25% of MassMutual’s representatives are bilingual in English and Spanish. 

Furthermore, MassMutual conducts both English and Spanish educational sessions during the same meetings, where one instructor will teach material and answer questions in both languages. The company also employs in-house translators during calls between workers and representatives, instead of utilizing third-party resources.

While both Rojas and Jordan believe the services provided are crucial, it’s the lasting effect in saving that holds the highest importance.

“You want to really take advantage of the fact that someone’s motivated in that moment, and help them do it and make it easy and intuitive,” says Jordan. 

 

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