Recent industry interest in in-plan retirement income solutions got a further boost this week with the announcement that HUB Retirement and Private Wealth (HUB RPW) has secured access to Hueler Income Solutions, a marketplace for guaranteed income products.
HUB will offer Hueler Income Solutions through an integration with Morningstar Investment Management’s advisor-managed accounts service.
Referencing the ongoing “auto” revolution (enrollment, deferral, escalation, portability), Barbara Delaney, Senior Vice President and Retirement Consultant with HUB Retirement & Private Wealth who spearheaded the partnership, said an auto-feature can’t be applied to distribution strategies.
“It’s not something we can auto,” Delaney explained. “That’s what the industry has been trying to do. We’re very successful at auto-enrollment and escalation. But we need to change the narrative to get people to start thinking about how much they want or need, which are two different things. It’s daunting for the average participant in a plan to try to figure that out.”
She added that the answer is to break it into smaller conversations (or soundbites), which is included in the Morningstar integration. How much they want and need, where they’ll live, the condition of their health, Social Security, and other income sources are all factors to be considered.
Internal plan sponsor marketing and prominent intranet placement are key, especially now that defined benefit plans are rare and the first wave of participants are retiring without pensions.
Three factors behind the deal
Three factors drove the integration. The first is a “hole” that exists with participants that do not meet required asset minimums for personalized distribution advice. The second is determining how much they need on an annual or monthly basis and where the first dollar will come from. Morningstar solves both with its technology.
“It will be live March 1st and able to say, from a tax efficient perspective, you should take this much per month,” Delaney noted. “And you can change your spending. ‘You know what? My daughter is getting married. It’s going to cost me $20,000. How does that impact me long-term?’ It will give you the functionality to change it as you go along. If something happens and your income goes up or down, it will guide you.”
The third and biggest piece is the guarantee, a constant question from participants.
“As Morningstar gives them asset allocation advice that may or may not include a guarantee, the participant is then guided to the Hueler platform. The platform will say, ‘How much do you want or need?’ You can say, ‘I’m going to give you $100,000 for an annuity. How much does it convert to?’ It’s real-time conversions that satisfy the SECURE Act in a way that no one ever thought it could.
“You also can say, ‘I want $2,000 a month,’ so you can play with it on both ends. The recommendation comes from Morningstar, but it’s Hueler’s technology and the participant’s decision to buy it. The technology goes to wherever that participant tells them. It’s so simple and easy to use.”
It’s a process, not a product, Delaney concluded, and one that’s prudent at that. The process puts what’s in the best interest of the participant first, critical for a successful program.
“It’s a solution that is tied to a program. It has been a collaborative effort in the best interest of the participant and begins to meet them where they are in their working life. As they get closer [to retirement], a more customized solution is an integral part of success.”
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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.
