Building Better Days

There are challenges facing not only those saving for their retirement, but also the retirement industry and professionals who work to help them to do so. A panel of industry leaders recently offered their perspective on meeting those challenges in order to better facilitate effective saving for the future.

In “Institutionalization of DC Plans—the Role of Personalization, Retirement Income and  Expanded Coverage,” a Nov. 6 discussion at the SPARK Forum, Mike Dullaghan, Director of DCIO Content & Sales Enablement, Putnam Investments, moderated a discussion by panelists Rob Barnett, President & Chief Executive Officer at Great Gray Trust Company; Yaqub Ahmed, head of Retirement, Insurance Sub-Advisory & 529 College Savings for Franklin Templeton; and Andrew Beatty, Division Executive and Head of Wealth, Retirement & International. 

Changing Times

The demands by the UAW in its recent strike included a return to the “good old days” of defined benefit plans, said Dullaghan at the start of the session. But “we don’t need the good old days—we need better days ahead,” he said. 

“There are some challenges regarding institutionalization of DC plans,” said Barnett, adding that there is a clear divide between the haves and the have-nots.

“There hasn’t been a lot of structural change to the industry in the last couple of decades,” said Ahmed, continuing, “SECURE 2.0 will hopefully get us to the next level.” 

The Coverage Gap 

The coverage gap is not only about expanding coverage, but also about reaching companies that aren’t part of answering the need to do so, panelists argued. “We have to get on the front end” and encourage more companies to establish retirement plans,” said Ahmed. 

Both Ahmed and Barnett argued that it is necessary that the industry think about how to encourage saving. “Very few people have saved enough,” said Barnett. 

Fixing the Problem

Part of the solution, Barnett suggested, is to think about better ways to encourage saving. Investment and savings vehicles are a key part of that, and Ahmed argued for an expansive approach, remarking that “It’s an ‘and’ solution.” He added, “We put up our own barriers. There’s a lot of good work to be done.” 

“It’s about being adaptive,” said Barnett. “We have to get people out of their comfort zones. We need to give people better access to better investments. We have to be thinking about this differently,” he argued, adding that it is necessary to think outside the box in order to expand saving options.  

“We need to start at the beginning” regarding getting a plan up and running, said Barnett, continuing, “We need to think more about the front end” and getting people in. 

“This generation takes 401(k)s as a given,” Barnett said, asserting that it is necessary to keep that in mind and think about how to get better information to younger people.

“It’s all about delivering better outcomes,” said Ahmed.

Investments

“We can’t get people to a dignified retirement without better returns in the plan. You’re not going to get that through indexing,” said Barnett. 

“It comes back to making plans attractive. Not just the match and the autoenroll—those are great things—but we have to start to think differently about the investment lineup," said Barnett.

Barnett continued that it also is necessary to find other ways to make saving attractive—and that it is important to give individual investors access to what will give them the results they want, “We have to think of better ways to give them better outcomes on the investments end.” 

“We as an industry need to start to think about investment language,” Barnett argued, and suggested that it is important to keep in mind that individuals don’t always understand the jargon with which industry members are conversant.

An Optimistic Note

Despite the challenges that face the retirement industry, savers, and those whom they serve, nonetheless panelists evinced optimism. 

“I think the industry is further along than one thinks it is,” said Beatty. He acknowledged that there are still challenges, but argued that “Now is the perfect opportunity to take it to the next level.” 

“The future of our business is bright,” said Dullaghan.