It’s obvious why CFOs tend to care more about a DB plan than a DC plan — funded status and contribution draws can not only increase a company’s liability, they can seriously erode its viability.
The question is how we get a bottom-line centric CFO to care about their DC plan with the same ardor. Until we do, the needed focus on retirement readiness will continue to suffer.
In April 2014, Hugh O’Toole left a high-profile job as head of sales at MassMutual to try to solve that problem. His new company, Viability Advisory Group, set out through a patent-pending evaluation program to actually quantify the employment costs of employees who are unlikely to be able, or believe they are able to, retire on time. Using employee census data to determine how many employees are likely to be forced to work past age 65, he has been able to quantify the actual increased costs of health care, disability, compensation and absenteeism by age group in a format to which CFOs, who respond to numbers and data specific to their company, rather than general research, can relate.
After testing the system and process with more than 50 CFOs and 300 advisors, O’Toole saw that he needed a partner to help fund and distribute the services of Viability AG — which is why he sold his company to MassMutual, rejoining his former employer to run the Viability business as a separate but wholly owned entity. (The acquisition was announced Nov. 16, but financial considerations were not disclosed.) MassMutual, long a proponent of plan health measures, had already developed the “CFO Story,” a presentation for advisors on how to appeal to the CFO.
While the obvious choice for a partner might have been a DCIO that could work with almost any record keeper (think big-ticket value-add programs like Alliance’s Center for Behavioral Financial or Columbia’s Retirement Learning Center), but such platforms also tend to shy away from being disruptive, seeking to work with as many partners as possible. On the other hand, Viability AG has the potential to be very disruptive — uncovering not only which providers and advisors are actually moving the needle on retirement readiness, but who actually has a plan and capabilities.
Though MassMutual will probably only work with advisors that are likely to work with them, they do plan to offer the Viability AG product for plans record kept by rivals. The new offering will be offered to MassMutual retirement plans and worksite insurance clients strictly through financial advisors, according to Eric Wietsma, head of Sales and Distribution for MassMutual Retirement Services.
Though it’s perhaps obvious why O’Toole sold to a provider — getting exposure and funding in one fell swoop — it remains to be see whether he will be able to remain autonomous enough to really change the industry and move CFOs to care about their DC plan.
Stay tuned.
