Advisor Insights: Navigating Retirement Income

About the piece 

There is near universal agreement on the importance of providing retirees with the ability to spend with confidence. Now, the conversation among industry stakeholders has shifted from discussing this challenge in front of us to exploring and implementing solutions. 

With this in mind, we sat down and talked to Jennifer Doss (National Practice Leader, Captrust), Kathleen Kelly (Managing Partner, Compass Financial Partners, a Marsh & McLennan Agency LLC Company), and Michael Kozemchack (Managing Director, Institutional Investment Consulting) to get a practitioner’s lens on how they think about retirement income and the conversations they are having with their plan sponsor clients.

Seizing the momentum, selecting a solution 

Easier said than done. Advisors acknowledge the effort required to understand the market landscape, how it has evolved, what peers are doing, and the nuances among the products themselves. Target date funds with an embedded guaranteed income component come in many forms. In addition to the annuity type and the more traditional factors included in the investment due diligence process, four factors emerged from our conversations as unique to retirement income investment solutions: consistency, simplicity, optionality, and ease of use. 

Getting off the sidelines

In our Read on Retirement® survey, retirement advisors who do not currently recommend a retirement income solution cited high fees (50%) and liquidity (30%) as top reasons for not recommending a solution today. Some of the newer solutions that have come to market more directly address the challenges historically identified by advisors, plan sponsors, and participants. Further, adoption of target date funds with embedded annuities is picking up – rapidly reducing the perception that a plan might be a “first mover”. The advisors reinforced that sharing success stories and proof points from clients who have adopted retirement income solutions can be highly effective in navigating these discussions.

Differentiating your practice 

In today's competitive market, retirement plan advisors must find ways to stand out and provide unique value to their clients. Not only can subject-matter expertise in retirement income solutions help an advisor differentiate their practice and build a competitive moat, but it can also build goodwill and trust with their plan sponsor clients.