NAPA 401(k) Summit Insider 2021

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S P E C I A L S U P P L E M E N T TO N A PA N E T

Insider 2021

NAPA 401(k) SUMMIT

THE MAGAZINE

Goldilocks?

She didn’t settle.

Neither should you.

©2021 American Century Proprietary Holdings, Inc. All rights reserved.

Not too big to notice you.

Not too small for the solutions you need.

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NAPA 401(k) Summit Insider Fall 2021

Table of Contents 2

16

4

(teaming with TPAs, wholesalers, & asset managers)

Inside the Summit Insider

Who Are the ‘Summit Insiders’?

6

Practice(s) Management

(sales, rollovers, outcomes & TDF)

Partner Shifts

20

Thought Leadership

(trends, hype, opportunities & threats)

26

napanet

Special Supplement To

the magazine

Editor-in-Chief Nevin E. Adams, JD nadams@usaretirement.org Art Director Ethan Duran eduran@usaretirement.org Director of Conference Sales Gwenn M. Marsh gmarsh@usaretirement.org Digital Sales Tony Descipio tdescipio@usaretirement.org Cover marivlada / Shutterstock.com

Focus on Financial Wellness

I Wish Plan Sponsors Knew More About…

Copyright 2021, National Association of Plan Advisors (NAPA). All rights reserved.

This publication may not be reproduced in whole or in part without written permission of the publisher.

12

34

QR Code to Digital Version*

(retirement income)

(overhyped trends)

8

The End(s) in Mind

‘Over’ Blown

Use your phone to link directly to the Online Version!

36

What (Almost) Nobody is Talking About…

napa-net.org

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* i os 13 and Android 9 users can scan using your phones built in camera utility.

9/23/21 2:59 PM

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NAPA 401(k) Summit Insider Fall 2021

Letter From the Editor

clients in considering a retirement income solution.

It was also the most cited factor influencing advisor considerations.

• Client support and market intel were tied as the mostvalued support from the DC wholesaler partners.

We’re Baaack!

We were #bettertogether in Las Vegas

There’s nothing like being at the NAPA 401(k) Summit—particularly being at the NAPA 401(k)

Summit after the many months and a worldwide pandemic that kept us all apart.

In the pages that follow you’ll find summarized the perspectives of more than 500 retirement plan advisors and home office staff on a range of issues—the criteria in selecting—and rejecting—key business relationships, the things that are over-hyped—and the things that no one is talking about—but that everyone, at least in the eyes of these “Insiders,” should be. We also got some insights on retirement income, important features in choosing targetdate funds, rollovers and outcomes.

We’ve included a number of verbatim comments on what these “Insiders” wish that plan sponsors knew, or knew better. Sometimes those words are harsh, sometimes reassuring—but we asked advisors for their insights, and they were generous in doing so. I only wish we had room to share them all.

Among the key findings: • Glidepath philosophy topped the criteria on selecting target-date funds, slightly outpacing 5-year performance.

• Rollovers, the SECURE Act’s expansion of a retirement income safe harbor, including lifetime income disclosures on participant statements, managed accounts, and e-delivery were all rated as “positive game changers.”

A special thanks to the hundreds of retirement plan advisors who took the time to provide such thoughtful responses—and to the sponsors of this fourth edition of the Summit Insider.

Nevin E. Adams, JD

Editor-in-Chief nadams@usaretirement.org

SAVE THE DATE

• More than half focus on measuring outcomes at the plan level during every plan review.

• Nearly two-thirds deliver financial wellness as a component of their current service offerings—another 17% do so through an external partner.

• ESG remains the most “over-hyped” trend in the industry, outpacing robo-advice and MEPs/PEPs by a significant margin.

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• Portability was deemed the most influential/ compelling factor to respondents’ plan sponsor

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NAPA 401(k) Summit Insider Fall 2021

Who Are the ‘Summit Insiders’?

Just over 500 advisor and home office “attendees” of the 2021 NAPA 401(k) Summit responded to this year’s

Summit Insider. Just under a third (32%) had been a retirement plan advisor for more than 20 years, and a quarter had been one for 15-20 years.

There were, however, 16% who had less than 5 years of experience in that role, and about 1 in 10 who had been in the role for 5-10 years.

Their target markets were similarly diverse. More than a quarter targeted plans with less than $5 million in assets, with just over one in five primarily serving clients between $5 and $10 million in assets, and 23% between $10 million and $25 million.

The remaining quarter were divided between market segments ranging from $25 million to more than $1 billion in assets.

Advisors who were RIAs outnumbered wirehouse advisors by about four to one. SI

How long have you been a retirement plan advisor/working with retirement plans?

With what size retirement plans do you TYPICALLY work/support?

11 12

15

16

84 32

149

165 58

76

47

118

114

131

Less than 5 years 5-10 years

Less than $5 million in assets $5-$10 million in assets

10-15 years 15-20 years More than 20 years

$10-$25 million in assets $25-$50 million in assets $50-$100 million in assets $100-$250 million in assets $250-$500 million in assets $500 million-$1 billion in assets > $1 billion in assets

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NAPA 401(k) Summit Insider Fall 2021

Practice(s) Management At a time when the sheer array of potential practice management focus areas is truly daunting, this edition of the Summit Insider highlights just a handful, albeit several key areas: • the amount of time spent focused on new business development; • the features that matter most when choosing a target-date fund; • whether or not our Summit Insiders were working with rollovers (yet); and • how, if at all, their plan reviews are incorporating outcomes as a focus.

There’s some interesting perspectives and insights associated with each…

What % of your time are you engaged in new business development (vs current client service/review work)?

Which of the following features are important when choosing a target-date fund (check all that apply)?

Are you currently working with rollovers as part of a wealth management focus?

Glide path philosophy

6%

230

7%

18%

5-year results 215

37% 13%

9% 44%

3-year results 110

31%

Brand name recognition

29%

85

Recordkeeper affiliation

4%

45

Less than 25% 25% - 50% 50% - 75% More than 75%

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Other criteria: 10-year track record was widely cited, though that was dwarfed by cost/fees. The underlying portfolio construction was also noted, as was the scoring by a number of evaluation tools.

Risk/reward stats were also cited, as was risk-adjusted return, and consistency—and for some, the active versus passive management approach was also a factor.

Yes, and have been for awhile.

Yes, but only started recently.

Yes, but only opportunistically/upon request.

No. No, and not planning to.

Not yet.

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NAPA 401(k) Summit Insider Fall 2021

How much do your plan reviews focus on measuring outcomes at the plan level?

4%

39%

THAT’S SOMEWHAT HARD TO “MEASURE AS THE DYNAMICS 57%

Every review Sometimes Never

Comments We have all of our committees articulate their goals for the plan so that we have something to measure to.

We give an aggregate retirement readiness report annually to all our plan sponsor clients. We used to also provide a personalized retirement readiness report to all our participants. We are improving that by now transitioning them to get our “lifesteps foundational financial plan” which covers budgeting, debt, emergency savings, death protection, retirement readiness and HSA optimization annually.

This is difficult when the plan sponsor is hard to chase down to get the reviews in.

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OF THE PLAN (I.E. PARTICIPANTS, AGE OF GROUP YOUNG/OLD, INVESTMENTS AVAILABLE UNDER THE PLAN) ARE CHANGING THROUGHOUT THE PLAN YEAR, UNLESS YOU HAVE A VERY STABLE WORKFORCE.”

The plan exists for the benefit of employees. Addressing participant outcomes is a must.

Our entire client experience is designed around optimizing outcomes for both the plan (minimizing risk) and the participant (increasing participant account balances).

Need too much data from an individual employee to measure this.

We can measure improvement but without knowing goals and outside accounts we can’t show much.

Our clients don’t worry about these, because we have such a robust value prop, which keeps them abreast on all these topics.

It depends on the client. Some clients ask for plan level performance, which we try to avoid and explain that it would all depend on how their participants are investing. Some clients like to look at how aggressive/ conservative certain age groups are.

Becoming a discussion with employers—moving in the right direction.

At the end of the day, the client is interested in employees’ financial security. If the employees are constantly worrying about paying their bills, they are not focusing on work. Financial stress can reduce productivity and increase absenteeism. SI

The focus is mostly on average participant deferral rather than on plan participation.

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NAPA 401(k) Summit Insider Fall 2021

Focus on Financial Wellness though plan sponsors have, as a group, been relatively skeptical—not of the need, but about the efficacy of the delivery, and the ability to quantify the value relative to the cost.

However, the COVID-19 pandemic cast a new light on financial wellness as an essential workplace benefit, and a growing majority of employers feel extreme responsibility for their employees’ financial wellbeing.

The growth of financial wellness programs in the workplace also means that expectations have shifted.

That said, financial wellness remains one of the most bandied about phrases in our industry—it’s something most aspire to, something plan sponsors are both interested in—and skeptical about—something that seems to have an elusive ROI, at least in objective, quantifiable terms—and yet—as indicated in the findings below, is increasingly an element in the service delivery of a majority of advisory firms.

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Is financial wellness a component of your current service offerings?

6% 13%

17%

64%

64% - Yes, we deliver it 17% - Yes, through an external partner 13% - Not yet 6% - No

How would you define financial wellness?

Holistic financial literacy and ability to deliver something that helps individually. We have a couple of plans that use Dave Ramsey’s program and we formulate delivery of education around what plan sponsors receive from the program.

What financial needs do the employees have and how can I meet them?”

We offer what I would define as “wellness plus.” We engage employees in annual individual meetings. They are allotted approximately 20 minutes to speak/ meet with a financial professional (we have 2 CFPs and 2 CPFAs) who are work with employees (participants). Notes on each meeting are documented and reviewed prior to new session to ensure a contiguous experience for those we meet with.

Much of what we do is education based, but for someone who needs more help to give them confidence,

VectorMine / shutterstock.com

Financial wellness has been on the radar of financial advisors for some time now,

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NAPA 401(k) Summit Insider Fall 2021

THE DEFINITION IS SLIPPERY. I WOULD DEFINE IT “BROADLY AS ASSISTING PLAN PARTICIPANTS WITH PERSONAL FINANCIAL STRATEGIES AND TOOLS BEYOND THE ACT OF SAVING FOR RETIREMENT.” we do have the tools and offering to do so. It creates extreme piece of mind and employees will often come to us before speaking with HR. We believe the term is outdated and frankly obsolete. We believe the next paradigm is offering institutionally priced Financial PLANNING services by a CFP as an employee benefit.

We see this is either a voluntary benefit paid by employees or even something 100% employer paid.

Using actual metrics to make a participant feel confident in their current and future financial situation Usable financial education on key topics - best practices.

Tough to define exactly. This involves a number of things including KNOWLEDGE related to debt management (and true cost of borrowing), budgeting, creating an emergency savings reserve, contributing no less than what is required to receive the maximum employer match contribution (and consideration of whether Roth or Pre-Tax 401(k) contributions are appropriate), a basic understanding of how social security retirement benefits are calculated, up-to-date beneficiary designations, utilizing taxadvantaged college savings accounts, where it is prudent do so.

The state of being in good financial health, especially as an actively pursued goal. Meaning, that you are not just currently healthy, but actively working on maintaining financial health. I kind of equate this to having

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a gym membership, versus actually going to the gym. You may be healthy today, but do you just drive by and wave at your gym, or are you actively maintaining your health by using the tools at your disposal to ensure your own long-term health?

complete financial planning. We deliver short “tidbits” that cover finance basics to all sponsors for distribution to participants.

The resources and the tools to prepare a participant for retirement.

The ability for a participant to achieve financial goals and best utilize their employers 401(k) and the recordkeepers platform.

Participants understanding the fundamentals of finance and planning for their current finances as well as their retirement.

The million dollar question... Also, how do you track progress towards it!? I would say Financial Wellness is having the awareness, knowledge, and tools to make financially sound decisions.

The basics of budgeting, debt management, investing, retirement/ estate planning & social security.

The agility to holistically coordinate all aspects of an individuals financial situation into a comprehensive view and plan.

That’s a great question that I don’t think I’ve ever seen the answer to. Everyone talks about it but I don’t know that I know what it is.

Educating the participants about more than the 401k? Explaining the importance of a budget, emergency savings and good vs bad debt?

That’s the million dollar question.

Everything from financial basics like debt and budgeting up to college planning and retirement, and up to

Reduced stress knowing that your financial matters are on the right path.

Overall financial health of an individual including but not limited to the ability to manage day-today finances while meeting their individual savings goals.

Offering more than just advice on investments. We incorporate budgeting, debt reduction, college planning, and income projection Meeting all aspects of an employee’s financial health (banking, credit scores, planning, 529, etc.)

It varies by client and needs to be flexible for each client to determine.

In the eye of the beholder. Similar to an education strategy, we work with client to determine what is best for client. It typically has a component of improving financial literacy (understanding) of how a person manages their short term, mid-term and long term goals and how they will pay for them. There can be an aspect of debt management too. We work with recordkeeper partners and in some cases recommend or present specific wellness programs.

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NAPA 401(k) Summit Insider Fall 2021

Improving employee financial knowledge, showing employees their current financial situations, helping them define goals, helping them see how they can reach those goals.

Financial wellness is living within your means, saving appropriately for unexpected events, planning for large purchases, and saving sufficiently to maintain one’s lifestyle in retirement.

Holistic participant help, planning, and tools related to their financial situation both for retirement and day to day life.

Financial Wellness is beyond traditional benefit and compensation programs, the focus on the well being of employees, helping them to relieve stress and anxiety in their personal lives, and thus improve productivity and the level of employee engagement simultaneously.

Helping employees identify and work toward solving issues with their finances so that they may absorb financial shocks short term and be prepared for the long term.

Helping employees build and maintain a strong financial foundation. This includes emergency savings, budgeting, high-interest debt reduction, and saving for retirement.

Giving the participants all the tools to make their entire financial situation more comfortable and having an individual available to explain whatever it takes to make the participant confident to retire on their terms.

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Financial wellness is an understanding of where you are financially in your journey and where you need to be going forward. And having a plan to accomplish those goals that you have set for your future.

Financial wellness allows employees to take control of their financial future and become educated and prepared.

Extending education beyond just the 401k but to a more holistic approach.

Delivering a financial literacy resource to couple with a holistic financial planning offering both on-site and virtually.

Being financially prepared for emergencies. Having access to the information and tool necessary to make good financial decisions.

Having a plan for the future.

A wholistic endeavor touching all areas of a person’s financial wellbeing.

A system of behaviors that result in one’s financial security.

A state of financial literacy that allows an individual (or family) to live the quality of life they desire in a manner that is primarily anxiety-free.

A robust combination of programs that are designed to help move individuals from a state of financial stress to one of financial confidence and well being.

Varies by client. SI

VectorMine / shutterstock.com

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NAPA 401(k) Summit Insider Fall 2021

The End in Mind — Retirement Income One of the great concerns of our industry—

when we aren’t worrying if people have saved enough for retirement—is worrying about how those savings are going to be enough to last through retirement.

There’s little question that participants need help structuring their income in retirement—and little doubt that a lifetime income option could help them do that. That said, the biggest impediment to adoption may simply be that (industry surveys notwithstanding) participants don’t seem to be asking for the option—and when they do have access, mostly don’t take advantage.

That said, as we’ve noted elsewhere the SECURE Act contained three specific provisions designed to ameliorate some of that resistance, if not to reverse it altogether.

In this Summit Insider, even as those provisions come into their own, we wanted to get a reading on in-plan retirement income options, what obstacles persist, and the prospects for change ahead. SI

How would you rate your plan sponsor clients’ level of interest in in-plan retirement income products?

4% 8% 14% 39%

36%

Minimal Occasional Non-existent Frequent High

What factor(s) have stopped/slowed your clients from exploring/implementing an in-plan retirement income solution (check all that apply)?

Knowledge of available options Selection/implementation process

Legal/fiduciary concerns

162 82 121

Specific product concerns (e.g., cost, flexibility, portability, complexity, investments...)

236 253

Just not a current priority for them Not a current priority for me/my practice

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103

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NAPA 401(k) Summit Insider Fall 2021

In considering a retirement income solution, which factors would be most influential/compelling for YOU to consider the option (check all that apply)?

229

Income guarantee Convenience

172 384

Portability SECURE Act compliant

152

QDIA-friendly

107

Platform agnostic

287

If it were part of a target-date offering

84

In considering a retirement income solution, which factors would be most influential/compelling to your plan sponsor clients/prospects (check all that apply)?

Income guarantee

281

Convenience

258 313

Portability SECURE Act compliant

155

QDIA-friendly

95

Platform agnostic If it were part of a target-date offering

200 59

Which guaranteed retirement income features do you think would be most appealing to participants (check all that apply)?

385

Income guarantee Convenience

202

Portability Flexibility

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287 218

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NAPA 401(k) Summit Insider Fall 2021

Partner ‘Shifts’ It’s been said that “no man is an island,” and certainly effectively serving and supporting workplace retirement plans is a team effort in a series of complex relationships.

In this year’s Summit Insider we once again asked about the criteria in choosing Third Party Administrator (TPA) partners (though the criteria remain consistent), and also about the type(s) of support valued from their DC wholesalers (which turns out to be a diverse mix), a point about expedited installations, and providers/recordkeepers—as well as some open-ended responses as to how asset managers could (better) support advisors.

What is your PRIMARY consideration in selecting a third-party administrator (TPA) partner?

8%

14%

Which type of support do you value MOST from the DC wholesalers you work with?

3% 5%

22% 2% 1%

68%

Ability to help with plan innovation Brand/reputation Fees Geography/proximity Participant engagement Service Don’t work with TPAs

When selecting a 401(k) provider, how valuable is expedited installation?

27%

17% 27% 6%

Client support Market intel Marketing materials Product insights Prospect introductions/referrals

4% 12%

50%

33% Very Important Important Somewhat Not important

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NAPA 401(k) Summit Insider Fall 2021

What is the most important thing that asset managers can do to improve their support for your DC business?

Work on getting us fund commentary for our fiduciary reporting.

We do not need meetings that last more than a half hour.

Value adds & best practices.

Value adds—namely educational resources for participants, market and legislative intelligence, and referrals.

Updates on markets and how their funds are positioned to weather the storms.

Understand what the average American is doing in their 401k. Fully understand the good and bad habits.

And, be a solution to improving that scenario. Asset Managers seem to think of big publicly traded companies and their 401k plans rather than the little micro market plans and the habits of the average Joe Schmo.

Focus on the little people. Not the S&P 500 Board rooms and their 401k committees that live in another world.

Understand my business and the clients I serve. Understand my business and only give me ideas that fit my market.

Thought leadership.

Asset managers are experts on managing assets for their respective firms. Therefore, I tend to question how much value they can bring and why they would want to provide information that is unrelated to the assets they manage. Therefore, providing the best information about the assets they manage and how they differentiate themselves from their competitors is probably the most important thing they can do for me.

Support events.

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Think about the participant’s perspective when describing the value of their solution.

Succinct summary / talking points explaining underperformance, when applicable.

The most important thing the industry could do to improve my relationship with asset managers is provide the data to them regarding which funds we are using with them and how much is invested in them—so they can provide more specific support to our business.

Stop the flood of email.

Somewhat regular calls talking about how they see their investments as part of an overall 401k menu.

Simply their materials.

Share trends and market updates.

“

PROVIDE TIMELY CONCISE RESPONSES TO OUR SPECIFIC QUESTIONS WITHOUT IMBEDDING UNREQUESTED CONTENT.” Supporting us on a personal level rather than just sending generic information.

Support product exploration and innovation while respecting our firm’s compliance guidelines for our advisors.

Support in differentiating themselves, platform agnostic.

Supply quarterly attribution analysis.

Super important to get access to industry benchmarking, surveys, etc!

Share practice management pieces and make introductions.

Return to product innovation. They are all the same.

Regular updates (quarterly is fine) and insights regarding their products what are the key differentiators from their competitors.

Purposeful messaging and not quantity of messaging. I’m not in business to support all of the marketing information they throw our way. Resources are great but too many are spamming us.

Provide us with solid data that demonstrates why one or two of their best funds is better qualitatively and quantitatively than others. I’m not interested in seeing a new or young fund or one that they want us to try out or start showing.

Provide tools and education which help my practice. the investment results are what they are and will pass or not pass the screens. We are faced with many funds which are compliant with the IPS. Thus, identifying the right partner to use repeatedly is key. I have limited research and development time so efficiency is key.

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NAPA 401(k) Summit Insider Fall 2021

GIVE INTEL ON EXISTING PLANS, AND SHARE PRICING “DATA FOR VARIOUS SIZES AND TYPES OF PLANS (INCLUDING ADVISORY FEES).”

Provide relationship level pricing for investment products offered.

Provide participant-facing materials for presentations/enrollment meetings.

Provide participant and plan sponsor approved educational materials.

Provide new marketing ideas in a Covid world.

Provide more insights into fund performance relative to the fund’s respective peer group, rather than just the index.

Provide more education around solutions and alternatives, trends, and comparison reports.

Provide information on how they are managing this economic and political environment in short and easy to understand bits.

the revenue sharing. While some recordkeepers can provide fee levelization at the participant level to mitigate this situation, others cannot.

I frequently will not recommend a fund family or specific fund when this is the case—instead opting for a fund that is agnostic relative to its shareclass pricing.

Prospecting, lead generation.

Practice management tips are always appreciated.

Offer support in winning new business.

Market Intel and proactive manager updates.

Let me know what people like me are doing successfully around the country.

Provide consistent top quartile returns.

Learn more about what recordkeepers, custodians, trustees and advisors do to impact retirement plans.

Provide compelling processes, rationale for selection of their funds in a DC lineup.

I’m young so helping me learn how to prospect for plans would be very helpful.

Provide additional commentary when they know a fund is going to fail FIRM or FI360 Scoring.

I appreciate the VALUE adds most like benchmarking reports so I don’t have to purchase it on my own.

Optimize their share classes; in other words, do not make the share class without revenue sharing more expensive than older (more expensive) share classes with revenue sharing less expensive net

I appreciate quarterly manager commentary on the specific products that I use most. American Funds.

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Help with the prospecting of 401(k) business.

Give short descriptions of funds so we can disseminate the information to committees at an elementary level.

Focusing more on the overall service their firm can provide to us and the benefits of using them vs. their competitors. Focusing on the nittygritty investment strategies isn’t really moving the ball these days in prospect conversations, especially as the industry becomes more commoditized.

Focus on my agenda, not theirs.

Focus on helping us provide solution for our clients biggest concerns. IE: It’s not the 401k.

Financial literacy/wellness resources to facilitate changing behaviors.

Be a resource rather than a salesperson.

Automatically inform us of share class changes ahead of time.

Assigning me orphan plans that had their advisor, quit, retire or die.

Appreciate my DCIOs that provide resources that support me in providing a higher level of service to my clients, e.g. MFS running a Fiduciary Benchmarks report upon request, Franklin Templeton’s Industry reports, VOYA’s Benchmark Wizard tool, Columbia Threadneedle’s access to the Retirement Learning Center, John Hancock’s access to Larkspur/ Pension Planet, T. Rowe Price’s Financial wellness tools comparison sheet, etc. SI

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NAPA 401(k) Summit Insider Fall 2021

It’s been a year, but—and with some regulatory clarity still outstanding—a plurality (still) thinks that the impact of multiple employer plans (MEPs), or the SECURE Act’s version (Pooled Employer Plans, or PEPs) remains to be seen. That said, those who see the development as a positive game changer remain a close second (in last year’s Insider 38% were in that category), with the remaining third being skeptical (much ado about not much) or a negative force.

That said, a growing number of pooled plan providers continue to line up and sign up—and if the eventual outcome still remains cloudy, enthusiasm still seems strong…

Anticipated Shift in DOL’s Approach on ESG 7%

Thought Leadership

By Nevin E. Adam, JD

elements under a “SWOT” analysis— strengths, weaknesses, opportunities or threats—and the recent Summit Insider gave us a chance to see what is on advisors’ minds now—and for the days ahead.

For this year’s Summit Insider, we again asked respondents to weigh in on how they saw these portents of change: a game changer, for good or ill, something about which much ado had been made without justification— or was it simply too soon to say?

Here’s what they thought.

Legend

45%

MEPs/PEPs (Multiple Employer Plans/ Pooled Employer Plans)

20%

4%

25%

37%

34%

A little more than a year ago, the Labor Department issued a proposed new rule on “Financial Factors in Selecting Plan Investments”— followed on Nov. 13, 2020 (after thousands of largely critical comments, many from purveyors and proponents of ESG), by the final rule on Financial Factors in Selecting Plan Investments, which adopted amendments to the “Investment Duties” regulation

• Too Soon to Say | • Positive Game Changer | • Much Ado About Not Much | • Negative Game Changer

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MJgraphics / shutterstock.com

It’s customary for businesses in evaluating future prospects to consider/identify

28%

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NAPA 401(k) Summit Insider Fall 2021

under Title I of ERISA. The changes stepped away from using the terms environmental, social and governance (ESG) factors, but instead generally require plan fiduciaries to select investments and investment courses of action based solely on consideration of “pecuniary factors.”

All of that was soon followed by an Executive Order from President Biden directing federal agencies to review existing regulations “promulgated, issued, or adopted between January 20, 2017, and January 20, 2021, that are or may be inconsistent with, or present obstacles to…” the “promotion and protection of public health and the environment and ensuring that agency activities are guided by the best science and protected by processes that ensure the integrity of Federal decision-making, and to advance consistent, clear, intelligible, comparable, and accurate disclosure of climate-related financial risk, including both physical and transition risks.”

And—in the interim—in midMarch the Employee Benefit Security Administration announced that it would not enforce the aforementioned final rules on and Fiduciary Duties Regarding Proxy Voting and Shareholder Rights.

As we head to press, an updated stance from the Biden administration is widely anticipated. If so, it would be yet another redirect in a series of shifts as administrations change. In fairness, up until the Trump administration’s foray, there had really only been Interpretive Bulletins (IBs) (in 1994, 2008 and 2016) and, more recently, a 2018 Field Assistance Bulletin (FAB) on this subject. The 2016 IB was read as encouraging consideration of ESG factors (or at least discouraging the discouraging); the 2018 FAB pulled back on that stance.

Legend

All in all, there’s been a sense of regulatory whiplash on the subject— but, certainly in retail markets, interest in ESG remains keen, even if—thus far—it’s failed to take hold among retirement plans. Which may well account for the tepid assessment among survey respondents.

DOL’s Fiduciary Reproposal

by a set of FAQs and DOL official comments) provides the path for ERISA fiduciaries (and those that would avoid its strictures)—but change is in the air, albeit one almost certainly informed by a comment period and review.

In the meantime, and with a sense of change ahead, “too soon to say” would appear to be a reasonable assessment.

Rollovers 14% 12% 23%

43%

18%

25% 25% 40%

It’s been said that elections matter—and there is perhaps no truer testament to that than the “evolution” of the Labor Department’s so-called “fiduciary rule.” The Obama administration’s attempt to bring those standards current to the new realities of defined contribution (and IRA) plan dominance came to an abrupt halt when the Fifth Circuit ruled the Labor Department had overstepped its bounds, leaving the Trump administration to thread a path created by the restoration of the old rules alongside some new guidance intended to complement new rules that were never allowed to take hold.

Subsequent guidance from the Trump administration was allowed to go into effect by the Biden administration on Feb. 16, 2021—much to the surprise (and relief) of many.

For the moment PTE 2020-02 (flavored

Defined contribution plans held just under $10 trillion in assets as of March 31, 2021, according to the Investment Company Institute, while IRAs represented $12.6 trillion—much of which is said to have originated in those defined contribution plans.

Regardless, rollovers—either as an accumulation “pile” or as a decumulation starting point—are adding up, and are of increasing value to a growing number of advisory and wealth management practices.

That said, the ability of retirement plan advisors to solicit/advise on rollovers has been buffeted about by the uncertainties attendant with the fluxes in the fiduciary rule(s), generating confusion, and caution by firms that ordinarily might have gone “all in” in continuing to help

• Too Soon to Say | • Positive Game Changer | • Much Ado About Not Much | • Negative Game Changer

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NAPA 401(k) Summit Insider Fall 2021

and advise ex-participants that they had long counseled while part of a retirement plan.

The clouds of uncertainty appear to be parting, however, and the “playing” field that once favored advisors operating outside the plan over those serving in that role as plan fiduciaries finally seems to be levelling. If it’s still too early to rate this aspect as an unqualified game changer, it nonetheless bears watching in the near term.

SECURE Act’s Expansion of Retirement Income Safe Harbor

(or even four) decades past the time of their selection.

While it is perhaps too early to know if this element (alone or in tandem with the other elements in SECURE) will move that particular needle, its intent— the need to help shift the focus toward an effective decumulation of retirement assets by offering in-plan solutions— surely supports the “positive game changer” label.

E-delivery

28%

46%

14%

82%

57%

Legend

16%

3%

24%

One of three elements in the Setting Every Community Up for Retirement Enhancement (SECURE) Act designed to shift participant focus from accumulation to decumulation, this particular element (the other two being the reporting of a monthly lifetime income amount on participant statements and allowing for the portability of “in plan” lifetime income benefits) was intended to alleviate the long-standing concerns plan fiduciaries have had regarding their selection of a lifetime income provider whose responsibilities might entail ongoing services two or three

10%

1%

4% 14%

Printing/Showing Lifetime Income Disclosures on Statements

When the Labor Department unveiled the final e-delivery rule in May 2020, it was the culmination of years of hard work of advocacy.

The timing was precipitous, coming in the midst of the COVID crisis that separated so many workers—and recordkeepers—from their offices.

That timing may slow the full impact out of the blocks, but over a decade the Labor Department anticipated that the new safe harbor will save plans approximately $3.2 billion net, annualized to $349 million per year (using a 3% discount rate)— money that could well be better spent on retirement savings. That has the makings of a positive game changer—and that seems to be just how the Summit Insiders see it—still.

We’ve already noted the three lifetime income enhancements in the SECURE Act, and if this one is already in play with many recordkeepers (and therefore, perhaps explains why a quarter of Summit Insider respondents say it’s “not much”), its potential to help nudge the focus from accumulation to decumulation is largely unquestioned.

What’s less certain, of course, is whether the (admittedly conservative) results outlined as proposal now—with no real projection of future growth—will undermine those goals. And, perhaps, it explains the subdued enthusiasm for the potential impact.

Managed Accounts 11%

15%

32% 41%

• Too Soon to Say | • Positive Game Changer | • Much Ado About Not Much | • Negative Game Changer

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NAPA 401(k) Summit Insider Fall 2021

Managed accounts have recently (re)emerged on the scene with some enthusiasm, at least in the advisor community. These options purport to provide a more customized solution that your traditional target-date fund, and one that also—at least potentially—brings to the fore the insights and perspective of the plan advisor.

That said, all managed accounts are (literally) not created equal—and some, arguably, amount to little more than expensive target-date funds—a point that has been made in several litigation filings of late.

has an inside track when it comes to servicing those individuals down the road, or in a host of other, nonretirement related capacities.

All that notwithstanding, consolidation means disruption in service, support, and perhaps revenue generation for advisors— although how much, and how, is largely dependent on which side of the consolidation trend you’re sitting—and how well/seamlessly it happens.

been a wake-up call of sorts—and the prospects for this kind of solution looks to be very well received by advisors.

Legislation to Expand Emergency Savings Accounts 6% 11%

22%

Legislation to Allow Student Loan Repayment Matching

Recordkeeper Consolidation

60%

6% 8%

16%

22% 46% 23%

70%

10%

Consolidation in the ranks of the nation’s recordkeepers is nothing new, though it seems to “erupt” with a certain vigorous passion about once every ten years or so, and we appear to be in one of those cycles at present. Arguably it occurs when some are simply no longer willing (or able) to continue to support these complicated and expensive-tomaintain services (never mind how they’re often mischaracterized as “commodity”), because whomever has possession of the individual participant records/data certainly

Legend

Ever since word of Abbott Lab’s private letter ruling from the IRS that provided a “green light” for the organization to provide nonelective contributions as a match for student loan repayments in 2018, HR managers across the nation have been trying to see how/if a similar approach might apply to make it easier for those burdened with student loan debt to more effectively benefit from workplace retirement plan savings opportunities.

Indeed, the sheer depth and breadth of the impact that student loan debt is said to have on retirement plan participation has

Among the stats that everyone seems to know and recount with regard to retirement savings is a Federal Reserve survey that once claimed that most Americans couldn’t pull together $400 to deal with a sudden financial emergency.

Of course, the 401(k) has become Main Street’s savings, as well as retirement savings, account—and the uneven impact (physical and economic) of COVID has only served to heighten concerns about the need for the development of emergency savings accounts that can provide that support, even if they are “sidecarred” alongside the regular savings accounts.

More recently, legislation has emerged that would give life to that concept, and even though it has yet to make it into law, it’s pretty clear that the Summit Insiders applaud the notion. SI

• Too Soon to Say | • Positive Game Changer | • Much Ado About Not Much | • Negative Game Changer

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I Wish Plan Sponsors Knew (More) About…

It’s often said that the customer is always right—

but that doesn’t mean that they are always fully informed and—not being fully informed—they might not always make the “optimal” choice. That said, and as much as advisors try to impart a sense of focus and reality, there are subjects that are complicated to broach—and plan sponsors with whom those perspectives may be shared, but fail to take hold.

Regardless, once again this year as part of the Summit Insider, we asked respondents to fill in the blank… “I wish plan sponsors knew more about…”—and while certain consistent themes emerge, there’s something to be said for the actual words regarding…

Their Role(s) and Responsibility

Their responsibilities and their all-in fees.

ERISA doesn’t reward loyalty to providers or advisors. Having a better understanding of the fiduciary best practice to benchmark their providers with more regularity.

I wish plan sponsors understood their responsibility more—and that you can NEVER delegate all of your fiduciary duty away!

Their roles and responsibilities as a plan sponsor as well as the roles and responsibilities of their service providers. I find too many plan sponsors not only don’t know their roles and responsibilities as it pertains to offering a retirement plan, but they don’t know the roles

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and responsibilities of their service providers. I don’t think many TPAs or recordkeepers do a good job of educating clients on their respective roles and responsibilities let alone helping the client’s understand theirs.

The importance of understanding exactly what it means to be a fiduciary and what their responsibilities are.... that it’s not just hiring some person that throws the word “fiduciary” around and is anything but an expert.

That leadership should be championing the use of retirement benefits to their employees rather than leaving that work to record keepers and advisors.

Fiduciary obligations, participant data without prejudice.

Their responsibilities as plan sponsors and how much work we do for them.

A complete understanding of the level of risk and the amount of responsibilities that they have according to the DOL.

They have a tremendous opportunity in front of them. Focus more on the opportunity than the risk, and the risk management will take care of itself.

That they are fiduciaries and need to be more engaged than just saying we offer this as part of our employer benefit package.

That improving their plan over time is part of their duty.

The importance of completing formal fiduciary training before their plan is audited.

They need to make timely decisions.

I wish more plan sponsors would understand investment fundamentals a little better (not chasing returns, value of risk protection, etc.).

Our Role(s)

What they should be receiving from their financial advisor and vendor partners from a service standpoint.

That not all advisors are equal and there is real value in working with advisors who specialize in working with corporate retirement plans.

The value of a strong advisor.

Compliance is expensive, and technology can solve some of the routine transactional pain-points of 401(k) plans, but integrations do not absolve them of their fiduciary responsibility.

That they need to read and follow instructions.

Their potential liability.

Process, process, process. Why we do what we do, and ultimately how that’s important in driving outcomes (vs. focusing purely on results).

The value of fiduciary, fee-only advice vs. other options out there. I wish they understood how commissions and revenue sharing worked and how to find out if they’re being gouged.

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NAPA 401(k) Summit Insider

rudall30

/ shutterstock.com

Fall 2021

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I AM A FIDUCIARY WITH NO CONFLICTS OF INTEREST “AND DO A HELL OF A LOT MORE THAN THE AVERAGE REG REP TRYING TO SELL THEM A 401K PLAN. ” That most legitimate advisors are agnostic to vendor/investment manager. Our recommendations are usually with the best interests in mind but clients often think there may be other motives.

Separation of specialist advisors, generalist advisors, and recordkeeper relationship managers.

How hard we work for them:) and that being a ‘bigger’ firm or ‘national’ firm doesn’t provide ‘better service’ etc.

The amount of support we give them.

That we are there to bounce any kind of ideas off of for their business.

The work done behind the scenes. We may meet once or twice a year, but work is always happening on the back end.

The difference between working with a retirement plan specialist compared to a generalist advisor.

That a 401k isn’t a “lowest bar” benefit and the true value of advisors. And yes, that is up to us to show to them.

The value of the advisor to a plan and how plans without advisors are less successful.

All the work we do to create and run a fiduciarily sound retirement plan.

Fees and the need for an advisor to help insulate them. Understanding who is still responsible from a fiduciary standpoint and the seriousness of committees The amount of ‘behind the scenes’ work we do (which is on us in many ways to find the means to communicate it).

The difference between an investment advisor and a plan advisor.

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The role advisors play in the plan.

Not just investments but coordinating all the players from participants to record keepers to HR departments.

The value of working with an advisor who does more than just investment due diligence.

The Role(s) of Other Parties Servicing the Plan

How recordkeepers make money off of plan assets on their platform, not just RK fees but spread products and managed account services.

The difference between someone sounding like a fiduciary but selling products, and someone who is actually a fiduciary looking out for their best interest.

Partner with a recordkeeper and service providers that makes plan compliance a priority—and makes it easy (turnkey) for you (the plan sponsor).

Who is responsible for the different things that need to happen each year with a plan.

The roles of the advisor, the TPA, and the Plan Sponsor. They struggle to understand the separation of roles.

They tend to send everyone to either the TPA or to the advisor, with no regard for each’s role in the plan.

To be able to see thru the veneer of snake oil salesmen, half truths & outright lies regarding revenue sharing deals, pay to play arrangements, undisclosed bonus compensation and kickbacks in our industry.

Fees

The lowest cost provider isn’t always the best.

Not all fee structures are created equal and not all Fee Disclosures are meant to be understood. I have heard way too many times in my career that XYZ provider can do my plan for “free.” how overall fees are being paid for.

We run into more prospective clients, that have no clue how all the fees are being paid for.

How little impact fees have on the overall outcome of a plan’s success.

Hidden fees and under the table payments. Recently took over a plan that had 10 bps revenue sharing to the TPA, and moved it to non-revenue sharing. He said he never received a dime. Liar liar pants on fire.

The value of fees for services. That cheapest isn’t always the best.

Also, that most survey results show participants expect their employers to help them retire and are essentially asking for auto features.

There are Ferraris and Kias for a reason. Cheap isn’t best but cost matters for what they’re receiving.

You don’t spreadsheet your doctor, mechanic, or attorney. You want the

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NAPA 401(k) Summit Insider Fall 2021

one that understands you and is a master of their trade... Have you ever seen BAD plastic surgery or hair transplants? Ugh. Fees are important, but not always the only factor to consider.

The value of service in a commoditized industry.

That the fee compression we’ve experienced has had a negative impact.

Fees are not the only decision point.

Plan design and implementation should not be simple.

Fee reduction is not always good.

The services they could be getting vs the services they are currently getting.

Plan Design

Financial wellness, education, and advice can be wonderful, but if you want to drive meaningful change in the participant base, look to plan design and defaults like auto-enroll/ escalation.

How health and wealth impact each other and focus on financial wellness.

How easy it is to improve their plan.

I wish plan sponsors understood the impact of taking a more proactive approach when managing a plan.

I feel like a lot of plan sponsors primarily rely on participants to make their own decisions. If they had a

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How much participant behavior matters in terms of outcome (or better yet, how little everything else matters).

Retirement is the only benefit employees take with them when they leave. Too much energy and budget is spent on benefits that don’t have near the impact that retirement does on employees’ future.

Retirement benefits should be a top priority not a second thought.

A plan without a match is just a headache.

Auto features have amazing results with approximately zero employee pushback.

Plan Operations

Plan design options... as hard as we try to let them know what is possible they still are slow to move to a better design... especially in competitive situations... relationships with bad advisors make for bad plan outcomes.

/ shutterstock.com

Proper plan management involves more than just choosing funds and offering the plan. In other words, 401(k) plans when thoughtfully designed and well managed are very powerful tools for retirement success.

more proactive approach, they could help position participants for greater retirement outcomes.

rudall30

How effective/important target date reenrollments can be.

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NAPA 401(k) Summit Insider Fall 2021

THE IMPORTANCE OF THE FIDUCIARY PROCESS. MANY “STILL DON’T TAKE THE TIME TO GO THROUGH THE PROCESS.” The importance of accurate census data. Also, the fee structure of the plan.

Other ‘Stuff’

The importance of having keeping track of and locating missing participants.

Investments are cyclical.

We want to be able to make changes quickly! Whether that be plan features or fund menu lineups, we want to do it fast!

The importance of a through process and documentation.

How busy we are and how their service is paramount to us being efficient.

There is no such thing as a completely hands off 401(k) plan.

Expense and revenue components and how they impact participants.

Making small changes (auto enroll, auto escalate, managed accounts) is generally favored by participants and isn’t looked upon the employer as a ‘mandate’ and gives a great reason to host employee education to garner up more interest in the plan.

Time frames for plan, investment or platform changes.

How critically important it is to upload full and accurate census data each pay period.

Importance of getting the plan into compliance.

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The cost of your employees not being prepared to retire.

That service should matter more than it does.

The difference between participant education and advice. The total plan cost of their plans.

The risks associated with revenue sharing—particularly for large plans that are litigation targets.

We are NOT their HR Department.

The importance of the participant engagement.

Following the plan document is not optional.

Ability to be flexible with processing... “breaking the rules without breaking the law.”

The cost for their team’s time and liability under most bundled solutions. And that fiduciary matters.

I still find many in the small to mid space are fairly indifferent.

Employees that participate in and understand their 401(k) Plan at work, are more likely to become satisfied and engaged employees, and have a longer tenure.

The importance of looking beyond the Plan and to the participants as to how we can really drive engagement with the employees on a personal

level—what really works with their employees and how we can leverage that to improve wellness and the Plan.

Behavioral results are facts and plan sponsors need to understand that they aren’t “different.”

Not much more—keeps us Retirement Plan Advisors in business :) How much improving the lives of their employees will benefit their work production.

All the consolidation and our inability to predict yet another change due to an acquisition of one provider of another.

The ROI of financial wellness programs.

The positive impact education and engagement has on plan participation and successful outcomes.

The importance of the timing of required notices.

Small attention to their plan on a regular basis allows recordkeepers, TPAs, and Advisors to serve them in a better, more complete way.

I wish plan sponsors had a better grasp on behavioral psychology. I think this would help us as advisors and consultants provide more effective plan design and employee education efforts. Sometimes their goals don’t align with an effective plan design or education plan. SI

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NAPA 401(k) Summit Insider Fall 2021

Over Blown When it comes to over-hyped trends, ESG investments once again (as it did in 2020) not only topped the list, but drew nearly twice as much support in that category as the No. 2 overhyped trend, robo-advice (which has also consistently been at or near the top of this list), with MEPs/ PEPs a close third. That said, who’s to say that a new view from the Biden

SI_Fall21_InsideContent.indd 34

administration might transform the perspective on ESG, or that some additional regulatory clarity around PEPs might prime that pump in the way that many see as potential?

Indeed, it’s hard to find a topic on this list that hasn’t at some point gone from being a trend or an opportunity, to a point where a sizeable minority feels that it has

“jumped the shark” and traversed into ignoble territory.

That said, what may today be viewed as passe can just as easily reemerge as an opportunity—or a threat. Consider the relatively low ranking for topics like fee compression, and consolidation— which are trends that seem a long way from “over.” SI

VectorMine / shutterstock.com

The most overhyped industry trend(s)

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NAPA 401(k) Summit Insider Fall 2021

What do you find to be the MOST over-hyped “trend” in the industry?

ESG Investments

Robo-advice

MEPs/PEPs

Collective Investment Trusts (CITs)

30%

17%

11%

8%

Managed Accounts

Financial Wellness

ETFs

3(38) Services

8%

5%

5%

4%

Retirement Income Strategies

Health Savings Accounts (HSAs)

Aggregators

Passive Investment Strategies / Vehicles

3%

3%

2%

2%

Advisor Consolidation

Fee Compression

Litigation

Recordkeeper Consolidation

1%

1%

1%

0%

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NAPA 401(k) Summit Insider Fall 2021

VectorMine / shutterstock.com

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What’s Nobody Talking About…

If things viewed as “overhyped” are talked about too much—well, the flip side must

surely be the things that (almost) nobody’s talking about… but perhaps should be.

There is, unfortunately, no way to adequately share the roughly 500 responses received to this question— oh, there was overlap to be sure, and outright duplication in some cases, some of which you will still see in the comments that follow. Check them out and see what you think. And if you don’t know what they’re talking about yet—perhaps it’s time you did…

Comments

Everyone should be talking about advisory fees in a plan. This should be front and center on all fee disclosures (including brokerage). A plan sponsor should be able to look and quickly see “Wow, Joe fraternity brother-in-law made 45k off our plan last year? I saw him one time when he met the owner and CFO for a golf outing.” : )

Middle market holistic financial planning. Most participants understand they should be saving into their retirement plan but they don’t know financial basics: set up an emergency fund, pay down debt, how much they need to set aside for kids’ education, how much insurance they need, etc.

Zoom meetings are likely here to stay for some clients and pricing should be modified accordingly.

Ways for small business owners who are not organized as a C-corp to save much more for retirement for themselves and key employees.

How we can EASILY solve income distribution from plans. It’s being talked about some, but the recordkeepers and their technology need to be the ones to solve it, not the investment managers.

No one is talking about the gig worker and their access to a retirement saving product. No one is talking about the Social Security fund gap/projected funding shortfall.

The end of independent advisor/ consultant.

Participant notices.

What happens when private equity is done buying up insurance, benefits, and retirement practices.

The downside of MEPs/PEPs. Hybrid presentations. Onsite presence with live remote support.

CalSavers and all state-mandated IRA programs. There are so many employers that will be fined for not complying because they were simply not aware. The state(s) do a terrible job of announcing this type of thing.

It’s our job to spread the word!

SI_Fall21_InsideContent.indd 37

What the Department of Labor is going to think if they hear you saying, “monetize the participant relationship.”

Plan outcome benchmarking. We know how plans compare on fees, we have no way of properly showing a plan how they compare to their peers in generating participant outcomes.

The downside of in-plan income solutions.

Employees are woefully undersaved.

Commending plan sponsors for an average participant account balance of $50,000 isn’t doing anyone any favors. We should be sounding the alarm. Our focus should be on helping participants understand that they must do their part and save.

Not the income gap, the wealth gap.

It is creating two completely separate Americas.

Lack of personal financial education in our education systems.

Pan sponsor liability of recordkeepers “stealing” participant assets with managed accounts that have not met the test of investment due diligence.

The idea that fee compression is likely to result in less service from recordkeepers.

Recordkeepers pulling the client away from the advisors with the use of managed money options.

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NAPA 401(k) Summit Insider Fall 2021

THE POSSIBLE IMPACT OF THE STATE RUN IRA AND “HOW THAT WOULD AFFECT THE SMALL MARKET OF RETIREMENT PLANS.” Blockchain.

I worry our industry is making things more complicated in an effort to generate revenue. Our industry I fear is also building complicated products and solutions to solve problems I believe don’t exist at the levels we believe they do.

From the advisor side, how we’re not seeing any compensation or “credit” for the income guarantee options. If this occurs, it will be just like HSAs and actually decreases our income potential yet again.

Standard reporting for fee disclosures. It’s a disgrace how little is actually disclosed in some participant fee disclosures. Recent notice I reviewed said Asset Management Charge “Varies”—Advisor fee “varies”—REALLY?! Our industry can and should do better than that.

The increased interest of the younger generation in investing through alternative platforms like Coinbase and Robinhood. How do we get these younger savers engaged in retirement savings and the long term aspect if investing instead of the get rich quick feeling of those platforms?

success. They act like we are simply overhead that they can legislate away.

Most independent advisors are not independent any longer.

Fiduciary liability insurance coverage.

The value of retaining clients vs. acquiring new ones. How service people make a significant difference in client satisfaction and retention.

Collective Trusts look to be a great idea. The problem is regarding the Investment Policy Statements advisors provide to their clients. Most of these indicate a minimum history to be included in the plan. Currently, there are not that many that can meet the threshold.

How PEPs could crush a lot of advisors if they take off.

Recordkeepers’ attempts to “monetize” participants which are often not in the best interest of participants.

You can’t help people retire that won’t help themselves.

Financial PLANNING (not wellness) as an employee benefit. Also in plan retirement income—distribution strategies won’t work well without recordkeepers allowing for systematic withdrawals to be investment specific by the participant vs. pro rata among all sources. Doing so would allow for an in-plan bucket strategy.

Nobody in DC seems to care about the value advisors bring to participant

Covid has created a bigger need for emergency savings in plan. $1000

Cybersecurity tips from the DOL.

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in plan options could lead to less leakage from employees taking loans larger than needed to pay a $500 expense.

The impacts on services and fees as recordkeepers consolidate.

Improving participation and income replacement so the government doesn’t interfere the way they’ve botched health insurance via the (socalled) Affordable Care Act. Death of target dates due to personalization.

The downside to lifetime guaranteed income products. Breakage fees, overall cost, rider implementation.

The phrase guaranteed income sounds good at the surface but what is under the hood.

The increasing feeding frenzy originating from the legal community to sue plan sponsors and ultimately moving from the large plans, to medium size plans and ultimately to small plans—less than $100m.

As I often say, the legal community literally controls the qualified plan world not only in actual litigation, but in so many other ways.

While CITs are a lower cost vehicle option, they will not necessarily have the same performance as their 40 Act brethren. In addition, many investment analytic platforms don’t have the comprehensive historical data so the investment reporting will

9/21/21 3:27 PM

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NAPA 401(k) Summit Insider Fall 2021

GENERATION X AND THEIR SAVINGS FOR RETIREMENT “AND IMPACT ON THE INDUSTRY AS A WHOLE. THERE IS NO OTHER GENERATION THAT GETS SO LITTLE ATTENTION.”

Plan audits and preventative measures. Creation of safeguards.

Automatic escalation. I believe automatic enrollment is the first critical step in having a successful retirement plan (my experience has been it almost always results in high participation) however, participants must increase their contributions consistently in order to give them the best opportunity to retire successfully and on their terms.

Bond funds for safety in allocation models in a potentially rising rate environment

The challenge of recruiting advisors in today’s labor market outside of M&A.

Investment strategies that solve for fixed income that do not involve increased duration risk or lower quality.

DEI in retirement plans.

not be as accurate or comprehensive as it was with 40 Act funds.

The lack of diversity in our industry.

The Consolidated Appropriations Act (CAA).

The risk of retiring in an inflationary environment. Many annuity products don’t have an inflation adjustment and those that do charge a pretty penny for it.

The shortfall on the social security fund.

That fee compression and consolidation in the recordkeeping space is leading to a decline in service and support especially of advisors and plan sponsors. I spend more time chasing RK folks who have not responded to client emails and see more admin mistakes than at any other time in my career.

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Roth and autoenrollment. With income taxes being so low, there is very little benefit for most people to contribute pre-tax. Unfortunately, most plan sponsors who have autoenrollment do so on a pre-tax basis and it is hard to get participants to change once it is in place.

The timing for putting in plan income options in retirement plans could not possibly be worse.

Insurance companies will struggle to remain solvent in this interest rate environment. To stay solvent, they will drastically lower income guarantees and increase premiums on insurance.

For this reason, I have no interest in promoting in-plan retirement income.

Participants are not using ANY technology except apps right now.

This is why financial wellness has completely missed the mark.

The lack of oversight of small RIAs. 408(b)(2) Service Agreement. Why are the majority of employers having no idea what it is, if their advisor ever gave it to them, what is in it… and why it’s a game changer in helping employers understand what the heck their broker/agent is providing.

Value of the HSA as a retirement benefit.

Financial literacy at the participant level... we vomit acronyms.

How bad the service had become in the recordkeeping space due to price compression and consolidation.

The aging out of many retirement plan advisors is accelerating the industry consolidation. I think it may increase the fees paid by plan sponsors as the small advisory shops can often operate with lower cost.

How to get participants to use the tools provided to them by the recordkeeper. On surveys, they state that they want assistance from a financial professional, financial education, workplace financial wellness, etc., but few actually take the time to engage. SI

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