Transamerica Helps Workers Move Into Retirement

Transamerica has launched a division focused on helping workers make the leap into retirement and invest and allocate their retirement assets.
“A lot of companies do a good job helping workers build their nest egg for retirement,” said Phil Eckman, the chief executive officer of the new Transamerica Retirement Management (TRM) unit, told PLANADVISER.com. “What we are trying to do is help them figure out what to do with that nest egg when they open it up, which I think is where other companies have fallen short.”
A large part of the company’s initiative centers around educating those about to embark on retirement on how best to make the transition into that stage of their lives, with the thought that today’s retirees are expected to bear a greater portion of the responsibility for managing retirement savings.
Through the Web site Secure Path (http://www.securepathbytransamerica.com) individuals can also find advice that doesn’t relate directly to investing. For instance, they can find information on how boomers should cope with kids coming back to live at the house, or how to take care of aging parents, Eckman said.
SecurePath gives individuals access to a team of Investment Advisor Representatives who offer educational tools, guidance, strategies and products for managing retirement savings.

IMHO: Moving Targets

In nearly 30 years working with employer-sponsored retirement plans, I am hard-pressed to call to mind a product innovation that has been adopted with as much vigor as the current generation of target-date funds.
In PLANSPONSOR’s 2006 Defined Contribution Survey, more than three in four of the nearly 5,000 responding plans had a risk- or target-date-based option on their menu – compared with “just’ 54% in the prior year’s survey.
There’s being on the menu, of course, and there’s being chosen from that menu. Still, in the 2006 survey, roughly 25% of participant balances, on average, were already invested in such options – and, on the median, 15% – and this well ahead of the Department of Labor’s tacit enhancement of these vehicles as the default investment vehicle of choice. All in all, it would appear that participants have more access to such choices and are beginning to wake to the simplicity of an investment choice that requires referencing little more than a birth certificate (many still make the case that a single investment allocation approach cannot possibly be suitable for each and every participant who plans to retire in the year 2040).
Moreover, the investment management industry has responded to the opportunity with enthusiasm. One need consider only the number of new offerings introduced in 2007 alone to appreciate just how much more choice is available than was the case the last time I penned a column on the topic (see “Style Conscious,’ PLANSPONSOR, September 2005). That’s a very positive development for the most part – after all, a lack of choice was, in the very recent past, a cautionary note of consideration for plan fiduciaries. Additionally, as the choices have expanded, competition (not to mention a renewed emphasis on fee transparency) seems certain to provide a pricing discipline that surely must be applied by fiduciaries, certainly to a “just pick one’ fund alternative.
Philosophical Differences
Our free market also has served to bring to the fore a dazzling array of differences in basic asset allocation philosophy. There are compelling arguments being made for allocations that are heavily laden with equities at retirement, while others embrace a more “traditional’ fixed-income bent, and still others seek to mirror the allocations in evidence among large defined benefit programs (which themselves are undergoing some fairly radical shifts). These competing notions – and seemingly everything in between – are still often “cloaked,’ certainly in the case of target-date offerings, behind names that are frustratingly similar. All claim to be focused on helping the investor achieve retirement security, while minimizing risk – that of running out of money too soon, or of not having enough to run out of in the first place. They can’t ALL be right, surely.
On the other hand, in the midst of all this burgeoning interest, it also has been interesting to watch some of the industry’s more revered asset allocation fund pioneers reinvent and/or rejigger their strategies, their glide paths, the logic that underpins their asset allocation philosophy.
It’s impossible at this point to say who is “right,’ of course (perhaps even harder to say that a single investment allocation approach is suitable for each and every participant who plans to retire in the year 2040). Still, IMHO, the industry’s willingness to continue to contemplate and embrace change in these glide paths bodes well, I think, for the intellectual rigor that surely must attend their emergence as a ubiquitous presence on defined contribution plan menus.
What that also means, of course, is that plan fiduciaries will be similarly challenged to keep pace.

Be sure to check out our lifestyle/lifecycle fund buyer’s guide at http://ww2.plansponsor.com/Lifestyle/

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