Outlook 2022: What Diet Advisors Should Watch Out For
It’s time to dust off the crystal ball and ask pension industry experts what they expect in 2022. WealthManagement.com asked several industry experts to share their ideas on what 2022 could bring.
Wealth Management.com: What do you think are the most important development plans that consultants should watch for in 2022?
Global Sales Director
Aon Wealth Management Solutions
We anticipate that the number of PEPs (group employer plans) and the size of existing PEPs will continue to increase in 2022, which will continue to drive market efficiency.
For defined benefit plan sponsors, we expect more retirement risk transfers in a very competitive insurance market.
Additionally, defined benefit plan sponsors with underfunded pension plans have likely seen their funded status increase in 2021, and the recently enacted pension funding relief results in less short-term funding volatility. We expect allocations to yield-seeking assets to increase accordingly.
Morgan Stanley at work
Whether it is RIA accumulations or archive consolidation, the sector continues to refine in the ultimate quest for scalability. In 2022, retirement advisors and consultants will be increasingly aware of the growth in end-to-end business models of industry players: Archivists look for more ways to monetize the participant base, while RIAs migrate. from pure institutional players to full store asset management. Both parties are looking for a sufficient scale to increase their margins. Partnerships between the parties will be tested.
Finally, the data will be scrutinized more and more. As the world of retirement embraces technology and with updated regulatory definitions, advisers and consultants must pay close attention to their outbound communications. Member protection will continue to be essential and ensuring a robust data infrastructure will be a table issue for all retirement advisors. Small-scale businesses such as smaller TPAs, smaller RIAs, or even smaller registrars are likely to struggle to cope with the pressure of increased cybersecurity costs.
Head of Institutional Investors & Client Experience Advisory
In 2022, we expect plan sponsors and consultants to continue to support the overall financial well-being of plan members beyond the design of smart plans, in particular through a high-quality, integrated advisory experience and profitable. Day-to-day decisions about spending, saving and debt are intertwined and have a profound influence on the ability of employees to save for retirement. Advice should go beyond portfolio construction to provide solutions that address a participant’s overall financial well-being, such as capacities to help repay debt, save for emergencies, and design strategies. personalized withdrawal rates. As counseling offerings evolve, we expect plan member uptake to accelerate further, as it provides financial and emotional value to all plan members, from those just entering retirement to those who are new to retirement. retirees looking to spend with confidence.
On a related note, we also expect to see more personalization at the participant level that encourages investors to take action for better financial health. Cutting-edge technology provides consultants and archivists with stronger and faster information plans, enabling them to understand the larger financial situation of each participant and, with this stronger information, deliver personalized advice where it is needed. no longer needed. Based on this information, we anticipate more omnichannel member experiences and optimized plan designs that improve retirement outcomes.
Defined Contribution Marketing Manager
As 2022 is an election year, more emphasis should be placed on passing pension legislation. And while the Build Back Better plan includes several retirement provisions, this year should (finally) see the SECURE Act 2.0 coming into effect. This bill would expand coverage and access for employees and include key provisions that would require automatic enrollment for all new plans, provide additional incentives to employers, and allow 403 (b) plans to participate in plans at multiple employers (MEP).
Another key development from 2022 is the requirement that pension plans provide illustrations of lifetime income to their members, but many assumptions still need to be clarified. 2022 is set to be a busy year for pensions and it offers opportunities for finance professionals to help their clients and plan sponsor members make sense of it all.
Head of Investment and Retirement Solutions
Prudential retirement strategies
The pandemic has diverted the attention of employers and advisers from retirement income considerations in the wake of the SECURE Act. As 2022 approaches, we expect to see renewed interest in this game-changing legislation, which contained provisions that increased the visibility of retirement income through disclosure requirements as well as a safe harbor. for the use of income options. Market dynamics and the regulatory environment have led to a proliferation of new income solutions products that address emerging risks in defined contribution plans.
On the defined benefit front, strong equity markets have pushed the funding of many company pension plans to around 100%. As a result, we expect the risk reduction trend to continue after significant activity in 2021. With many plans having already executed lump-sum payment programs and retirement buybacks, we expect full plan terminations to accelerate in the future. 2022 and beyond. With the expected increase in plan terminations, pension buybacks may continue to gain in popularity. Buybacks are convertible to buyback and allow promoters to set prices and reduce exposure to capital market conditions and insurer capacity during the lengthy process of plan termination.
Executive Director of the Institutional Retirement Income Council and Director of Fiduciary Insurance Services, LLC
The landscape for defined contribution income solutions is growing rapidly, with an increasing proportion of plan sponsors expressing an interest in retaining plan members during retirement, and an explosive amount of post-SECURE product development. The combination of these factors points to a need for pension consultants and advisers to be educated on the level of CD retirement holistically, the new generation of income solutions being introduced into the plan space and on their responsibilities in the process. evaluate these solutions. Rapidly shifting legislative priorities mean that there remains a possibility that SECURE 2.0, which like SECURE 1.0 enjoys broad bipartisan support, will be passed in the dying days of 2021, although 2022 looks more likely. Considered in combination with other retirement bills that could also be passed in 2022 and which, if passed, would massively increase the number of qualified retirement savers in our country, it looks like we could get started. in a time of upheaval in our industry. These inflection points in an industry always represent a disproportionate opportunity for some, and a material disruption for others. The rapid consolidation between archivists and RPA / RIA aggregation companies only adds one more piece of intrigue to what is expected to be a hectic 2022 in the DC space!
Diet advisers will continue to be affected in 2022 by the headlines marking the end of 2021. We end the year with a new COVID-19 variant, ERISA-related lawsuits are on the rise, and we remain in the midst of âThe Big Resignationâ all of which has a huge impact on plan advisors, promoters and members.
More than 150 ERISA class actions have been filed in the past two years as the workforce experiences a global pandemic. This suggests that employees took a closer look at 401 (k) fees and returns as household financial pressures increased in light of COVID-19. In 2022, advisers will focus more than ever on reducing this risk of lawsuits to the extent possible. Many of the obligations imposed by ERISA relate in fact to terminated participants, who can and do participate in legal proceedings. We anticipate that advisors will closely monitor the results of pending lawsuits and, at the same time, seek ways to remove terminated members from plans in order to reduce unnecessary risk posed to plan sponsors.
The âbig resignationâ and the tight job market it created will also keep the financial well-being of plan sponsors in mind. Advisors began to create and deliver exclusive financial wellness packages, as did record keepers. Advisors will continue to define their role in providing such solutions to their clients in response to increasing employee demand for more personalized and comprehensive financial advice and support.