PLANADVISER - September/October 2022 - 25

that besides rolling up your sleeves and trying to connect
with those folks. "
Conversations with the plan sponsors should focus on
the capabilities of their recordkeepers, including whether
they can administer the distribution options that retirees
might want or need, Schwartz says. For example, even
if they do not purchase an annuity, retirees may want to
be able to make regular withdrawals from their account
without racking up fees for each transaction.
Providing Advice
Advisers can also help with advice for retirees who want
guidance on a drawdown plan that maximizes their ability to
spend in retirement without running out of money and minimizes
taxes. Such guidance may require more personalization
than does accumulation advice, as other factors-e.g.,
outside assets and medical expenses-may come into play.
" Retirees really need help figuring out how to draw down
their money, " says Peg Knox, chief operating officer of the
Defined Contribution Institutional Investment Association.
" They want to know how to [do that], which dollar should
they take first. Having that advice in the plan is super
helpful to retirees. "
Whether the sponsor deliberately encourages its
retirees to remain in-plan or not, it, along with its adviser,
still has a fiduciary responsibility to those participants,
Voris says. So, as a sponsor considers offering additional
products or services to retirees, it must also do so from a
fiduciary perspective.
" There's no question that plan sponsors supporting
retirees are creating another level of responsibility for
themselves, " Schwartz says.
Besides the fiduciary obligation, plan advisers also need
to help sponsor clients think through the logistics of serving
retirees, who are likely to move and drop out of regular
contact with the former employer.
" If you're a large company and you have people everywhere,
trying to coordinate a seminar is not going to work, "
Johnian says. " How do we leverage technology in a virtual or
automated way to reach those folks? "
While technology has made this easier, retirees tend
to become less comfortable with its changes as they age,
Johnian says. Like other plan participants, they are prone
to inertia and may lose motivation to remain engaged with
the plan.
A Question of Value
Of course, to add on such services, sponsors will have to
pay their adviser more-typically from plan assets-or
hire a new adviser, Johnian says. They will need to consider
whether that route will ultimately add value to the plan
over time, he notes.
For advisers, servicing retirees requires a different set of
conversations and skills than they may normally use, Kelly
says. That may mean creating new content for wellness
programs and new scripts for participant conversations.
" Advisers are used to focusing their efforts on accumulation
and talking to people about the
benefits of saving and investing to grow their
assets, " Johnian says. " It changes when we talk
to retirees. They don't care about any of that.
They just want to know if they have enough money
and if it's invested in a way that lets them spend it
down and create X% of their income every year. "
'All Fiduciaries to the Plan'
Part of the business model for many advisers concerns
helping retirees with wealth management services, or even
encouraging them to roll over their 401(k) assets to the
adviser's firm. With more plan sponsors looking to keep
retirees in-plan, that can create a conflict of interest, but
experts say it is a manageable one as long as advisers and
sponsors focus on transparency and their fiduciary duty.
" We are all fiduciaries to the plan, which means we have
a duty of loyalty to it and, by extension, to the participant, "
Schwartz says.
That fiduciary duty comes into play when plan advisers
help the participants make decisions about rolling over
their assets. There is a recognition from both the adviser
and sponsor that, in some cases, in-plan solutions work well
for retiree participants, but, in other cases, at least right
now, there is a need for greater customization.
The key is makings sure that the sponsor, adviser and
recordkeeper agree on the circumstances in which a participant
might be better served outside the plan.
" Sometimes the recordkeepers need to take off their
recordkeeping hat, and asset managers need to take off
their asset management hat, " says Voris. " And everyone
needs to take a step back and think about the best approach
for the participant. "
Many solutions exist that could be used to help retirees,
but these are not always offered within a retirement plan.
" There are a lot of plan resources-from financial planning
to counseling to guaranteed products-that have been
[around] for a long time, " Voris says. " Sometimes, recordkeepers
and advisers are trying to solve it in-plan without
looking at the whole universe of solutions. "
More Options Coming
Schwartz says he expects more options-including nonannuity
income solutions-that can serve all the financial
needs of in-plan retirees.
" In the same way that managed accounts have a fee for
personalized solutions, maybe the same thing happens in
the retirement space, and we could price it institutionally
and make it more affordable, " he says. " There's a significant
financial planning component that they need. "
Voris agrees that the quality of in-plan options will
continue to improve for retirees over the next few years.
" Most plan sponsors really care about their employees and
participants, and they see this as something that would add
substantial value, " Voris says. " Plan sponsors may be wellsuited
to provide that type of service through their recordkeeper
or adviser. " -Beth Braverman
planadviser.com September-October 2022 | 25
http://www.planadviser.com
PLANADVISER - September/October 2022

Table of Contents for the Digital Edition of PLANADVISER - September/October 2022
