Broadridge introduces retirement income and stable valuer

Broadridge’s Fi360 is available with a retirement and stable value product evaluation tool and is designed to provide plan advisors and sponsors with a due diligence process for evaluating and selecting plan offerings.

Fi360’s Retirement Product Evaluator, launched last week, is based on a proprietary database of retirement savings and stable fund products in partnership with CANNEX, a retirement data provider. Pricing varies based on needs, but the goal is to allow advisors, sponsors and central offices to tailor their analyses to the needs of plans and participants, particularly as they seek to help protect retirement income.

John Faustino

“It lets (a user) choose from 60 criteria to decide what is important to the plan and categorize it as high, medium or low,” says John Faustino, head of retirement products at Broadridge. “It can be tailored to an advisor’s specific areas so they can evaluate the results or communicate them to the plan sponsor’s clients.”

The product offering comes amid ongoing debate in the retirement industry about how to ensure participants receive adequate income in retirement to supplement Social Security. In a recent PIMCO advisory survey on defined contribution pension plans, 90% of large institutional clients said retirement income solutions were their top priority in plan design, up from 74% just a year ago.

According to Faustino, the pension income portion of the evaluator can compare about eight pension products, and soon there will be the ability to compare 15 to 20. The tool allows three or more solutions to be compared simultaneously, with the user able to customize their core requirements for the product, including “explicit fees, implicit fees, how accumulation or de-accumulation is done.”

Need for analysis

The data chief believes the market for the product will be strong as the pensions industry seeks to understand retirement income solutions and ultimately translate these into plans to support the de-saving phase in particular.

“Given the negative connotations many people associate with pensions, it is important to have a third-party assessment tool that can be tailored to their needs,” says Faustino.

Although there has been a proliferation of retirement products that include annuities in recent years, adoption has been relatively slow, due in part to fiduciary concerns and the ability and willingness of data custodians to offer the products on their platforms. According to the 2024 PLANSPONSOR DC Benchmarking Survey, only 6.7% of plan sponsors offer an annuity option in the plan, and another 26% offer it through a managed account. PLANSPONSOR is a sister publication of PLANADVISER.

According to Faustino, Fi360 has been interested in developing a retirement income evaluator since the Setting Every Community Up for Retirement Enhancement Act of 2019 promoted the use of annuities to create a pension-like structure for 401(k) plans — they have already been used for many years in 403(b) plans to create a defined benefit system.

First, Faustino said, the industry needed to find a standardized way to evaluate the products because insurers all defined them differently. That need, in part, led Broadridge to form the Retirement Income Consortium, which brought together insurers, archivists and asset managers. Based in part on the work of that group, Broadridge published a guide on how to “proceed prudently” when evaluating retirement income solutions.

Now the retirement income evaluator is launching a product that Faustino has had in mind since his early days at Morningstar Inc., when he saw target-date funds coming onto the market. Back then, he says, there was a clear need for benchmarking and evaluation tools for the promising investment product, but he was slow to push for the solutions.

“I didn’t want to make that mistake again,” says Faustino. “We knew the pension income would be big and we wanted to do something to motivate people.”

Training required

In April, Morningstar released a study on TDF products that include an annuity option. The company concluded that while the products have potential, more education and communication are needed to make them widely adopted in plan design.

Other Fi360 investment rating tools, such as mutual funds and exchange-traded funds, provide users with a rating score. However, for retirement income and stable value, the solutions are more nuanced and require users to dive deeper.

“There are a lot of nuances in determining the best interests of the plan,” says Faustino. “It didn’t seem appropriate to us to run a calculated hard score on stable value and retirement income solutions.”

Insurance-backed stable value products have been used in retirement plans for some time, and Fi360’s evaluator has listed around 300 classes of shares. The solution has suffered a setback due to higher interest rates making it less attractive, but Faustino points out that with interest rates falling, demand for the investment and therefore a growing need to analyze it is expected in the coming months.

According to Faustino, the Stable Value Evaluator already has a large broker/dealer client. The Retirement Income Evaluator is now used by a large insurer and a handful of plan advisors.