PLANADVISER - November/December 2017 - 56

servicing strategies
outcomes in the end. "
Ruminating on this complex set of issues, Bob Reynolds,
president and CEO of Great-West Financial and Putnam
Investments in Boston, suggests advisers can take another
approach-fight to create " a new sense of a true 'people's
capitalism.' "
What he means by advocating for a people's capitalism is
the idea that too few Americans have access to or even understand
the basics of the financial markets. Particularly when
it comes to tax-advantaged workplace retirement savings
plans, which Reynolds sees as the most promising opportunity
for most Americans to build real wealth and financial
independence, access and knowledge are far too limited.
" Employers should be proud of and excited about the
opportunity they have to improve the financial lives of the
people who work for them-and the economic health of the
nation at large, " Reynolds says. " We know that the more
savings you have in a society, the faster the growth rate of
the overall economy. This seems counterintuitive because
the invested retirement dollars are not going straight to
consumption, but the growth comes because the money
is injected right into the capital markets, and this, in turn,
spurs on the economy. "
For Reynolds, talking about people's capitalism means
helping plan sponsors and participants alike " see this direct
link from the retirement planning conversation to the growth
and stability of the economy as a whole. " As described in
Reynolds' new book, " From Here to Security - How Workplace
Savings Can Keep America's Promise, " there is ample
evidence to show that, should providing at least basic
access to tax-advantaged workplace retirement savings be
mandated for all employers, there could be some $5.5 trillion
in additional savings injected into the U.S. capital markets
over just the next decade.
" I don't have to explain that such a large amount of additional
investing would be a tremendous impetus for boosting
GDP [gross domestic product] growth to levels we have not
seen for some time, " Reynolds says. " This is why I am fully in
support of things like open multiple employer plans [MEPs],
as well as universal access in the workplace to payroll deduction
individual retirement accounts [IRAs]. "
The Role for Advisers Is Clear
Turning to the potential role of the adviser in promoting
aggressive retirement plans, and even peoples' capitalism,
Reynolds observes, " Every study we've done on the subject
shows the clear value of advisers in this whole business.
" When there is a skilled plan adviser in place, we very
reliably see participation levels go up, contribution rates go
up and annual returns go up, " Reynolds continues. " And so,
we know that the role of advisers in the business, working
in close concert with providers and plan sponsors, has been
greatly successful-and we need to continue this.
Reynolds further urges advisers to stay in contact with
their elected representatives and stress the importance
of protecting tax-advantaged retirement investing. Many
industry insiders believe the less generous that the tax benefits
associated with workplace retirement savings become, the
fewer the people who will be attracted into the system. While
there are analyses showing after-tax retirement investing
can still be very powerful for long-term wealth generation,
" just as important are the optics and the messages being sent
by legislators, " Reynolds says.
Further highlighting the important role of advisers in this
conversation, Jordan Burgess, head of specialist field sales
overseeing defined contribution investment only (DCIO) sales
at Fidelity Institutional Asset Management, in Boston, points
to results of the firm's eighth annual Plan Sponsor Attitudes
survey, which revealed that a sizable majority of plan sponsors
(65%) are highly satisfied with their plan advisers.
However, similar to the last several editions of the survey,
Fidelity reports that a record number of sponsors are actively
looking to switch their plan advisers-nearly four in 10 (38%),
up from 30% last year. Many of them say they are looking
for advisers who can speak about and help implement more
aggressive plan designs.
Even with the strong marks they received from plan
sponsor clients, Burgess warns, this is not the time for advisers
to lie back and rest on their accomplishments. " While most
plan sponsors remain satisfied with their adviser, they are
raising their expectations, " he explains. " For some advisers,
this could put their business at risk. For others, it could be an
opportunity to win new clients. "
Burgess says the data is clear: " Successful plan advisers
are those who are aware of their dual mandate to help
plan participants achieve their retirement outcomes and to
support plan sponsors with the challenges associated with
offering a defined contribution plan and other employee
benefits.
" Our study shows that plan sponsors are making more
plan design changes than ever before and are eagerly
engaging with advisers to do so, " he concludes. " Plan design
reform activity continues to increase and reached a new high
at 92%, with plan advisers seen as the primary influencer of
these changes. Importantly, 79% of plan sponsors reported
that participants were satisfied with the changes made
recently to their plan. " -John Manganaro
KEY TAKEAWAYS
* Perhaps the most powerful argument an adviser can
make to a plan sponsor to adopt aggressive plan design
is the flip side of doing so: having a work force that
cannot afford to retire.
* For sponsors worried about automatically enrolling
participants into a plan before a market downturn,
advisers should help them realize the buoyancy of
markets over time.
* A Fidelity survey of plan sponsors found they are beginning
to expect their adviser to recommend more assertive
plan design, and, if he fails to do so, they strongly
consider replacing him.
56 | planadviser.com november-december 2017
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PLANADVISER - November/December 2017

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