It’s that time of year; the annual look ahead (often anxiously) to what awaits in the New Year, and hot takes on how 401k and similar retirement plans will be affected—if at all.
Nationwide Financial is out with its estimation, and John Carter, president of Nationwide Retirement Plans offers up five specific areas to watch, including health care, technology and more.
Here are his predictions:
1). Equity market volatility and rising interest rates are causing participants to wonder what the impacts will be to their 401(k) portfolios. As a result, we expect to see greater call volume from participants as volatility spikes, and continued interest around managed account solutions.
2). Health care is one of the largest expenses in retirement, and wealth and health are inextricably tied. Yet, health savings accounts (HSAs) are a fairly-untapped retirement saving strategy today, even though HSAs offer participants a triple-tax advantage: contributions are made pre-tax, savings grow tax-deferred and withdrawals are tax free when used to pay for medical expenses. Nationwide expects greater interest in offering a combined retirement planning program that encourages savings in an HSA alongside a 401(k), 457, or 403(b), allowing participants to have a fully integrated solution to manage current health care expenses, plan for future health care saving and save for retirement.
3). Technology is shaping Americans’ expectations across all industries. Whether it’s accessibility of information, or assistance and support, people expect immediate results and easy interactions. The retirement plans industry is no different. Thus, retirement plan providers, like Nationwide, are consistently investing in new technology and developing new tools and capabilities to improve the experiences of our participants, plan sponsors, and intermediary partners.
4). With the national media’s emphasis on cybersecurity, we anticipate growing interest in and concern from both plan sponsors and participants on the security of participant data. We foresee greater discussions with plan sponsors on cybersecurity during the RFP process, and more emphasis placed on this critical need and the scale of an organization’s entire IT operations.
5). Advisors will better serve their clients well by broadening their preferred provider consideration set and having the health/wealth discussions. With defined contribution/401k dabblers exiting the business as demand for specialization grows, advisors should look to providers that offer a robust package of tools beyond the product offering to serve the overall financial needs of participants. There is an opportunity in 2019 to engage clients in health/wealth conversations and rely on providers’ resources, such as those offered through Nationwide Retirement Institute, for valuable content and solutions to make the conversations easy and productive.