PLANADVISER - September/October 2019 - 13

Advisers as Teachers
How to guide anxious investors through rocky markets
RETIREMENT plan advisers perform many
functions, from helping plan sponsors
craft investment menus to running due
diligence reports on recordkeepers and
third-party administrators (TPAs).
Among advisers' most important
roles, says Susan Czochara, retirement
solutions practice leader at Northern
Trust Asset Management,
is that of a
teacher, who offers guidance and reassurance
to participants about risk and
market volatility. And, she adds, as individuals
with sizable defined contribution
(DC) plan balances reach and enter
retirement, the adviser must help them
address the critical topic of sequence of
returns (SOR) risk.
According to Czochara, showing a
participant historical data that demonstrate
how markets bounce back after
corrections or downturns can help allay
his worries. Advisers can also explain
the upside of diversifying his portfolio
and can offer individualized guidance
for assessing his risk tolerance. Guidance
that is personal and acknowledges
his concerns and emotions will
obviously be most helpful.
Ed Farrington, executive vice president
at Natixis, concurs, noting that
participants who feel a sense of reassurance
from advisers are likelier to
react better during periods of market
volatility, even when they are no more
knowledgeable about the mechanics
of the equity markets. They are also
more comfortable with other risks,
including longevity, inflation and
health care spending.
" The journey is going to be long,
and it's going to have moments where
participants can be scared because
the market
is down or they have a
health care expenditure that looks
very daunting, " Farrington says. " Much
like a personal trainer in a gym, an
adviser can provide the assistance and
training that's needed to make the
right decisions. "
For a couple retiring today in their
early 60s, there is a good likelihood
that at least one of them will live well
into their 90s, Farrington says. So, the
old perception that near-retirees are
short-term investors who must invest
conservatively is no longer realistic.
SOR risk must be considered, he says,
but few investment experts would
advocate near-retirees take all of their
investment risk off the table.
In fact, retirees and near-retirees
need to consider growing their capital,
due to inflation and longevity risk,
Czochara says. Those who choose
an overly conservative investment
approach and sit on the cash they
have accumulated can, over time,
lose critical purchasing power or run
out of money altogether. " Participants
may experience significant purchasing
power erosion if their portfolios don't
take into account the impact of inflation, "
she stresses.
For that reason, Farrington suggests
that advisers talk about risk and return
as part of the bigger picture.
-Amanda Umpierrez
App Appeal
How to up the technology's power to engage
ONCE regarded as an industry out of
touch with technology, institutional
retirement planning has been playing
catch-up. Turning some attention from
web design, firms have been developing
mobile apps, and, experts suggest,
these have revolutionized how participants
engage with their accounts.
Apps allow participants
to literally
tap into their retirement account,
adjust their 401(k) contributions, view
or change investments, and take advantage
of individualized resources such as
support tools-all on their phone.
Andrew Way, director of research
for annuity, life and retirement at
Corporate Insight, says, " Firms are
trying to balance user experience
with robustness. They're working to
add more data, more information and
more resources into apps without
overwhelming the user. " So, instead of
adding five or six clicks to an already
crammed interface of information,
firms are streamlining processes to
present the added data in a way that is
easy to access.
Many firms have simplified their use
of color, too, Way observes. Overloading
an app with colors is now passé.
Redesigning the look and feel is
one way TIAA improved its apps, notes
Scott Blandford, the organization's
chief digital officer. TIAA implemented
an app for iPhones in 2009 and one for
Androids in 2015.
Over the years, TIAA has seen large
increases in engagement. The number
of mobile users grew by 47% between
2017 and 2018; total logins, which also
include web use, grew 56% that year.
" Our website remains an extremely
important part of our
engagement
with customers. But, while web stays
steady, we expect mobile to continue
expanding, " Blandford says.
Statistics seem to bear out his
prediction. Year to date, mobile users
exceed, by 28%, the number who used
the app in 2018, TIAA reports.
Meanwhile, apps keep evolving.
Participants with some recordkeepers'
plans can now use Siri, Apple's virtual
assistant, or
their Apple Watch to
access their portfolio and balance.
Or, sometimes, participants will
opt to use no device at all to get their
account information. " They just want
to talk, " Blanford says.
-Amanda Umpierrez
planadviser.com September-October 2019 | 13
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