Among the 43 countries in the Natixis Global Retirement
Index, the U.S. fell three places to No. 17 and achieved an overall score of
72%.
U.S. retirees’ perceived quality of life decreased in 2016. While the U.S.
maintained its No. 7 ranking in health, its highest ranking in the sub-indices, the
U.S. ranked 30th in life expectancy, suggesting that what Americans
spend on health care may not be yielding the same return on investment as in
other countries.
The U.S. had the fifth-highest income per captia in the index, but its income inequality
rose. “The results suggest that millions of lower-income Americans are missing
out on economic growth and may struggle to save for a secure retirement as a
result,” Natixis says.
The U.S. ranked in the top 10 for finances, “largely due to improvements in
bank non-performing loans and federal debt levels relative to other nations,” Natixis
says. However, the nation’s ratio of retirees to employment-age adults rose,
putting increasing pressure on Social Security and Medicare.
“This year’s Global Retirement Index is an
important reminder that retirement security is a complex, multi-dimensional
issue that is vastly influenced by a nation’s policies, politics and economics,”
says Ed Farrington, executive vice president of retirement for Natixis Global
Asset Management. “The population is getting older, making retirement security
one of the most pressing social issues facing the world. Factors such as
increasing longevity, income inequality and the impact of monetary policy on
personal savings and pension liabilities are challenging the longstanding
assumptions about how Americans plan for and live in retirement.”
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Ron Cohen, head of DCIO sales at Wells Fargo, compares the surprisingly wide gap between what plan sponsors expect from their advisers versus what advisers generally prioritize.
Wells Fargo has published a new analysis for the retirement
plan advisory community, dubbed “The Science of Superior Service,” which offers
insight on the “gap between what plan sponsors want and what advisers think
they want.”
Talking through the research with PLANADVISER, Ron Cohen, head
of defined
contribution investment only (DCIO) sales at Wells Fargo, said that at a
high level, the analysis clearly shows client satisfaction hinges on careful
control of expectations and actions. Not really a surprise, the bigger the average plan size in a
practice, the bigger the revenue growth. At the same time, as average plan size
increases, Wells Fargo finds the perception of what advisers believe is
important to the sponsor evolves.
For example, among small plans there is less of an emphasis
among advisers on “helping the client manage overall costs.” The same is true
of “recommending plan efficiencies” and “acting as a 3(21) fiduciary,” which
seem to be much more of a priority when advisers think about serving their larger
plan clients. Interestingly, the advisers surveyed by Wells Fargo seem to think
smaller plan clients are more concerned with the adviser “meeting one-on-one
with employees” and “discussing individual retirement account (IRA) rollovers.”
Cohen observed that these conceptions among advisers are only
somewhat accurate and do not always reflect the broad characteristics of what small
and large plans look for in the advisory relationship. He pointed to clear
disconnects between what advisers think and what sponsors expect, warning that
plan size is far from the only determinant of what will be important to a given
plan sponsor.
“Take regulatory compliance and follow through,” Cohen said.
“The majority, 70%, of advisers feel this is among the most challenging avenues
through which to differentiate their quality of client service, yet it is also
one of the most important factors to plan sponsors—ranked as a top
differentiator. Along the same lines, the data shows 59% of advisers feel offering
plan insights about participant behavior is challenging, but it also ranks
among the top services that plan sponsors view as a differentiator.”
NEXT: Proactive
advisers do better
The analysis goes on to consider “services that are
difficult to provide and have a low impact on success” compared with “services
that are difficult to provide but have a high impact on success.” In the former
category are “understanding participant behavior” and “providing easily
understood explanations of retirement topics,” while the latter category
includes “keeping up with industry product development,” “ensuring regulatory
compliance” and “discussing fees charged and value provided.”
Cohen pointed to “proactive recommendations” and “responsiveness
and thoroughness” as essential adviser characteristics, whatever market segment
is being served. Of course, there is no simple formula for “being proactive or
responsive,” and there is actually evidence in the data that some advisers
actually overvalue their responsiveness and undervalue their communication
skills and the true level of their engagement with plan sponsor clients.
“When we dug deeper and analyzed the data, we saw that responsiveness to the plan sponsor is simply the table stakes. We saw that the
No. 1 differentiator, according to plan sponsors, is simply showing serious and
consistent engagement with the plan, yet a third of advisers find this to be
challenging,” Cohen explained. “Understanding participant behavior is also
important.”
Indeed, while “understanding participant behavior” ranks
lower among services advisers believe to be important, the topic ties in closely
to “educating participants,” “defining plan health” and “engagement”—all of
which rank very high with sponsors.
“Advisers who rated the importance of understanding
participants a 4 or 5 (out of 5) are twice as likely to report revenue growth
of 25% or more in the past three years,” Cohen concluded.
Additional research findings and other information is
available here.