5 Rooms, 5 Themes: Retirement Security and Other Things We’ve Just Heard - PART 2

Get in the room! This room is NAST on March 14 at the Watergate.

Last edition we promised you the inside scoop from five rooms, but we only gave you room #1. So, what’s behind those other doors? Good stuff you need.

These five hot topics are culled from conferences and calls thoughtfully curated and hosted by the Aspen Institute Financial Security Program, DCIIA’s Innovation Forum Team, Georgetown Center for Retirement Initiatives’ State Retirement Savings Program Network, NAST’s Legislative Conference Team, and even the Conference of the Western Region Chartered Financial Analyst Societies.

We bring it. You chew on it. Just remember, the world is a better place because you’re here. Act accordingly.

Door No. 2: We’re not the youngest people in the room anymore. There was a time when we were – remember that bright-eyed, bushy-tailed, fresh-faced feeling? Together we learned how to talk the financial services talk, wear the suits, and sling acronyms with the best of them. We are Bad!  … but somedays we are just little “b” bad … at communicating with Millenials, Gen Z, and the Alphas nipping at their heels. They don’t really care about our acronym skills, our product sheets, and especially not our perfect-ness. They want it real. Very real.

• Wake up wunderkinds – it’s all about TikTok. Yes, and YouTube. This is what Gen Z said to us from the front of the room, and they weren’t kidding. If you’re not there, we’re 99% sure you’re not talking to them.

  • Gen Z said: “talk to us where we are – we’re not coming looking for you”.

  • The stuff that connects tends to be personal, and personable. It is absolutely not corporate. What does that mean for financial services brands and communicators? We probably have to take a page from Red Bull, and Apple Fitness, and Celebrity Cruises, which lets one of their Captains TikTok her daily life, and appreciation. What you see in these three examples – real people doing real things – experiential learning and experiential branding.

  • There’s a lot more on TikTok and YouTube that’s much more person 1:1. So check it out for yourself, see what people are doing, think about the chat you’re going to have with your compliance team about how to be there.

• Artificial Intelligence – Yes. Can you help me by knowing me well enough to make suggestions I’ll act on? Yes. When asked whether they worried about being tracked from place to place and having their data used on them, Gen Z said, “We have no expectation of privacy.” We think they know something the rest of us are in denial about. In any case, (responsibly and effectively) use their data! Give them intelligent prompts to improve financial decisions, experience, and wellness.

• Check out this TikTok, bear with the editing — it does drive home the point about where we’re headed, what Gen Z is likely to expect and experience, and it might give you pause — what will your services role be in a structure that looks like this?

Door No. 3:  Retirement Security, Part One. Rooms we go into, naturally focus on retirement security. This conversation start with a robust discussion of the merits of SECURE 2.0 – adding sponsors regularly and rumored to be up for a Senate action late this spring – and the RISE Act. Important, but arguably not focused on expansion of retirement savings coverage at work. Where we went next may surprise you.

• We hear positivity about proposed legislation and its ability to bring incremental improvements to the current system – along with recognition that legislation doesn’t happen fast, so be patient and keep innovating.

• Retirement Savings Lost and Found is a red-hot topic. We hope if/as implemented it’s a lot more automated than our last attempt to recover $100 in unclaimed property from two states we lived in (5 documents requested from us, we hate paperwork and may have let our claim lapse). All comparisons aside, it’s important for saved assets to stay with the individuals who set them aside, for those assets to continue growing, and for assets to be available on a relatively consolidated basis when it’s time for retirement or drawdown.

• What’s really working in the retirement security space? In one of our rooms, Kathleen Kennedy Townsend gave a terrific shout-out to the states for their experimentation across the space – expanding coverage, using automatic enrollment, tackling better lifetime income solutions and working on next-generation designs for emergency savings.

• At NAST the space set aside for informal updates on state administered retirement savings programs filled up with a standing-room-only crowd who asked great, practical questions and didn’t want to leave the room when the session was over.

Door No. 4: Retirement Security, Part Two. What’s retirement security without … security. And what are the edges of retirement security – do they fold in emergency savings, artificial intelligence, insurance-based risk management, financial wellness diagnostics?

• Next day, new focus – at Georgetown’s SRSPN Conference one session aimed squarely at policy and legislation.

• KKT shared Labor Secretary Walsh’s retirement policy goals: 1, 2, 3xx

• So what’s working in the states’ legislative space?

  • Study commissions that produce solid data to support legislation and that raise awareness and start key stakeholder dialogues within the state;

  • Bill champions with personal passion and a willingness to cultivate bipartisan support and sponsorship;

  • Coalition building – with policy organizations, and asset building networks;

  • Engaging employers and business associations early and often – “get endorsements!” – “get out in the streets” “create brewpub gatherings”.

• Biggest challenge? Getting employers in the room – to be part of the conversation, to express support for legislation when they back it.

• This conversation circled back to the reality check we mentioned at the outset: how do we define retirement security, and how broad is the focus. The basics, still very important, may be retirement savings coverage and use. But the elements supporting true retirement security are broader than that.

Door No. 5: What We’re Learning. It’s no secret, we’re big fans of good research. The environment of the last five years has provided a synchronicity of natural experimentation and data relevant to retirement security and financial wellness. Each of the rooms we entered referenced very recent, excellent work.

• Morningstar Center for Retirement & Policy Studies’ Lia Mitchell and Aron Szapiro have just published a fresh Retirement Plan Landscape Report – highlights include trends data related to coverage, assets, and plan counts, and well as costs to workers and retirees.

  • At first glance, the U.S. retirement system appears to be stable, but that obscures the fragility of a system that loses thousands of plans and billions of assets every year;

  • Plan participants pay different amounts to invest in DC plans depending on where they work;

  • Plans of all sizes offer similar investment strategies, but the largest plans have shifted away from mutual funds as their vehicle of choice;

  • DB pension plans may be disappearing, but they play an important role in millions of Americans’ retirements, and people will collect these benefits for decades.

• AARP’s David John and John Sabelhaus have a couple of initiatives under way. Including:

  • Updated data on the number of Americans who are employed by a company that does not offer them a retirement benefit. 

  • New estimations on current workplace retirement plan coverage rates by age, race and ethnicity, education, gender, employer size, and earnings levels across U.S. states using data from the Current Population Survey, IRS Statistics of Income, and Survey of Consumer Finances. Because state programs are not employer benefits, the numbers don’t subtract out those who are saving through one of the three, but AARP’s upcoming fact sheets will note that and provide that number also. While these new estimates won’t be available for a few weeks yet, check out John Sabelhaus’ recent paper titled The Current State of U.S. Workplace Retirement Plan Coverage where John describes their methodology.

  • New report summarizing the findings to date about how the three Auto IRA programs are doing and facts about how they are structured, how employers feel about them, etc. It will include data from a variety of sources and is intended as a quick guide as well as where to go for more information.

• The Aspen Institute’s Tim Shaw and Delaney Crampton are focused on emergency savings, including Joint Principles for Effective Emergency Savings Policy. As you read the piece, be on the lookout for supporting data related to these ideas:

  • Allow for automatic enrollment in workplace emergency savings;

  • Ensure emergency savings are their own “bucket” of savings;

  • Allow for a wide range of options, particularly for low-to-moderate-income (LMI) households (think: different types of accounts and value stores);

  • Design emergency savings to meet household needs;

  • Safeguard retirement savings.

Bonus: Your Doors. We love what we’re seeing in the space as good people tackle good hard problems – and create change. It’s often the tiniest meaningful changes that can have incredible lasting impact. In just the last five years we’ve started to change the retirement savings opportunities for over 20 million working Americans. Started. To. And we are changing how we talk to each other about money. Just ask TikTok, and Yemi Rose, and Patrice Washington. We are gradually creating a financial system in the US that is more inclusive and that works better.  So what are you working on? Are you building something that’s better – even a little bit better – we want to know. Because your small change might be the one that propels us over the next line.

We think you are amazing. Thank you for joining us on Part two of this spring journey - What now? Let’s keep talking.

- Lisa

This piece was featured in the April 7, 2022, edition of Retirement Security Matters. For more fresh thinking on retirement savings innovation, check out the newsletter here.