Upload
cameron-preston
View
217
Download
1
Tags:
Embed Size (px)
Citation preview
An Introduction to RIIAThought-Leadership and Best Practices
© 2014. Retirement Income Industry Association. All rights reserved.Retirement Income Industry Association®, RIIA®, is the owner of the RIIA® logo, a registered collectivemembership mark and trademark/service mark; the owner of RIIA's Retirement Management Analyst(sm),RMA(sm), and logo, a certification mark and the owner of the RMA curriculum; and the owner of RIIAMarket Insight(sm), RMI(sm), and logo, a service mark. Retirement Income Industry Association®, RIIA®, isalso the owner of the “View Across the Silos(sm),” “Household Balance Sheet View(sm)” “HouseholdBalance Sheet Benchmark(sm),” “Retirement Policy Statement(sm)” and Retirement Management Journal(sm),RMJSM, and logo, a service mark of RIIA® (Collectively, "Marks, Logos and Property"). Only RIIA®, itsauthorized members and/or certified persons, in compliance with usage guidelines, may use the Marks,Logos and Property. The Marks, Logos and Property may not be copied, imitated, or used, in whole orin part, without the prior written permission of RIIA®.
History of RIIA’s Founders
• Rational Investors: 1996-2001
• Mass-Customized Investment Advice over the Internet
• Sold to S&P in 1999
• Retirement Engineering: 2001-2006
• Intent to create a new industry
• Pricing income in terms of $/lb.
• RIIA: 2006-Present
• The View Across the Silos: Thought-Leadership
• The RMA designation: Best Practices
Founding Members (2006)
Alliance BernsteinAmerican CenturyAVIVA NARDeloitte ConsultingGenworth FinancialGreenwich AssociatesIbbotson/MorningstarFundQuestFranklin TempletonING U.S. Financial ServicesLipper, a Reuters CompanyMassMutualMcElroy, Deutsh, Mulvaney & CarpenterMercer HR ServicesMerrill Lynch/Bank of AmericaMetLifeMFS Investment Management
Nationwide FinancialOppenheimer FundsPLANSPONSORRBC Insurance/Royal Bank of CanadaRetirement Engineering, Inc.The 401(k)Company/SchwabThe Phoenix CompaniesRussell Investment GroupSymetra FinancialUBS Global Asset ManagementWealth2KWells Fargo
• Institutional Members
• 86 since 2006, 44 active now, including:
• TIAA-CREF, New York Life, MassMutual, Prudential,
Challenger, JPMorgan, Morgan Stanley, Bank of
America/Merrill Lynch, BNY/Mellon, BlackRock,
• Individual Members
• about 1,000 since 2006
• 5,000 members on LinkedIn Group
• RMA Certificate Holders
• about 100 since 2010
• In 2014 the RMA designation will be taught at 5
Universities: BU, TTU, SSU, NSU and FIU
RIIA Today
Thought-Leadership
• Board Members
• Special Advisors to the Board
• Conference Keynote Speakers
• Retirement Management Journal Authors
• Virtual Learning Center Webinars Speakers
• Retirement Management Analyst Curriculum Book Authors
• RIIA Market Insight Research Consortium Members
Thought-Leadership: Board Members
Regular Board Members
•Chip Castille, BlackRock
•Adam Bryan, DTCC
•Karen Wimbish, Wells Fargo
•Bill Hunter, Bank of America/Merrill Lynch
•Ron Mastrogiovanni, HVS
•Ed O’ Connor, Morgan Stanley
•Tim Murphy, Investors Capital
•Anand Rao, PwC
•Rob Capone, BNY/Mellon
•Jan Gundersen, TIAA-CREF
Former Board Members:
•Peng Chen, Morningstar/DFA
•Tom Johnson, MassMutual/NewYork Life
•Sri Reddy, Prudential Financial
At Large Members:
Joan Boros, Esq.
Elvin Turner, Esq.
Stephen Saxon, Esq.
Mathew P. Fink, retired ICI
Thought-Leadership: Special Advisors
Academic Advisors including:•Shlomo Benartzi, UCLA•Zvi Bodie, Boston University•Jeff Brown, University of Illinois•Michael Finke, Texas Tech University•Larry Kotlikoff, Boston University•David Laibson, Harvard University•Annamaria Lusardi, Dartmouth College•Moshe Arye Milevsky, Ph.D.,York University•Olivia Mitchell, Wharton School, University of Pennsylvania•Wade Pfau, American College•Meir Statman, Santa Clara University•Jack VanDerhei, Temple University and EBRI Fellow•Stephen Zeldes, Columbia University
Thought-Leadership: Special Advisors
Executive Advisors, including:
•Hans Carstensen, retired Chairman, AVIVA
•Farrell Dolan, retired, Fidelity
•Keith B Jarrett, Chairman, Rockport Funding, LLC
•Jerry Kenney, Merrill Lynch/Blackrock
•Louis Lataif, Boston University School of Management
•Sandra Timmermann, Gerontologist and founder of the MetLife Mature
Market Institute
Thought-Leadership: Special Advisors
Practicing Advisors, including:
•Mitch Anthony, Advisor Insights, Inc.
•John Mulligan, CFP®,CIMA, AIFA, RMA
•Anna Rappaport, FSA, MAAA, Anna Rappaport Consulting
•Chuck Robinson, Northwestern Mutual Wealth Management
•Sheldon H. Smith, Esq, Partner, Holme Roberts & Owen LLP
•Don Trone, Strategic Ethos
•Jarrod Upton
Thought-Leadership: Officers
• Francois Gadenne, Co-founder, Chairman of the Board
• Al Turco, Co-founder, Counsel to the Board
• Udo Frank (retired Allianz Global Investors), Treasurer
• Joan Boros, Secretary
• David Ehrenthal, Business Unit Director, Membership Services
• Deborah Burkholder, Business Unit Director, Events
• Robert Powell, Business Unit Director, Publications
• Elvin Turner, Business Unit Director, Research
• Francois Gadenne, Business Unit Director, Education
• Marcia Mantell, Business Unit Director, Consumer
Thought-Leadership: Keynote Speakers
• 2006: Meir Statman
• 2007: Ray Kurzweil
• 2008: Ray Burham, David Warsh
• 2009: Bruce Sterling, Howard Bloom
• 2010: Sam Khoury, Buddy Donohue, Marsh Carter
• 2011: Doug Short, Charlie Baker, VDH, Clint Watts
• 2012: Frank Casey, Tim Garrett, Herb Meyer
• 2013: Michael Kitces, Michael Lane
• 2014: David Blanchett, Sandy Timmermann, Bill Baldwin
Thought-Leadership: RMJ Authors
Since Spring 2011 issue, 64 RMJ papers from authors including:•Shlomo Benartzi•Steve Sexauer•Laurence B. Siegel•Michael Finke•Wade Pfau•Matt Grove•Harry Markowitz•Anna Rappaport•David Blanchett•Michael Zwecher•Peng Chen•Michael Kitces•Helen Simon
Thought-Leadership: VLC Speakers
• Two webinars per months, with speakers such as:• Michael Finke, Ph.D., CFP® - Ph.D. Coordinator and Associate Professor
of Personal Financial Planning at Texas Tech University• Sarah Holden, Senior Director of Retirement & Investor Research at the
Investment Company Institute (ICI).• Andrew Blumberg , Group Director, DTCC Analytic Reporting for
Annuities• Dennis Gallant, President of GDC Research• Zachary S. Parker, CFP, MBA, 1st Vice President – Income Distribution &
Product Strategy, Securities America• Stan “The Annuity Man” Haithcock - nationally recognized annuity expert
and annuity critic• Michael Kitces - Partner and Director of Research for Pinnacle Advisory
Group• Dana Anspach, Principal, Sensible Money, LLC
Thought-Leadership: RMA Governance Board
• Al Turco, Esq., McElroy, Deutsch, Mulvaney & Carpenter,LLP
• Joan Boros, Esq., Stradley Ronon Stevens & Young, LLP
• Harold Evensky, Evensky & Katz
• Patrick Fitzgerald
• Francois Gadenne
• Craig Adamson, LPL Financial, LLC
• Michael Finke, Ph.D. Texas Tech University
• Lawrence Ford
• Ruth Ann Murray, Boston University, Metropolitan College
• Zachary Parker, Securities America, Inc.
Thought-Leadership: RMA Authors
• Beth Allan
• Dana Anspach
• Brian Barnier
• David Blanchett
• Jason Branning
• Brent Burns
• April Caudill
• Larry Cohen
• Harold Evensky
• Michael Finke
• Jeremy Fletcher
• Ray Grubbs
• Stephen Huxley
• Cliff Jurdi
• Paul Kaplan
• Mitzi Lauderdale
• Chris Leone
• Michael Lonier
• David Macchia
• Brett Machtig
• Aaron Minney
• Steve Mitchell
• John Mulligan
• Wade Pfau
• Paul Samuelson
• Jack Sharry
• Doug Short
• Al Turco
• Elvin Turner
• Alain Valles
• George Wilbanks
• Michael Zwecher
• Francois Gadenne
Thought-Leadership: Research Committee
• Kathleen Beichert, SVP, OppenheimerFunds
• David Blanchett, Morningstar Investment Management
• Andrew Blumberg, DTCC, Analytic Reporting for Annuities
• Ron Bush, Brightwork Partners, LLC
• Larry Cohen, Strategic Business Insights
• Matt Greenwald, Mathew Greenwald & Associates
• Lilah Koski, Koski Research
• Louis Lombardi, PwC
• Kim McSheridan
• Lisa Plotnick
• Anna Rappaport
• Linda Schwartz, TIAA-CREF
• Jack Tatar, GEM Research Solutions
The Evolution of RIIA’s Conferences
A Time to Present Best PracticesRFC14: The Art and Science of the Retirement Policy StatementRSC14: Retirement Opportunities are the beginning of great enterprisesRFC 13: Practical Solutions in an Uncertain WorldRSC13: The Household Balance Sheet View
A Time to Ask The Right QuestionsRFC12: What does it take to be a top retirement income advisor?RSC12: What can Defined Contribution and Retail Distribution learn from one another after five years of independent product and process development?RFC11: Are We Rome or Byzantium?RSC11: The Future of Retirement Income Solutions and Delivery:
The Retirement Puzzle in an Age of Uncertainty
A Time to Define the ProblemsAMAD10: Making Powerful Connections to Advance Retirement Income SecurityRSC10: New Products, New Communications, New Technologies, New ProcessesAMAD09: Traditional Retirement Planning Failed: How Will A New Approach Work?IIR09: The New Normal as Seen from the View Across The Silos
A Time to Present Best PracticesRFC14: The Art and Science of the Retirement Policy StatementRSC14: Retirement Opportunities are the beginning of great enterprisesRFC 13: Practical Solutions in an Uncertain WorldRSC13: The Household Balance Sheet View
A Time to Ask The Right QuestionsRFC12: What does it take to be a top retirement income advisor?RSC12: What can Defined Contribution and Retail Distribution learn from one another after five years of independent product and process development?RFC11: Are We Rome or Byzantium?RSC11: The Future of Retirement Income Solutions and Delivery:
The Retirement Puzzle in an Age of Uncertainty
A Time to Define the ProblemsAMAD10: Making Powerful Connections to Advance Retirement Income SecurityRSC10: New Products, New Communications, New Technologies, New ProcessesAMAD09: Traditional Retirement Planning Failed: How Will A New Approach Work?IIR09: The New Normal as Seen from the View Across The Silos
The RMA Curriculum: Many Types of Best Practices
Old Current Validated Thought-Leadership
Account Client Household Health/Wealth
The RMA Curriculum: Many Types of Best Practices
Old Current Validated Thought-LeadershipAccount Client Household Health/Wealth
Fear-based, Maximizing
Aspiration-based Goals-based Adaptive toolbox, Minimax
The RMA Curriculum: Many Types of Best Practices
Old Current Validated Thought-LeadershipAccount Client Household Health/Wealth
Fear-based, Maximizing
Aspiration-based Goals-based Adaptive toolbox, Minimax
Vocabulary Test for Data Input in Software Programs
Personal Mastery of Professional Planning Skills
The RMA Curriculum: Many Types of Best Practices
Old Current Validated Thought-Leadership
Probability First(Expert Models of “Known Risks”)
Safety First(Holistic Checklists for “Uncertainty”)
Vocabulary Test for Data Input in Software Programs
Personal Mastery of Professional Planning Skills
The RMA Curriculum: Many Types of Best Practices
Old Current Validated Thought-Leadership
Probability First(Expert Models of “Known Risks”)
Safety First(Holistic Checklists for “Uncertainty”)
AUMs / Readiness(Financial Literacy)
AUMs / Fundedness(Risk Literacy)
Vocabulary Test for Data Input in Software Programs
Personal Mastery of Professional Planning Skills
The RMA Curriculum: Many Types of Best Practices
Old Current Validated Thought-Leadership
Probability First(Expert Models of “Known Risks”)
Safety First(Holistic Checklists for “Uncertainty”)
AUMs / Readiness(Financial Literacy)
AUMs / Fundedness(Risk Literacy)
Risk Profile / Salary Replacement Household Balance Sheet(Assets, Liabilities, Risk Exposures)
Vocabulary Test for Data Input in Software Programs
Personal Mastery of Professional Planning Skills
The RMA Curriculum: Many Types of Best Practices
Old Current Validated Thought-Leadership
Probability First(Expert Models of “Known Risks”)
Safety First(Holistic Checklists for “Uncertainty”)
AUMs / Readiness(Financial Literacy)
AUMs / Fundedness(Risk Literacy)
Risk Profile / Salary Replacement Household Balance Sheet(Assets, Liabilities, Risk Exposures)
Investment Allocations(Risky Assets Diversification = Upside)
Retirement Allocations(Upside, Floor, Longevity, Reserves)
Vocabulary Test for Data Input in Software Programs
Personal Mastery of Professional Planning Skills
The RMA Curriculum: Many Types of Best Practices
Old Current Validated Thought-LeadershipAccount Client Household Health/Wealth
Fear-based, Maximizing
Aspiration-based Goals-based Adaptive toolbox, Minimax
Probability First(Expert Models of “Known Risks”)
Safety First(Holistic Checklists for “Uncertainty”)
AUMs / Readiness(Financial Literacy)
AUMs / Fundedness(Risk Literacy)
Risk Profile / Salary Replacement Household Balance Sheet(Assets, Liabilities, Risk Exposures)
Investment Allocations(Risky Assets Diversification = Upside)
Retirement Allocations(Upside, Floor, Longevity, Reserves)
Investment Policy Statement Retirement Policy Statement
Vocabulary Test for Data Input in Software Programs
Personal Mastery of Professional Planning Skills
Best Practices to Retirement Policy Statement
1- Buying “Lifestyle Time” for clients
- “Fundedness” , Investment-based, Goals-based, Product-based
2- Finding the relevant Assets, Liabilities and Risks with the
“Household Balance Sheet View(sm)”
3- Transitioning from Asset Allocations to “Retirement Allocations”
- Mitigating risk exposures: “First Build a Floor…”. - Optimizing Performance: “… Then Expose to Upside(sm)”.
The “Retirement Policy Statement“ as a protective process
PwC
The RMA Curriculum: Full Range of Stakeholders
The RMA’s Arc of Development started with DC, moved to Relationship Advisors and returned to both DC and Retail Transactional Advisors
Best Practices: The Three Disruptions
The Presence of Client Risks and Needs that are not addressed by traditional Investment Management
– These un-systematic “Chance” and “Behavioral” risks mean that retirement management cannot be a “single cylinder” risk management engine based only on “risk retention/diversification”
Retirement management is 4-cylinders risk management engine that includes:
– risk “retention”, risk “management, risk “pooling”,” risk “avoidance”
Best Practices: The Three Disruptions
Solutions that exist Outside of the traditional Business Models.•The traditional business model is “gathering assets.” •The business model of retirement is “paying a monthly check”
Incremental thinking and misunderstood adoptions will not “move the needle”.
DCDB Retail
Income Statement Planning
Household Balance Sheet Planning
Retirement Planning Best Practices by Primary Client Channel
Best Practices: The Three Disruptions
Academic Justifications and Practice Validations expand beyond the traditional focus on Wealth•Traditional financial management is a special case of the larger financial framework that has been developed and formalized since the 1950s.
Retirement Management re-introduces minimum consumption in the financial equation •The goal of investment management is to expose the client’s wealth to upside potential subject to a risk profile.•The goal of retirement management is “First Build a (minimum consumption) Floor, Then Expose (to wealth growing) Upside”.
Best Practices: Ten Key Competencies
1- Working with both wealth and consumption needs
2- Focusing on the right client tiers: Fundedness
3- Selecting the proper client-matched, fundamental planning strategy
- Investment-based, (start with the portfolio)
- Goal-based, (start with the budget)
- Product-based, (start with the account)
4 - Developing the full household balance sheet
5- Planning with human, social and financial capital
6- Mapping risk exposures
7- Recommending risk management techniques allocations: Retirement Allocations
8- Selecting implementation process approaches
9- Recommending account locations and product selections
10- Reviewing the plan on a recurring schedule
PwC | RIIA | SBI
Fundedness Tools Overfunded Constrained Underfunded
Wealthy Households and Participants
Fundedness measures based on Financial Assets:C/FC, FC/C
Fundedness measures based on Financial Assets:C/FC, FC/CC’/FC, FC/C’
Fundedness measures based on Financial Assets:C/FC, FC/CC’/FC, FC/C’
Affluent Households and Participants
C’/FC, FC/C’ as well asFundedness measures based on HHBS:A/L
C’/FC, FC/C’ as well asFundedness measures based on HHBS:A/L
C’/FC, FC/C’ as well asFundedness measures based on HHBS:A/L
Mass Market Households and Participants
IF HHBS data incomplete, Fundedness measures based on a salary replacement ratio:
If HHBS data incomplete, Fundedness measures based on a salary replacement ratio::
If HHBS data incomplete, Fundedness measures based on a salary replacement ratio:
Are your tools, processes and products focused on the right client segment?
Investment Based Planning/Flooring Goals Based Planning/Flooring Product Based Planning
Best Practices: The Measures of “Fundedness”
PwC | RIIA | SBI
Fundamental Planning
StrategiesOverfunded Constrained Underfunded
High Net Worth Households and Participants
Investment-based planning(Generational Wealth)
Goal-based planning(Deferred Consumption)
Product-based planning(Best practices)
Affluent Households and Participants
Goal-based planning(Deferred Consumption)
Goal-based planning(Deferred Consumption)
Product-based planning(Best practices)
Mass Market Households and Participants
Product-based planning(Best practices)
Product-based planning(Best practices)
Product-based planning(Best practices)
A consistent conceptual framework across all stakeholder and client segments
Best Practices: Fundamental Planning Strategies
AssetAllocations
Retirement Allocations(Risk Management Techniques
Allocations)
Implementation Process Approaches
Stocks(60%)
Upside (risk retention)(60%)
Total Return
Bonds(30%)
Floor (risk management)(30%)
SWPsTime Segmentation
LaddersInsurance
- Longevity (risk pooling)(0%)
Insurance
Cash(10%)
Reserves (risk avoidance)(10%)
Cash
Best Practices: The Retirement Allocations
Retirement Allocations(Risk Management
Techniques Allocations)
Implementation Process Approaches
“Products that Wrap….
Upside (risk retention)(60%)
Total Return … The Market,
Floor (risk management)(30%)
SWPsTime Segmentation
LaddersInsurance
… The Market,…The Price of Income,
…The Household Balance Sheet,
… A Ladder,… The Mortality Credit,
Longevity (risk pooling)(0%)
Insurance … The Mortality Credit,
Reserves (risk avoidance)(10%)
Cash … Tax and/or Inflation.”
Mapping Products to Retirement Allocations