Empower Retirement has released its PlanVisualizer technology offering, a Monte Carlo-based simulator that allows 401k advisors to modify key variables in plan design to illustrate their effects in real time.
Available through the broader retirement advisor market, PlanVisualizer provides plan sponsors “with a multi-dimensional, holistic view of their retirement plan in its current state, along with the ability to model how changes to key design elements can potentially affect participant preparedness.”
It’s particularly timely, according to Peter Kapinos, head of advisor, sponsor and investment marketing with the company. Advisors are currently dealing with retirement income issues, match formula changes as a result of the recent tax cuts, and “the need to demonstrate innovation in a relatively mature 401k industry. We’ve introduced PlanVisualizer to try to bring all those things to an advisor.”
“This is about the advisor helping clients to, No. 1, measure their planned income replacement; No. 2 bring some plan design ideas in the context of whatever the client’s budget looks like; and No. 3 showcase new innovation with plan sponsors which, depending on who their provider is, they might not be getting today,” Kapinos says.
Featuring an intuitive design with drag and drop capabilities, the underlying algorithms are based on four elements: age, balance, salary, and deferral.
“For example, a lot of clients like the idea of auto-enrollment but they’re not sure what the ROI is going to be,” he explains. “This gives you the return on various plan designs. The advisor can dial it up or down to see its impact on the percentage probability that employees are on track to reach targeted income replacement rates.”
The same can be done for things like automatic escalation, he adds, and the associated cost increases to the sponsor, so the advisor can dynamically show how different scenarios can get the desired results “with maybe a lower sticker price.”
Empower says PlanVisualizer is part of its “advisor-centric approach” to serving the growing market for defined contribution retirement services. It claims that since 2014, it has received some of the highest favorability marks in the industry from 30,000 plan advisors across the country.
“I really like it,” says Barbara Delaney, principal and founder of StoneStreet Renaissance, a retirement and investment fiduciary advisory group in Pearl River, New York. “It allows us to do things like play with the match and stretch it out and see what it will cost. We’ve never done that in real time.”
She plans to use it in an upcoming committee meeting for a prospect the firm is targeting.
“They have a low participation rate, between 50 percent and 60 percent, which is not what we’re used to, and it might have something to do with the fact that they’re in multiple states,” Delaney adds. “We like that it’s interactive and immediate rather than presenting just two or three scenarios. But we’ll use it first with current clients so we’re well-versed in how it works.”
The new offering will be available through Empower’s advisor website.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
