Photograph by Rachel Philipson
The topic of technology can be polarizing, but its effect on the retirement industry is undeniable. It is difficult to think of the days when daily value and paperless systems with online tools weren’t standard. However, as is always the case with this topic, there is more to come. To get a sense of where we might be headed, PLANADVISER spoke with Christen Marsenison, vice president of Client Services and Delivery at Envisage Systems.
PA: What technology changes are you seeing today in the retirement plan industry?
Marsenison: Planning and saving for retirement has evolved from a very paper-heavy to a more technically savvy environment. With that comes a lot of changes, but technology is changing again. Data has become a major factor in the industry. What we’re going to do with that data, and how it is going to evolve to help us offer better services across the board—from the recordkeeping perspective, the advisers’ perspective and the sponsors’ perspective—is all to benefit the participants.
Technology will facilitate a shift in focus, giving providers a holistic financial picture of participants.
PA: We’ve often said Baby Boomers have changed every path of life that they’ve been in. Now, when you look toward Millennials, what are they doing to change the retirement industry?
Marsenison: Millennials are more engaged with technology than any generation in history. Because of that, technology has to evolve to meet their needs. Millennials are going to change things exponentially because they maintain different expectations of technology and their need for it to be readily available. They want it now, they want it accurate, and they want it complete and holistic.
We’re seeing massive changes in the way that Millennials work and where they work. Large companies historically maintain brick and mortar locations. These companies are now downsizing physical locations and increasing virtualization. This shift is prompted by Millennials and supported by technology.
With changes in technology, in where and how people work, and the work itself changing, you’re going to see a major impact on the way that retirement is viewed. They’re going to want a technology-based, but also subject matter expertise-based, retirement system that’s at their beck and call, perhaps through an application (app) that also gives them a holistic picture of their finances. Without that, you’re going to miss the largest population of our work force right now.
PA: Overall, how will technology help plan sponsors and participants?
Marsenison: In a word: access. Plan sponsors are currently trying to dig through what recordkeeping data—what funds are in the plan, how is the plan working, is it effective or ineffective, what’s the participant rate, what’s the participation rate, how much is there in assets under management (AUM)?
Technology is going to help plan sponsors and/or participants to bring in data outside of what is currently available in the recordkeeping databases—what we like to call the financial life network.
As a participant, what do I need access to from a data perspective in order to have my holistic picture reviewed? What’s my financial life look like? It should include health care, credits, mortgages, savings, any banking accounts and possibly an individual retirement account (IRA).
Plan sponsors are going to have to offer that as a service in order to stay competitive. Imagine a world where a plan sponsor could offer a participant a collection of services all around credit counseling: If that led to better credit, you can get better rates on your mortgage, which would decrease your mortgage payments, which gives you more disposable income, which we’re now proposing that you apply to an IRA with this investment return. That can all be done through data and technology via a holistic solution—joining forces for a financial life network.
The only thing I would add is that technology will also have to support the cross-generational work force for 10 to 15 years. You’re not going to get 100% of Baby Boomers on board today. To transfer a Social Security number across the Internet for a Baby Boomer wouldn’t work very well; for a Millennial, it will.
So, I think technology is going to have to continue to foster both needs for some period of time. You are going to have to support communications with Baby Boomers as well as moving your technology to be more advanced and Millennial-focused.