Happy to be with you here today talking about one of my favorite topics – retirement income. It’s a huge topic right? We've been talking about this for years in the industry but I think we're at an inflection point now where we’re really beginning to see some activity here. I want to make sure you’re aware of what we see.
We took a look at our recordkeeping book of business and looked at all of the participants that were installed in that book and have seen a very very interesting trend line form. As you can see here over the last five years, more and more retired participants are staying in-plan.
From 2015 up to 2019 you’ll see that we’re approaching 60% of retired participants still hold their money in their DC plan one year after retirement. Very interesting for sure. Big time implications.
What does it mean for you? Well if you're a DC specialist advisor, making sure you're having proactive conversations with your plans sponsor clients about the topic of retirement income.
And offering up consulting and services whether it's the investment products, the communications, the information, the tools to support a new customer base participating in DC plans.
If you're a wealth advisor, you got to think about that rollover IRA source of future revenue. Is there a material change happening in this space? I think there's something going on here for sure. Keep an eye on that and monitor that.
If you do both, if you’re on the DC specialist side but also do some wealth management – and you’re on both sides of that equation, of that transaction. It is deemed a fiduciary transaction now on roll over advice or stay in plan advice by our federal government, by the Department of Labor.
Keeping an eye on that, making sure that your fiduciary processes are in place is absolutely critical for your future success.
We plan to come back to you and talk more about this topic over time. Wanted to brief you early on with these initial data points. Thanks for your time.
- More defined contribution (DC) plan participants are keeping their savings in plan after they retire, and future retirees expect to derive a greater share of retirement income from their DC plan balances.
- Defined Contribution specialists should consider retirement income needs to remain competitive.
- Wealth specialists should consider the rollover and fiduciary implications of investors staying in retirement plans longer.
- Do you specialize in both? Get prepared that what happens on one side of your business is going to impact the other.
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