Personalizing the plan sponsor and participant experience to achieve a true one-on-one engagement model is just one issue with which the industry continues to struggle, according to Ed Murphy, president of Empower Retirement.
Speaking to attendees of the Kohler 2018 Conference, an annual retirement plan study group held each summer in rural Wisconsin, Murphy presented a session entitled “Insider’s View: The U.S. Retirement System,” in which he detailed several trends he currently sees.
Claiming the industry is “light-years behind other businesses” in its methods of engagement, he said it requires more investment in infrastructure and messaging.
Other trends mentioned were the growing gig economy and the fact that 30 million to 40 million workers do not have access to an employer-sponsored plan, but Murphy did note the rise in interest and potential legislative action involving open MEPs and other “creative solutions” on which providers are focused.
Specific to advisors, he pointed to consolidation in the space, saying scale matters “as much to advisors and consultants as it does on the provider side,” and solving for the needs of increasingly constrained HR departments will be a key to success moving forward.
“Large, multi-office specialist retirement advisory offices are growing. They’re adding more sophisticated services like financial wellness and planning. Their need (and demand for) increasing support and reporting capabilities are also driving consolidation, while aggregator RIAs continue to acquire books of business.”
Defined contribution/401k dabblers (often referred to as “Two-Plan Tonys”) are exiting the business as demand for specialization grows.
Specific to investment trends, providers are including far fewer proprietary products than in the past, and incremental costs are rising due to regulatory and cyber-security issues, another reason he believes “scale matters.”
“Once we get past the election and into 2019, it could be a pivotal year,” Murphy concluded. “If Democrats take the house, and many certainly see it as a possibility, Richard Neal, D-Mass., will become chairman of the House Ways and Means Committee. He’s said his No. 1 priority is retirement, and there are a number of bipartisan proposals currently in play.”
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.
