HEALTH WEALTH CAREER WHY DC PLANS NEED TO CONSIDER BROAD FINANCIAL WELLNESS AND OTHER ISSUES IN 2016

Transcription

1 HEALTH WEALTH CAREER WHY DC PLANS NEED TO CONSIDER BROAD FINANCIAL WELLNESS AND OTHER ISSUES IN 2016

2 TODAY S SPEAKERS BETSY DILL US Financial Wellness Leader LIANA MAGNER, CFA US DC Investment Leader MERCER

3 WHY CONSIDER BROADER FINANCIAL WELLNESS? MERCER FOUND THAT THE LIKELIHOOD OF RETIRING DECREASED AS THE BALANCES IN RETIREMENT FUNDS INCREASED. MERCER

4 1 ARE ALL THE PROGRAMS OFFERED TO HELP EMPLOYEES ADDRESS THEIR FINANCIAL NEEDS ACTUALLY UNDERSTOOD AND USED? Given the complexity and potential utility of a number of employee benefits, many are not surprisingly underutilized. A financial wellness assessment help understand program utility and identify any gaps. Putting the right infrastructure in place can assist employees find the services most useful to them. MERCER

5 2 DO YOU KNOW HOW DIFFERENT THE RETIREMENT EXPERIENCE OF MEN AND WOMEN IS LIKELY TO BE IN YOUR ORGANIZATION? Women suffer from a triple bind: lower salaries, more employment gaps, and longer life expectancies plus they reportedly experience far more stress related to financial issues. Use analytics to understand the differences and develop targeted communication or support strategies to address these realities. MERCER

6 3 IS YOUR INVESTMENT LINEUP WORKING FOR YOUR PARTICIPANT BASE? Review your analysis of the retirement plan s participant demographics and investment behaviors and assess how appropriate your investment lineup is for your participants. Custom multimanager options may provide participants access to greater diversification without adding complexity to their investment decision-making process. Unlimited choice seems more attractive in theory than in practice Dr. Sheena Iyengar WHEN OVERWHELMED WITH CHOICE, SUBOPTIMAL DECISIONS IMPEDE RETIREMENT READINESS. MERCER

7 4 DOES YOUR PLAN MAXIMIZE TAX EFFICIENCY, AND DO YOUR EMPLOYEES EVEN UNDERSTAND WHAT THAT MEANS? The youngest employees in your workforce could benefit from a Roth than a pre-tax election. For pre-tax savers, the ability to offer in-plan Roth conversions increases the opportunities for tax diversification and efficiencies.. Ensure that you and your employees understand the new landscape, and then consider what makes sense for your plan. MERCER

8 5 HAVE YOU REVIEWED THE APPROPRIATENESS OF YOUR PLAN S DEFAULT INVESTMENT ALTERNATIVE? A GAO report from September 2015 reiterates the importance of selecting and monitoring the retirement plan s default and recognizes many of the challenges that plan sponsors face in the process. Ensure that your plan s default is still a good fit for your participant base; use analysis of participants to determine the appropriate default. MERCER

9 6 HAVE YOU EVER THOUGHT ABOUT THE CHALLENGES THAT RESULT FROM HAVING RETIREMENT ASSETS IN MULTIPLE PLACES? Most participants would benefit from having all retirement assets in one place. Higher assets within a plan drive down costs for everyone through economies of scale. Job 1 401(k) = Job 2 Job 3 Job 4 Job 5 Job 6 Job 7 Job 8 401(k) 401(k) 401(k) 401(k) 401(k) 401(k) 401(k) Total Retirement Assets? Aggregate exposures?? Total Fees??? MERCER

10 7 HAVE YOU RECENTLY REVIEWED YOUR PLAN S CAPITAL PRESERVATION OPTION AND DETERMINED WHETHER ANY CHANGE IS WARRANTED? Round two of money market reform will take effect in October The recent reforms have reduced the expected returns. Consider whether a money market fund remains a suitable option or whether other alternatives better meet objectives. MERCER

11 8 ARE YOU HELPING PARTICIPANTS MAKE BETTER DECISIONS AT RETIREMENT? At retirement optimization can provide significant benefits to retiring participants. This includes making social security elections, medical coverage decisions, tax optimization, and decisions on when to draw from which retirement product. MERCER

12 9 ARE ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG) FACTORS A CONSIDERATION FOR YOUR INVESTMENT LINEUP? This issue is being raised more often, particularly by younger participants. Recent US Department of Labor guidance has clarified the use of ESG factors in selecting plan investments. Potential responses can range from explicit responsible investing/impact investing options to the consideration of ESG as a key factor in the selection of investment managers. MERCER

13 10 ARE LOANS REALLY DETERIORATING THE FINANCIAL WELLNESS OF YOUR PARTICIPANTS? Many sponsors are deeply concerned by participants taking out loans on their plan assets. It s important to monitor loan activity, but it s also critical to understand the reasons behind the need for participant loans. They may be the best option in a bad situation. MERCER

14 TYING IT ALL TOGETHER ADDRESS THE BARRIERS TO BETTER OUTCOMES Inertia Sub-optimal elections Benefit gaps Gender differences Generational /Lifestage differences MERCER

15 QUESTIONS? BETSY DILL US Financial Wellness Leader LIANA MAGNER, CFA US DC Investment Leader QUESTIONS Please type your questions in the Q&A section of the toolbar and we will do our best to answer as many questions as we have time for. To submit a question while in full screen mode, use the Q&A button, on the floating panel, on the top of your screen. FEEDBACK Please take the time to fill out the feedback form at the end of this webcast so we can continue to improve. The feedback form will pop-up in a new window when the session ends. CLICK HERE TO ASK A QUESTION TO ALL PANELISTS MERCER

16 IMPORTANT NOTICES References to Mercer shall be construed to include Mercer LLC and/or its associated companies Mercer LLC. All rights reserved. This contains confidential and proprietary information of Mercer and is intended for the exclusive use of the parties to whom it was provided by Mercer. Its content may not be modified, sold, or otherwise provided, in whole or in part, to any other person or entity without Mercer s prior written permission. Mercer does not provide tax or legal advice. You should contact your tax advisor, accountant and/or attorney before making any decisions with tax or legal implications. The findings, ratings, and/or opinions expressed herein are the intellectual property of Mercer and are subject to change without notice. They are not intended to convey any guarantees as to the future performance of the investment products, asset classes, or capital markets discussed. Past performance does not guarantee future results. Mercer s ratings do not constitute individualized investment advice. This does not contain investment advice relating to your particular circumstances. No investment decision should be made based on this information without first obtaining appropriate professional advice and considering your circumstances. Information contained herein has been obtained from a range of third-party sources. While the information is believed to be reliable, Mercer has not sought to verify it independently. As such, Mercer makes no representations or warranties as to the accuracy of the information presented and takes no responsibility or liability (including for indirect, consequential, or incidental damages) for any error, omission, or inaccuracy in the data supplied by any third party. Investment advisory services provided by Mercer Investment Consulting LLC, formerly known as Mercer Investment Consulting, Inc. Mercer Investment Consulting LLC is a federally registered investment adviser under the Investment Advisers Act of 1940, as amended, providing nondiscretionary and discretionary investment advice to its clients on an individual basis. Registration as an investment advisor does not imply a certain level of skill or training. The oral and written communications of an advisor provide you with information about which you determine to hire or retain an advisor. Mercer s Form ADV Part 2A & 2B can be obtained by written request directed to: Compliance Department, Mercer Investment Consulting LLC, 701 Market Street, Suite 1100, St. Louis, MO MMC Securities is a registered broker dealer and an SEC registered investment adviser. Securitiesoffered through MMC Securities LLC., Member FINRA/SIPC, Main office: 1166 Avenue of the Americas, New York, NY Phone (212) Variable insurance products distributed through Marsh Insurance & Investments Corp; MIIC Insurance Services in California, and Marsh Insurance Agency & Investments in New York. MERCER

17 MERCER