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What’s Holding Back Lifetime Income Solutions? Advisors.

NAPA Net readers didn’t have to look very far to identify the biggest impediment to the adoption of lifetime income solutions in defined contribution plans.





The top voted response in this week’s poll was “their advisor doesn’t like/trust the products.” The second most cited response? “Advisors believe that Income Products will cannibalize their own ‘rollover’ model.”





Not that there weren’t other concerns. Products were “hard to understand and too expensive” was third-most cited, while “concerns about portability” lingered at number five.





However, the fourth-most cited response was: “no perceived need for the product.”





The remainder of the top 10 impediments were:






  • Waiting for safe harbor approach/approval



  • Concern about taking on additional fiduciary risk/litigation



  • Lack of participant demand



  • Difficult to communicate/explain to participants



  • They are expensive solutions that may or may not be transferable or easy to get out of 


Indeed, despite the encouragement of regulators, the retirement plan industry at large, and a great many retirement plan advisors, the takeup rate among plan sponsors remains rather modest. In a recent industry survey of more than 5,000 plan sponsors, nearly half say they offer no retirement income options in their DC plans — and another third say they are unsure about which options are offered. And while the certainty improved along with plan size, the overall picture painted by PLANSPONSOR’s annual DC survey was relatively consistent.





Thanks to everyone who participated in our NAPA Net poll!

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