Keeping assets of retired participants in plan is the topic of discussion between Ron Cohen, head of Defined Contribution Investment Only Distribution, and Nate Miles, head of Retirement, here at Allspring Global Investments.


Nate Miles: Hi, I’m Nate Miles, head of Retirement here at Allspring Global Investments, and you’re listening to On the Trading Desk®.

Today we’re discussing the impact of retirement savers remaining in plan. And joining us is Ron Cohen, head of our DCIO Team here at Allspring, who will be providing his insights on the topic. And we’re certainly glad to have Ron here. Thanks for being here, Ron.

Ron Cohen: Great. Thanks for having me.

Nate: Yeah. So, looking forward to this discussion. I mean, it’s certainly something that I know comes up in a lot of your conversations. And so maybe you could just start off, Ron, and try to get us in the mindset of the plan sponsor’s desire, or lack thereof, to really keep assets of retired participants in the plan?

Ron: Absolutely. It’s an interesting topic with retirees staying in plan because for so many years, our industry was so focused on accumulation, right? How do we get people to save enough money for retirement?

And all of a sudden, the next thing you know, well, two-thirds of the assets are being held by people 50 or over, right? And now we need to figure out, OK, what are we going to do to help these people now with the decumulation side of things?

And again, we were so focused on accumulation that I think we kind of let this one slide a little bit. And now we’re trying to do a little bit of catch-up.

And so that’s why you’re seeing the asset managers are trying to develop retirement income products, and the recordkeepers are trying to figure out how to implement them, and advisors are trying to figure out, OK, I do want to do rollovers, but I understand we’ve got to figure out something for the masses.

And so, if you’re a plan sponsor, you’re starting to look at the asset base and say, OK, first and foremost, do we want to retain retirees or do we want to encourage rollovers? And I think that’s a very important conversation for advisors to be having with plan sponsors and plan sponsors to be thinking about and being much more thoughtful around this decumulation phase and what do they want to do.

And so many plan sponsors, it seems, and again, we’re kind of seeing numbers where it’s kind of twice as many plan sponsors are thinking that they want to retain retirees, and they’re thinking about it for a number of reasons, not the least of which is cost, right? They kind of have economies of scale. And when you have that many, those participants and those large balances, you want to retain them because that helps with your pricing ability, right? And the way you can negotiate costs.

But there’s also kind of a paternal feeling, right? They want to figure out, OK, how do we help these participants? And they’re actually using it as a retention tool, right? And a recruitment tool in that their retirement program can help take you through your employment, but then help you during retirement, as well.

And then lastly, we think about the Department of Labor, right? And it certainly seems like the Department of Labor is very interested in participants staying in plan, right? They’re making it a little bit more challenging for advisors to do rollovers. They like the low fees that are associated with the plans that they already have, the lineups that they have. And so, you’ve got that piece of it, as well, that’s kind of weighing on plan sponsors.

Nate: Yeah. Interesting. I mean, I think in your experience, Ron, have you noticed a shift, not just in the surveys, but really in your interactions with plan sponsors and advisors where you’re actually seeing people take those steps that you mentioned to keep the assets in plan?

Ron: Yeah, it’s a very important conversation. I can tell you that even here at Allspring, we’ve had conversations for our own retirement plan, right? What do we want to be doing? And do we need to be thinking about some sort of a retirement tier? Or what do we need to do with the investments?

And so, we are seeing more and more plan sponsors and their advisors and consultants having these conversations. It’s funny. If you’d asked me 15 years ago about retirement income solutions, it was always an out-of-plan type of product, right? It was people rolling over to an IRA, and that’s where they’re going to take their income from.

And now, it’s an in-plan solution. And plan sponsors are saying, okay, if it’s going to be in plan, what does that mean? What do I need to be thinking about from just the administration perspective, from my plan document, right? Does my plan even allow for this? Can my recordkeeper accommodate the different distribution options that we want? What kind of investments do we now need to start thinking about? What about education? If we’re going to have retirees in the plan, what’re the implications there? Those sorts of things are really what’s starting to weigh on plan sponsors and the advisors and consultants.

And so, there’s been a lot of robust conversations around this. Some are starting to add some of these new retirement income products that are being rolled out. I think it’s a little slow. I mean, some have started but are more kind of watching and waiting to see how those play out. But a lot of looking at that retirement tier. Do I need to start adding to my investment menu to make sure that there are investment options that can deliver income for my retirees who are still in the plan?

Nate: Have you seen in the market people settle on what is income? Is it guaranteed or non-guaranteed? Are people looking to draw down assets or keep assets the same? What are you hearing?

Ron: So, there’s kind of three different camps, if you will, Nate.

Everyone loves the idea of guaranteed income. But the second you say the word annuity, people are like, oh, I don’t want that. Well, but you actually want every feature of an annuity, but somehow you just don’t want to use that word. And so that’s a challenge for the industry.

But you are seeing somewhere in the camp of yes, I do want some sort of guaranteed income component, right? And that could be something as simple as attaching it to a target date fund where at a certain point, a certain age, a certain percentage moves over to that guaranteed income piece. And that provides that guaranteed income so that folks don’t end up outliving their accounts.

But then there are some who say, look, I’m not sure I want that. I think I’m looking more at is there a managed payout fund, right? Are there income-producing funds that we could use for the people who want to do it themselves?

And then the third piece that we talked about are managed accounts, right? And I think everyone is looking at what can managed accounts do for decumulation and what have they been doing for an accumulation? And that is giving a much more personalized approach to decumulation. And I’m not sure anyone’s there yet. I’m not sure any of the managed account providers have kind of cracked the code on that. Just like I don’t think any of the asset managers have cracked the code on that ideal guaranteed income product for in-plan, either. But those are the three kind of areas that we’re seeing discussions around.

Nate: Yeah, and speaking, I guess, of advisors, what have you seen change on the education front and I’m thinking really there’s still got to be a huge benefit to those one-on-one meetings. So I’m just curious your pulse on where that is, what’s changed, and maybe where that’s going.

Ron: When you think about retirement income and you think about keeping retirees in plan, that’s a whole new segment of education.

And they’ve built their practice around this. And they’re coming out with things around Social Security, right? Helping participants to figure out how to optimize Social Security, given their individual situation.

Helping them to understand Medicare, right? These are topics that we as an industry never even thought about and advisors and plan sponsors are trying to figure out what’s the best way?

Is it optimization tools, which is obviously where a lot of them are going, right? They’re trying to push people to the web. Is it in person? That’s challenging, right? Especially depending on the advisor, and the team, or the plan sponsor, and the number of individuals, the number of employees, locations, all that sort of stuff comes into play.

But again, we’re seeing that it’s this whole new realm of education. And that’s why financial wellness was something that has been talked about for so long and is really starting to take hold. And I think it’s not only going to be in the budgeting and the college saving and that sort of thing when they talk about financial wellness, it’s really going to start focusing around retirees and pre-retirees. And directionally, that’s where we see education heading.

Nate: Yeah. You made me think of one more question, Ron, and that is that threshold. So, plan sponsors, we’re hearing they increasingly want to hold onto assets of retirees in the plan. There’s still a great opportunity for rollovers for those kinds of senior executives, the larger balance participants.

What can you say about that threshold, whatever it is, on the rollover end? Is it increasing in terms of what that number needs to be? Is it decreasing? What change are you noticing on that front?

Ron: So, I think it depends on the advisor and their firm. Is it someone who offers a robo (robo-advisor) for a lower account balance, right?

So, most recordkeepers allow an advisor to kind of set that threshold where they say any terminated participant who has a balance, let’s say, over $100,000, they get notified, so that they can reach out and have that conversation. And some advisors say, look, I only want $250,000 and above. So, the advisor really gets to customize that.

But I think what we’re seeing is for advisor shops that have a robo component, they’re willing to go down to say, $50,000, or whatever that lower number is.

So, I don’t mean to give a non-answer, but it really depends on the advisor and their firm and what their capabilities are to service some of the lower account balances. $100,000 used to be that round number. That was the Mason-Dixon Line, if you will, where above $100,000, the advisors wanted it, and below, they’d rather it stayed in plan or the recordkeeper handled it or whatever the case may be.

But with new capabilities at some of these shops, some of them we’re seeing go lower and then, don’t get me wrong, for others, we’re seeing them go higher. They’re saying look, I only want $250,000 or above. Because wealth management, the wealth management piece, is becoming a big, big focus, whether you’re a large wirehouse or you’re a small RIA (registered investment advisor), advisors are understanding on the wealth management side, there’s a lot of benefits to doing that component as well, right? Obviously, the margins are much higher over there.

Nate: And I guess, Ron, just listening to you, it’s safe to say that there’s almost a tug of war now between plan sponsors and the rollover advisor that maybe didn’t exist previously and probably ends up with better options and outcomes for participants.

If the plan sponsor wants them to stay in plan and the advisor on the rollover end has to now compete more directly for those assets in a way that maybe they didn’t before, it probably means both sides, whether it’s in-plan or out-of-plan, evolve in a way that yields better outcomes. Is that a fair assessment of maybe where you think it might go?

Ron: Yeah, I mean, look, that’s always been the elephant in the room. Who owns the participant or who’s going to get to own the participant?

The recordkeepers want them. Make no mistake about it. That’s why some recordkeepers have bought their own robos.

The advisors want them because they’re now going into that wealth management side.

The asset managers are now starting to come out with their own and trying to attract. There’s been several that I can think of that have built out participant websites and whatnot and they’re going to be heading down that path. It’s all going to come to a head, and it’s all over this battle for the participant.

And it’s going to be very interesting to see how it plays out. Like, everyone’s playing well in the sandbox, but everyone knows deep down, they’re all trying to figure out how do they get the participant.

Nate: Interesting. I know our time is quickly passing us by here. Anything, Ron, that you’ve noticed that we haven’t chatted about that you wanted to bring up during today’s discussion?

Ron: Again, I just think that this is a very important topic and a trend that is only going to continue to grow in importance. Like we said at the beginning, two-thirds of the assets in 401(k) plans are held by people 50 and over. This is going to be one of the most important trends and plan sponsors and advisors and consultants need to make sure that they’ve got a plan in place for how they want to handle those individuals.

Nate: So, this wraps up this episode of On the Trading Desk. Thanks for being here, Ron.

Ron: Great, thanks for having me.

Nate: If you would like to read more market insights and investment perspectives from Allspring Global Investments, you can find them at our firm’s website,

To stay connected to On the Trading Desk and listen to past and future episodes of the program, you can subscribe to the podcast on Apple Podcasts, Spotify, or wherever you get your podcasts. Until next time, I’m Nate Miles and thanks for listening.



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