Selecting Insurers for Lifetime Income: Help Is on the Way
Jennifer DeLong: Many plan sponsors and consultants aren’t necessarily comfortable with assessing insurance providers as we talk about lifetime income solutions within DC plans. And while the provisions related to the safe harbor for annuities selection within the SECURE Act making its way through Washington, address some of that, there still may just be a lack of comfort for those plan sponsors and consultants.
How should plan sponsors think about that? How should consultants think about that? Are there services that they can subscribe to or use to help with insurer selection? Should consultants see this as an opportunity to get themselves educated in terms of being able to be more helpful to their plan sponsors as these solutions start to take hold in the industry?
Andrew Stumacher: I think we’ll see consultants offer this service up. We’ll see advisors offer this type of service up. Where they have some experience in evaluating different types of retirement income options. And the SECURE Act will help with that because those advisors [and] consultants will have a more definitive pathway to proving that annuity provider.
And you’re right, sponsors, even with SECURE Act, may say that this is one thing that we don’t want to have to worry about. And so, we’ll hire someone to do that service for us. And as we see more innovation from products, we’ll see some examples of maybe multi-insurer products or insurer marketplaces, which will require, or you know, would require a plan sponsor to have to evaluate multiple insurers. You’d almost have to bring that service. Make that service available to those sponsors to evaluate those different annuity providers.
JD: And I think that’s really important for plan sponsors to realize is, as they’re considering these types of solutions for their DC plan, they can certainly get help. They can definitely reach out to other resources and other consultants, advisors, willing to sign on as fiduciaries to help with that insurer selection process. They don’t need to do it all on their own.
AS: They’re never alone in this. And it’s really, it’s kind of, making it easy for them. If we had to kind of sum it up, it’s certainty and control of the participants, and ease and flexibility for sponsors. I think that really addresses everyone’s goals.