You wouldn't know it from the way most mutual fund companies and insurers are marketing their products today, but retirement income in all its dimensions is going to be the key driver of the financial and investment business for the next two decades at least.
While everyone in the financial product business seems to sense that, the feeling I got from attending this week's Retirement Income Industry Association meeting in Boston is that institutional inertia and lack of a direct payback are the key reasons we've seen so few major changes in product creation or marketing thus far.
Product firms continue to see the world from the perspective of their silos. To a mutual fund company, for example, the solution to retirement income is a mutual fund since a fund is the most profitable thing for a mutual fund complex to create and market, and it's what the entire organization understands.
To an insurance company, the retirement income solution is an annuity — for the same reason funds work so well at fund companies.
What about something new and different and not exactly a fund or an annuity? At the moment, the answer from traditional providers too often is, “we don't do that here.”
That answer has to change.
RIIA member organizations should heed the thoughtful prodding from Francois Gadenne, the group's chairman and executive director, and the RIIA directors who work diligently to bring academic and marketing insights to the providers of retirement income products. They encourage players to break out of their silos.
Given the importance of retirement income to baby boomers, the challenge to financial firms is that new players may enter the market, ignore today's product categories and give many consumers what they're looking for: a pension substitute and an easier way to keep track of the different pots of money most of us accumulate over the years.
For example, Mint Software Inc., which was recently purchased by Intuit Inc., could decide to become a retirement income player.
I don't know anything about its plans, but just ask my 26-year-old son (who works for one of the nation's major financial companies) about Mint's power to organize and present financial information and you'll get raves.
If you think that Intuit or some other player can't nose out an entrenched fund company, think about how Hyundai has eaten General Motors' lunch.
On that happy note, let me pass along some good news.
On Monday night, the RIIA presented five awards for retirement income communications. Yours truly gave out two: the best-retail-communications award in print and new-media categories. The winners, respectively, were BlackRock Inc., for a campaign to help advisers understand Social Security benefits more fully, and Sun Life Financial Inc. for a multimedia effort to help advisers capture 401(k) rollovers.
Advisers Andrew Altfest of Altfest Personal Wealth Management and Ronald Palastro of R.S. Palastro Financial Planning Services Inc. helped me with the judging, and my thanks go to them.
Congratulations to the winners.