Products January 24, 2018

Voya Increases Targeted Communications with Personalized Videos

According to Voya, the new tool allows employees to visualize their own path towards retirement and future financial goals.

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As the retirement industry sets out to increase participant-targeted communications, Voya Financial has added a new tool to their suite of retirement planning resources: personalized videos.

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Available through its myOrangeMoney website, the videos will detail a participant’s own journey towards retirement and link the effects of positive actions towards future financial goals, according to Voya. The tool is relative to the myOrangeMoney experience, which allows individuals to understand personalized balances in the perspective of projected retirement income. Similar to the website, the videos combine monthly income replacement goals, estimated monthly retirement income and possible shortfalls, says Voya.

“When it comes to retirement planning, our customers want information that is easy to digest and accessible when, where and how they want it,” says Christine Lange, senior vice president, Retirement Digital Solutions for Voya Financial. “We also recognize that individuals who are saving in a workplace plan benefit from a higher degree of personalization, and this can lead to better engagement and action. As we look to the future, we believe personalization is the most effective way to communicate with customers. Our videos place participants as the ‘main character’ of their own video-based journey, and this can help us nudge them toward better outcomes.”

Voya adds that according to industry research, “four times as many consumers would rather watch a video about a product than read about it.”

Yet, when it comes to personalization, not as many consumers are on board. A 2017 Willis Towers Watson survey found that 57% of employees do not want an employer to send personalized messages to those facing imperative financial decisions, while 50% believe it is not the role of an employer to send personalized messages to those not participating in retirement savings.

“While employees are eager for their employers to provide support and technology that deliver valuable guidance and suggestions on retirement and financial decisions, employees are very wary of personalized outreach,” said Shane Bartling, senior consultant at Willis Towers Watson.

According to Voya, the added tools mirror continuous research with the Voya Behavioral Finance Institute for Innovation, such as studies of the gap time between information received to when it is applied by a consumer. Voya believes the tool exemplifies this research by reducing the time between education and action, all while helping the consumer select a viable choice.

More information on the resource, including an example of a personalized account video, can be found here.  

Compliance January 24, 2018

Would a Retirement Plan Mandate Mirror Affordable Care Act Fight?

“I really like the idea of promoting default-driven plans, and the evidence is abundantly clear that automatic retirement plans can be very effective,” says Jeff Kletti at Wells Fargo. “However, my experience has been that the pendulum can swing too far in terms of mandates.”

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Jeff Kletti, head of investments at Wells Fargo Institutional Retirement and Trust, sat down recently with PLANSPONSOR to offer an inside look at trends and challenges taking shape within the company’s sizable defined contribution (DC) plan book of business.

Among various topics, the conversation focused in large part on plan sponsors’ embrace of passive target-date funds (TDFs), and how this trend includes some important points of subtlety that go beyond “active versus passive.” Kletti also took time to talk about the emergence of some ambitious pieces of Congressional legislation that would, if approved by the House and the Senate and signed by the president, more or less entirely change the U.S. employer-sponsored retirement planning landscape.

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As examples he pointed to two bills put forward late in 2017 by House Ways and Means Committee Ranking Member Richard Neal, D-Massachusetts, quickly garnering the support of retirement plan industry advocacy and lobbying groups. The first of these was the Retirement Plan Simplification and Enhancement Act of 2017. Very broadly speaking, the Simplification and Enhancement Act includes provisions aimed at expanding retirement plan coverage and increasing savings levels, preserving lifetime retirement income, simplifying and clarifying qualified retirement plan rules, and implementing a limited set of defined benefit (DB) plan reforms. The next, the Automatic Retirement Plan Act, is an even more aggressive proposal that would require nearly all employers to have a retirement plan, either a 401(k) or 403(b) plan, and to automatically enroll participants. In addition, the bill would enhance employers’ ability to participate in open multiple employer plans, limit the formation of state-sponsored automatic enrollment individual retirement account (IRA) plans and permit workers to have 50% or more of their distributions invested in a “form that guarantees them lifetime income.”

Starting in 2020, the Automatic Retirement Plan Act would be applied to all employers, except those with fewer than 10 employees, those in business for less than three years and those qualifying as governmental or church organizations. For employers with 100 or fewer employers earning at least $5,000 in 2021, the bill would apply in 2022. Should an employer fail to comply with the law, they would be fined $10 per employee each day.

Reviewing this laundry list of potential changes, Kletti pointed to the mandated offering of an auto-enrollment 401(k) or 403(b) as the true game changer. And for that reason he expects the Automatic Retirement Plan Act would stir an incredible debate should it ever come up for genuine Congressional consideration—even a replay of the rhetorical warfare that from the first surrounded and still surrounds the Affordable Care Act. As Kletti sees it, there is not that big of a difference philosophically between requiring employers to offer health insurance versus requiring them to offer retirement planning benefits.

“Just to be clear, this is my personal standpoint on this very interesting and important topic,”Kletti said. “Frankly, I really like the idea of promoting default-driven plans, and the evidence is abundantly clear that automatic retirement plans can be very effective. However, my experience has been that the pendulum can swing too far in terms of mandates—as we have seen in our recent political past. I know it’s dangerous to make broad statements about American culture, but one can image the pushback that could arise if this proposal is viewed as too much of a top-down, federal government mandate.”

Even facing this challenge, Kletti said it is not impossible to imagine one or both of the Neal bills being a surprising success, perhaps in the wake of the 2018 midterm election cycle or beyond. Other proposals are circulating in Congress that would approach these issues in different ways, and the same goes for them, given that lawmakers on both sides of the spectrum have voiced cautious support for expanding retirement plan coverage. 

“It’s going to be a difficult balancing act between implementing and promoting the auto-features we know work so well, versus being viewed as overly paternalistic and controlling,” Kletti concluded. “And there is the other consideration that employers in this country are not a homogeneous population. Depending on the industry, geography and individual company culture, there can be very different relationships in place between employers and employees. Not everyone feels tied to their company and not everybody can save for retirement right now—and that is an important thing to consider.”

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