“Why aren’t we giving participants better income planning assistance?” Sheryl O’Connor rhetorically asked. “We should be helping them create plans in order to be better prepared when they leave.”
O’Connor, Founder and CEO of retirement income planning software firm IncomeConductor, counts firms like Marsh McLennan as clients whose coaches use the tool with their participants.
“Marsh has seen that people tend to contribute more if they actually have a clear picture of their goal,” she said.
It’s a subscription-based service that also works with major broker-dealers nationwide, including LPL Financial, Advisor Group, and Cambridge Investment Research.
“We started out as mostly for wealth advisors, but then we expanded into the ERISA side of the business,” O’Connor explained. “One of our angel investors was a top plan advisor with MassMutual before moving to the wealth side. He uses IncomeConductor as an illustration with his plan participants and then says, ‘If you want to do some real individualized planning, I can do that as well.”
After working with many of the country’s largest recordkeepers, she hit upon the idea. She saw the kinds of income planning tools available through their websites for participants and called them “not good.”
“It’s very simple to use and gives the participant an actual plan, not a probability of success.
Starting as a beta tool under the asset management firm she worked for, she secured funding and struck out (with two of the firm’s other partners) as a separate company in 2017. The business-to-business platform is for advisors, coaches, and planning staff to use with clients. Social Security, healthcare expenses, and longevity projections can also be included.
She said that part of the platform’s benefit is that the retirement plan advisor can educate the participant with information about their individual situation, making it ideal for onsite one-on-one meetings.
“It’s a great educational tool for group meetings, as well, and advisors can hold educational sessions for plan participants around retirement income planning and how different planning components affect their retirement readiness. From there, if they want to take a deeper dive and create a custom plan for themselves (with all their other accounts pulled in), that’s the next step in the process.
O’Connor described a recent appearance on a Morningstar Investor Conference panel. The moderator asked the panelists for their opinion on when a person should begin planning for retirement. The other guest, also a technology expert with a retirement income software business, said, “No sooner than five years away from retirement.”
“My answer, after being in the industry for almost 30 years, is that as soon as you start saving for retirement, you should start planning for retirement,” she concluded. “There are so many benefits to that, one of which is to make sure people contribute to both an IRA and the Roth components of a 401(k). I think that’s another value add that plan advisors can bring to their clients, showing them that it’s not only important to diversify your investments but also to diversify your savings structure.”
