A wide-ranging agenda full of timely and thought-provoking topics captured advisor attention at last weekend’s Viking Cove Institute Industry Leaders Summit at the Omni La Costa Resort in Carlsbad, Calif.
While SECURE 2.0 was addressed in our previous article, here are a few more takeaways.
Momentum building for hybrid plans?
A session on QDIAs and guaranteed income at last weekend’s hinted that momentum could be building for hybrid 401(k) plans that change as a participant ages—from target-date funds (TDFs) until perhaps age 45, then shifting to an advisor managed account with perhaps a guaranteed income component.
The hybrid plan topic is part of a broader industry conversation that’s starting to happen more frequently these days regarding whether participants will cut back on rolling their 401(k) money into IRAs upon retirement in favor of staying in plans with fiduciary protection that are increasingly starting to offer advisor managed accounts and guaranteed income options.
Moderator Jason Roberts of Pension Resource Institute (not to mention the founder and managing partner both the Retirement Law Group and Group Plan Systems) noted that the decision to pivot from a TDF to an advisor managed account should be made at the plan sponsor level.
The session also featured panelists Glenn Dial of American Century, Morningstar Investment Management’s Brian Platz and Nashville-based advisor Steven Glasgow of Janney Montgomery Scott.
Glasgow said he has traditionally gone with the TDF approach, but he has acknowledged a bigger push for managed accounts recently. And he’s very much noticed a push for more in-plan income solutions, to which he said, “We’re curious—we’re kicking the tires.”
‘Protected Retirement’
The conference featured plenty of talk about adding guaranteed lifetime income options—otherwise known as “lifetime income solutions” and rarely ever in the 401(k) market as “annuities.”
But there may be a new name to consider, according to American Century’s Dial, who said he heard it the term “protected retirement” at another recent event and it resonated somewhat.
Dial said protection from market downturns is something is something that can be addressed through auto features.
“As an industry, these products need to be auto-everything. Participants should be defaulted to protection,” Dial said. “I’m hopeful we’ll start pushing this as an industry.”
He added that the participants that need the most help aren’t the top 10% of income earners… “We need to help the masses.”
He also made a compelling argument for anyone through the chain worried about defaulting participants into lifetime income solutions.
“What if we default them into it and they don’t use it?” some might wonder. “It’s like suing your homeowners insurance provider because you didn’t make a claim,” Dial said.
More quick-hitters
• Active ownership: Michael Jackson from Christian Brothers Investment Services made an interesting point about active ownership/divesting vs. not divesting during the conference’s session on ESG.
One of the big misnomers in the business of ESG, Jackson said, is when you go to a plan sponsor who says they don’t want to hold any fossil fuels, for example. “That’s fine. We can do that. But think about if you take a different approach and say we do want to own this fossil fuel, because we can make a difference,” Jackson said.
“If we choose to exclude ExxonMobil, we’ve cast our vote—we’ve said, ‘we’re out.’ But when we go in and we buy ExxonMobil or somebody like that, we can do shareholder resolutions, we can partner with other firms… We have the ability then to start to initiate change. We have example after example of where actually owning something, we were more effective than just excluding it right off the bat… If we actually own it, we can make a bigger difference.”
• Get comfortable with being uncomfortable: Sunday DE&I panelists Tiffany McGhee of Pivotal Advisors, Rosalyn Brown of WiPN and Laura Finn of Financial Finesse emphasized the need for advisors to “get comfortable with being uncomfortable” when it comes to having needed and overdue conversations and gaining a better understanding around DE&I and addressing the retirement industry’s lack of diversity. McGhee added that plan sponsors are increasingly requiring advisors to provide specific breakdowns of diversity in their firms. “The questions are really evolving on the RFPs,” she said.
• RFPs being fact-checked for DE&I: Reinforcing how RFPs really are changing as a result of diversity, equity and inclusion (DE&I) initiatives, Doug Bermudez noted how advisors need to be on the ball. Bermudez cautioned advisors that they need to be authentic and accurate when responding to RFPs, because these days your responses will be fact-checked, and those that fail will be disqualified.
SEE ALSO:
• Great SECURE 2.0 Advice for Advisors: VCI Industry Leaders Summit
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
