Broadridge Fi360 Solutions, data provider Cannex, and Fiduciary Insurance Services have teamed to initiate a Lifetime Income consortium to promote the need for guaranteed income options within retirement plans.
Broadridge Fi360 Solutions’ Head John Faustino said between eight and 10 firms have expressed strong interest in participating, and Nationwide and Alliance Bernstein have already committed.
“This initiative is targeted at catalyzing lifetime income adoption for the industry overall,” Faustino explained. “We believe that by working together, we can create a rising tide that will lift all ships.”
The consortium’s mission is, “To provide an expertly-substantiated framework and evangelism which enables plan fiduciaries to extend the scope of their advice and implementation capabilities beyond to-retirement solutions, into the through-retirement solutions.”
Asked about how it differs from the Alliance for Lifetime Income, Faustino said the latter is a nonprofit 501(c)(6) educational organization based in Washington, D.C. that creates awareness and educates Americans about the value and importance of lifetime income in retirement.
“While our missions are complementary, we’re more plan-centric and focus on addressing roadblocks to adoption outside of just execution,” he added. “Our consortium will be run by a for-profit, Broadridge, and focused on accelerating the adoption of retirement income through employer-based plans.”
The consortium’s development and implementation is broken out into four phases, and the founders are looking for commitments for Phases 1 and 2 (first 12 months), with an opportunity to shape and participate in go-forward phases.
“Central to our perspective is that lifetime income must add real value to participants and be profitable for advisors and product providers for it to be successful,” they added.
The four phases are as follows:
PHASE No. 1: One to Nine Months
- Educational webinars to Fi360’s designees focused on demand, commercial opportunity, fiduciary practices (high-level), product profiles, etc.
- 12k+ designees in total, mostly advisors; many of whom have meaningful retirement plan business
- In 2020, our webinars had an average of 556 register, 340 attend live, and 1,128 watch on-demand
- Collaboration between Fi360, Fiduciary Insurance Services, Cannex, and product manufacturers on the development of a formalized due-diligence process for Lifetime Income offerings
- Expectation would be ‘fit type’ methodology as opposed to a score… Fi360 did something similar with the Stable Value Industry Association.
- Consensus building on methodology by product type, data required, etc.
- Various ‘types’ of lifetime income will be prioritized based on expected market demand/need
- The output from this effort will be paper-based initially, and available for consortium members to share with advisors as third-party validated approach for Lifetime Income due diligence
- Potentially develop/launch CEFEX, www.cefex.org, audit process / certification specific to guaranteed income product manufacturers validating adherence to industry standards
- Cannex initiates collection of data from guaranteed income product manufacturers (independent from consortium activities)
PHASE No. 2: 10 to 12 Months
- Continued educational webinars to Fi360’s designees
- Validation of due-diligence approach and software/data needs
- Surveys to Fi360 designees/software users
- Focus groups with advisors and Fi360 enterprise clients
- Conversion of ‘paper’ due diligence methodology and feedback to development specifications
- Validation of paper due diligence methodology by prominent ERISA attorney
PHASE No. 3: 13 to 24 Months
- Consolidated Cannex data feeds available for Fi360 and other FinTechs
- Fi360 tool development completed
- Fi360 to include in advisor facing software; providing the data and tools advisors need in the context of their existing retirement plan workflows
- Product manufacturers could make the tools/data available on their websites / to wholesalers for advisor support
- Data to be licensed to other retirement plan tool providers; we are not interested in keeping data exclusively at Fi360
PHASE No. 4: 25-Plus Months (Steady State)
- Periodic webinars/advisor surveys
- Refinements to software solution
“We expect to secure commitments by the end of the year and actively begin collaborative efforts in January,” Faustino concluded.
For more information, contact John Faustino at John.Faustino@Broadridge.com and 708-769-0218.