PLANADVISER - July/August 2022 - 34
plan design / investments
ESG on the Horizon
A company's communication style tends
o far, there is more conversation about environmental, social and governance
funds than adoption, says Gene Huxhold of John Hancock.
" I would caution a company against doing too much there, " he says and
points to the lack of regulatory guidance. " Right now, it's too squishy. "
Mike Geraci of Commonwealth Financial Network also cites a need
for more legislative clarity. In the interim, he recommends selecting funds
based on investment merits. " In terms of momentum and demand, adoption
is being driven by the participant-it's very important to them, " Geraci says.
Even when the fund performance is compelling, Huxhold sees hesitation
such as with the John Hancock ESG Large Cap Core Fund managed by Trillium.
With more than 30 years' experience and boasting top quartile returns,
it has yet to generate significant asset flows, Huxhold says.
Today, most investment companies have hired ESG specialists, Huxhold
says, and, as a firm, John Hancock Investment Management has an internal
team that rates each of its strategies on a scale of one to five to review its
incorporation of ESG factors.
Looking ahead, Huxhold says he expects funds to effectively become
ESG funds. " You're not going to need an ESG fund, because the investment
management firm is not going to put forward something that's not
one, " he says. -EH
of custom solutions are most apt to suit mega plans where
" the assets have to justify that, " he says.
At OneAmerica in Indianapolis, Steven Kofkoff, vice
president, retirement services strategy, product management
and innovation, sees growing demand for an option
that allows participants to customize their glide path by
further refining their risk tolerance as either conservative,
moderate or aggressive. OneAmerica calls this alternative
RetirementTrack, which the firm introduced in June 2020.
" We also understand that target-date funds aren't for
everyone, " Kofkoff says. " No two participants are alike, and
the solutions we offer need to reflect that. "
Making Advice More Personal
For Kathleen Kelly, managing partner with Compass Financial
Partners, a Marsh & McLennan Agency LLC company, in
Greensboro, North Carolina, the solution she sees is traditional
but with added support. " We still believe the universe
of off-the-shelf target-date funds is sufficiently broad and
diverse to really address most plan sponsor needs, " Kelly says.
To enhance the success of TDFs, she says, her firm
engages participants to improve their own investing and
retirement outcomes. The firm performs surveys to learn
what topics these employees find most interesting; then,
from the results, the Compass financial wellness team
creates a series of custom webinars and sessions, which are
delivered by financial coaches and educators and explore
themes such as investing or student loan debt. Of late, the
hot topics are market volatility and inflation, she says.
" You're then able to say, 'We listened to you-thank you
for your feedback,' " Kelly says, referring to these surveys.
" 'We'll now deliver a 12-point plan about financial wellness.' "
to reflect its values. Some companies prefer
dedicated benefit apps. Others are trying to
limit email so may blast advertisements on
monitors in break rooms. Others want all
communications to resemble the look of
their brand in font and color, while at the
opposite end of the spectrum, some want it
to explicitly come from a third party.
" This is where we're always willing to try
things, " Kelly says. " We want to meet the
employees where they are. "
And while managed accounts are attractive
due to their more personalized approach,
where Kelly foresees investors' greatest need
arising is in generating reliable income at
retirement. For most people, the additional
cost of a professionally managed portfolio
would generate too little value to offset the
benefits of a target-date option, she says.
" The target-date is a very effective, very
efficient tool, " Kelly says. " But the next frontier
is the decumulation piece, and how do
you enable participants who may have never
been comfortable in the accumulating phase
to then turn around and become an actuary, accountant and
investment manager of their life's savings? "
Kelly expects further interest and growth in creating guaranteed
income solutions and is watching products from BlackRock,
Prudential, State Street and TIAA. The next steps that
could lead to more widespread adoption, Kelly says, include
broadening such products' availability, which the Setting
Every Community Up for Retirement Enhancement, aka
SECURE, Act facilitated by creating a fiduciary safe harbor.
" Participants would like some form of guarantee-it's
just getting to a place where [the solutions] are available,
understandable and priced right, " Kelly says. " The last six
months have reminded everyone that markets do go down,
and there's a sequence of return risk. "
Huxhold also says he sees growing interest in retirement
income. But he anticipates the need for advisers to create
new software or find a way for employees who have had
multiple jobs and numerous DC plans to bring it all together.
" Technology is going to let us do more at the participant
level, " he says.
Marinescu, too, predicts more conversation about retirement
income, and demand increasing for institutionally
priced products. Currently, due to the ease of personalization,
lifetime income products are most effectively handled
in the context of a personalized portfolio with advice such as
one receives from a managed account, he says. " It's more of
a natural progression of thinking about how much income
the portfolios will generate and whether the current volatility
will change-that this [growing interest in income]
will continue, " he says. -Elizabeth Harris
34 | planadviser.com July-August 2022
PLANADVISER - July/August 2022
Table of Contents for the Digital Edition of PLANADVISER - July/August 2022
Previewing Plan Features
A Different Way to Save
New Territory for Income?
Compliance for Wealth Managers
If Caught Off Guard by A Failure
Larry E. Crocker
PLANADVISER - July/August 2022 - C1
PLANADVISER - July/August 2022 - FC1
PLANADVISER - July/August 2022 - FC2
PLANADVISER - July/August 2022 - C2
PLANADVISER - July/August 2022 - 1
PLANADVISER - July/August 2022 - 2
PLANADVISER - July/August 2022 - 3
PLANADVISER - July/August 2022 - 4
PLANADVISER - July/August 2022 - 5
PLANADVISER - July/August 2022 - 6
PLANADVISER - July/August 2022 - 7
PLANADVISER - July/August 2022 - 8
PLANADVISER - July/August 2022 - 9
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PLANADVISER - July/August 2022 - 11
PLANADVISER - July/August 2022 - 12
PLANADVISER - July/August 2022 - 13
PLANADVISER - July/August 2022 - 14
PLANADVISER - July/August 2022 - 15
PLANADVISER - July/August 2022 - Balancing Act
PLANADVISER - July/August 2022 - 17
PLANADVISER - July/August 2022 - 18
PLANADVISER - July/August 2022 - 19
PLANADVISER - July/August 2022 - Greater Access
PLANADVISER - July/August 2022 - 21
PLANADVISER - July/August 2022 - 22
PLANADVISER - July/August 2022 - 23
PLANADVISER - July/August 2022 - Previewing Plan Features
PLANADVISER - July/August 2022 - 25
PLANADVISER - July/August 2022 - 26
PLANADVISER - July/August 2022 - 27
PLANADVISER - July/August 2022 - A Different Way to Save
PLANADVISER - July/August 2022 - 29
PLANADVISER - July/August 2022 - 30
PLANADVISER - July/August 2022 - 31
PLANADVISER - July/August 2022 - Next-Level Options
PLANADVISER - July/August 2022 - 33
PLANADVISER - July/August 2022 - 34
PLANADVISER - July/August 2022 - 35
PLANADVISER - July/August 2022 - New Territory for Income?
PLANADVISER - July/August 2022 - 37
PLANADVISER - July/August 2022 - Compliance for Wealth Managers
PLANADVISER - July/August 2022 - If Caught Off Guard by A Failure
PLANADVISER - July/August 2022 - Larry E. Crocker
PLANADVISER - July/August 2022 - Cover3
PLANADVISER - July/August 2022 - Cover4