While we have known for some time that Americans are clearly not saving enough for retirement, there’s now a growing consciousness that participant outcomes shouldn’t just be a focus, but rather the focus. That’s not to say that topics like fiduciary liability mitigation are any less important. It is, however, a very strong and important statement about what matters most—getting everyday Americans ready for retirement. Everything else is noise. Intuitively, we all know this and have for some time, but it sure is pretty cool to see an industry come together and get its focus right.
While we often credit Apple with the need to think differently, it was actually Albert Einstein who said, “We cannot solve problems with the same thinking we used when we created them.” So how do we break the mold and create an effective message, messenger, and medium that are capable of reaching all those hard working Americans who really need our help? How do we think differently?
As I alluded to earlier, the exciting news is that we already are. I see it every day as I talk with my peers (advisers and industry), plan sponsors, and, yes, even when I talk with participants; and it is exciting to see. But if we’re to make real progress, we have to magnify our efforts. This isn’t something we can just talk about at conferences or in editorials like this one.
I’m a huge fan of clear frameworks that inform what we will, and will not, focus on. There are plenty of great ideas in this world. Our job, as leaders, as 401(k) Whisperers, is to create a framework that is capable of focusing our efforts on a set course of action to reach an important end-goal. This framework should embrace those great ideas that fit and, perhaps more importantly, ignore those that do not. I’d like to share our framework at Transamerica Retirement Solutions.
We call it Principles-Based Design. Simply put, we have outlined a set of design principles that inform our thinking as we build our products, bring our services to plan sponsors, and ultimately, as we invest in society. These principles act as our filter, they help us determine what we will and will not do. They all emanate from one central theme: we exist to help people save and invest wisely to secure their retirement dreams.
So what are these principles?
Create clarity – Not only about the services provided and the fees charged, which seems pretty obvious, but also about retirement outcomes; both at a participant and plan level.
Promote fairness – Through a retirement platform flexible enough to ensure plan sponsors and advisers can create a fair environment, certainly with respect to fees, but also through access to a conflict-free investment platform and advice when needed.
Deliver value – Through an increase in positive retirement outcomes. That can mean more people within our plans have a positive retirement outlook, and it can also mean helping to solve major issues like coverage, leakage, longevity risk, and providing cost-effective advice.
Own it – Nothing improves without ownership. “Unless someone like you cares a whole awful lot, nothing’s going to get better. It’s not.” –Dr. Seuss
Be the catalyst – As we’ve learned from behavioral finance, inertia is a powerful force, but action is always the catalyst. Before a participant can be defaulted into a plan, someone has to take action to create the defaults that can effectively lead to retirement security. Action is an absolute imperative, so be that catalyst for positive action, whatever form it may take.
Challenge the status quo – I won’t bore you with the definition of insanity, but I will say that different results require a different approach. We need to be willing to question the status quo so progress can happen.
Our best ideas belong in the public domain – Acting alone we will fail; together we will succeed in changing the savings behavior in America. We are committed to sharing our best ideas for changing the savings behavior of American workers.
These ideas were explored at the Transamerica Retirement Readiness Summit in April. In the spirit of our last principle, “our best ideas belong in the public domain,” they will serve as the framework for my contributed articles over the next several months. Hope you will enjoy and participate in the discussion.
Stig Nybo, President of Pension Sales and Distribution at Transamerica
NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.Any opinions of the author(s) do not necessarily reflect the stance of Asset International or its affiliates.
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