COLORADO SPRINGS – Today, 10,000 people turned 65. That number of people will continue to turn 65 every day until 2030.
This is just one of the challenges facing the retirement planning industry, noted Robert DeChellis, President of Allianz Life Financial Services on Day 1 of the Insured Retirement Institute’s annual meeting.
A panel of industry experts that also included executives from Voya, Morgan Stanley, and T.Rowe Price discussed how to reach out to these thousands of future retirees -- and their millennial children.
But first, they acknowledged the industry’s underlying problem: how people view retirement planning. “People are more afraid of doing retirement planning than they are of dying,” DeChellis said.
The industry has to get consumers to be aware of their situation, he said. The second issue is what to do when they’re aware of it, because when they plow on ahead without guidance, consumers can make bad decisions.
The third issue the industry faces, he said, is “how to make this connection between advice and guidance and the consumer that so desperately needs it.”
The question for an industry once admired and, depending on your perspective, later vilified, is this: How do you demonstrate your value?
Sandwiched in this larger question is the issue of how to rebuild trust.
“You build trust by making it simple and straightforward. And having it be a little fun,” said Carolyn Johnson, CEO of Insurance Solutions at Voya Financial. “People hate talking about retirement planning, but they love talking about retirement. Can we build that trust through different ways of engaging?”
To engage clients, you need better communication. “What we need to do as an industry is help the advisors broaden their conversation with their clients. There’s a huge education gap in the industry,” said Ben Huneke, Managing Director, Head of Investment Solutions, Morgan Stanley.
The elephant in the room: The DOL fiduciary rule
Does the DOL fiduciary rule offer the industry a chance to reshape its image? Could it help the industry?
“Yes,” said George Riedel, head of U.S. Intermediaries at T. Rowe Price. “Usually these rules that come out are governed by the black letter of the law. If you don’t comply, the SEC fines you. This is different. The governance is upon us.”
Many firms are still trying to understand what the requirements will be and how to translate them to individual clients.
The process of finding practical ways to comply will evolve. Insights may come out of observing what happens with litigation under the fiduciary rule.
One thing is clear: Advisors now realize “they need to embrace complexity and embrace a holistic view of the client,” said Morgan Stanley’s Huneke.
No moaning about technology
People aren’t complaining about technology anymore. They’ve moved on to figuring how to make technology benefit them, whether that’s getting more customers or giving advisors more time to focus on customers.
Maybe that offers all the players in the industry the chance to figure out their value proposition, the panel said.
“When I think about the challenges our industry faces, I think about what our industry represents: guarantees, income, tax safety, capitalizing on chaos. Given what our industry focuses on, why aren’t we more successful?” asked T. Rowe Price’s Riedel. “What is it about what we’re putting out there that advisors don’t want to use?”
Technology offers choices -- and inroads to new markets. “There is a place for customers to do some self-service, particularly in our retirement plans business,” said Voya’s Johnson.
Still the industry must be wary of stereotyping generations in terms of technology usage and comfort, the panelists said. Older clients are often very pragmatic about technology and will embrace what meets their needs. And millennials, though comfortable with technology, still value the human touch, and human advisors, noted Johnson.
Even if asset management is delegated to robo-advisors, there are only so many hours in a day for a human advisor to serve clients, the panel said.
What's the answer? Nothing conclusive. Perhaps advisors should take note of what’s happening in the medical industry. Physicians are positioning themselves as concierge doctors, taking a smaller number of clients but providing more personalized service and charging more for it.
The industry must figure out where to go -- or else. “If we’re not doing our job providing a retirement solution, you’re going to see the government step in,” said Morgan Stanley’s Huneke.