Financial planning platforms target Social Security benefits data for online integration

Financial Engines, Betterment among automated investment services aiming to let their clients use information to inform retirement planning

Jul 14, 2015 @ 1:21 pm

By Alessandra Malito

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One day, advisers may not have to tell their clients to go onto the Social Security Administration's website to get their most recent benefits statement. Instead, advisers will be able to encourage them sign on to their own website or app.

That's because Financial Engines, Betterment and HelloWallet have recently struck a partnership with the SSA to develop software to incorporate Social Security data for individuals automatically onto their platforms. It is yet one more of the government's attempts to assist soon-to-be retirees with their financial planning.

With this new initiative, the information found in monthly Social Security statements would be released in a transferrable data file to be placed in a program. From there, advisers would be able to see a more exact number, as opposed to a projection that they create based on the guesses of their clients. It would help with creating financial projections and retirement plans.

"If [the SSA] makes the data available, it allows a separate advice engine or guidance engine to calculate that benefit in one step, so it makes it more seamless for the user," said Aaron Szapiro, policy and finance expert at HelloWallet, which Morningstar Inc. acquired last year. "It gives the user better information in one step."

Social Security benefits are a critical component of retirement planning for many Americans, and yet there is so much that goes into how to consider receiving the benefits, leaving many wondering about what payouts they can expect during retirement and when would be the best time to claim them.

In a true/false quiz that Massachusetts Mutual Life Insurance Co. gave to 1,500 adults, only 28% received a passing grade when asked basic questions about Social Security benefits.

"Basically what happens, you ask your clients what does your Social Security look like, and obviously they don't know," said Chris Chen, a financial adviser with Insight Financial Strategists. He said that while getting the statement off the SSA website isn't too difficult, having it downloaded directly to an adviser's platform would be helpful.

Kristi Sullivan, a financial adviser at Sullivan Financial Planning, said that getting information off of the SSA website can be irritating.

"It was a 55-minute wait to talk to someone," Ms. Sullivan said, adding that she had tried getting information about her own Social Security account. "It's a frustrating process."

Having a way to easily access a client's Social Security information would make it a lot easier to find the numbers relevant for that investor's retirement planning, she said.

Such an automated process would also help advisers and clients to avoid possible retirement planning mistakes.

"Because human behavior tends towards the easiest course of action, removing any roadblocks can yield step-changes in outcomes," Alex Benke, director of advice products at Betterment, wrote in an e-mail.

Betterment jumped into the retirement planning market in April.

Financial Engines, which works primarily in the 401(k) space, began to address this Social Security issue last year, when the company released a tool to measure an individual's potential benefits. With this new partnership, said David Weiskopf, vice president of corporate communications at Financial Engines, near-retirees will gain a new perspective on their own finances.

"It is a great way to help people, particularly to get a much more accurate sense of what they are likely to receive, and then make decisions around how to make that happen," Mr. Weiskopf said.

Although it will be a slow process in implementing an automated solution for integrating Social Security data, it will be beneficial one once accomplished, said Joe Elsasser, the founder of software provider Social Security Timing.

"If you look back just 10 years ago, there just wasn't the level of interest in Social Security claiming strategies as there is today," Mr. Elsasser said. "As more and more boomers retire, that level of access is going to become more and more important."

That's where the administration's newest initiative comes in.

"Forward-thinking policymakers understand that we will all be better served when systems talk to each other," Mr. Benke said. "Technology, powered by ever more data and streamlined experiences, is bringing fiduciary services to vastly more people than could access them in the past, and the government has a role to play here."

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