1 brad vaughan vice president – dcio sales consultant november 11, 2015
TRANSCRIPT
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1
Brad VaughanVice President – DCIO Sales ConsultantNovember 11, 2015
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THE TRADITIONAL DC MINDSETSHIFTING YOUR DC MINDSET
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THE BABY BOOMER 401(k) EXPERIENCE: 1981–2015
1981 2015
401(k)
Menu design 404(c)
Target risk funds
Auto-enrollment
Catch-up contributions
Target date funds as QDIAs
Retirement income
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GENERATIONAL DEFINITIONS
In 2015, they are…
Baby Boomer1946–64
Gen X1965–81
Millennial1982–95
76million
59million
80million
age51-69
age34-50
age20-33
"Baby Boomers vs. Millennials: Who Would You Rather Hire?". Time Magazine.
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BUTTONED-UP VS. CASUAL
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SUPER STAR VS. TEAM PLAYER
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TECHNOLOGY: TOOL VS. LIFESTYLE
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POTENTIAL OPPORTUNITIES
Build credibility with sponsors and drive better outcomes
– Recommend plan design and service enhancements that cater to frequent job changers
– Develop an effective rollover strategy to capture existing assets from previous employer plans
– Leverage social media tools; explore ways to build an online community of employees within a plan
– Engage with points of influence to develop a peer network; find ways to incorporate peer benchmarking
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THE RETIREMENT FOUNDATION IS DETERIORATING
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SALARY UNEMPLOYMENT DEBT
AND THERE ARE MAJOR IMPEDIMENTS TO SAVING
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SLOW AND STEADY TO BOOM AND BUST
Dot-ComBubble
RealEstateBubble
1981 1995 1996 2014
0
1,000
1,800
S&
P 5
00
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WHAT WE’VE SEEN AT T. ROWE PRICE
0%
5%
10%
15%
20%
25%
2012 2013
29%
26%26%
30%
2014
Percent of Non-TDF Users Age 20–34 With Greater Than 80% of Their Account Balance Invested in Cash
Source: T. Rowe Price Retirement Plan Services 401(k) accounts that are currently active, have a positive balance, and do not include any assets invested in target date funds. Cash includes money market and stable value funds.
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POTENTIAL OPPORTUNITIES
Build credibility with sponsors and drive better outcomes
− Promote an age-appropriate default investment for auto-enrollment
− Elevate the initial default savings rate
– Couple that with steeper auto-escalation increases
– Provide younger participants with the opportunity to delegate (or validate) retirement investment decisions
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2,000participants
200plan sponsors
T. ROWE PRICE MILESTONE STUDY
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#1 FINANCIAL GOAL BY AGE GROUP
Paying off debt
Saving for retirement
Just getting byPaying off debt
Saving for retirement
Just getting by
44%
19%
18%
35%
35%
10%
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THINKING ABOUT RETIREMENT GOALS
Source: 2010 T. Rowe Price Milestone Study.
Employees start setting their goals in
their 30s/40s
I’m starting to think about my retirement goals in my 20s/30s
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AWARENESS WITHOUT ABILITY CREATES FEAR, DENIAL, AND ANXIETY
How do I save for retirement?Need to pay
the bills
School loans
Creditors are calling
I’m worried
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TOP 3 MILESTONES TO SAVE MORE FOR RETIREMENT
Source: 2010 T. Rowe Price Milestone Study.
Reaching a certain age20%
Health21%
Current events/economy27%
Ages 50–59
Becoming a parent29%
Current events/economy 19%
Marriage17%
Ages 20–29
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PLAN CHANGES DON'T POSITIVELY IMPACT SAVINGS BEHAVIOR
1.2% 0%Typical Plan Changes
Investment changesEnhanced websiteCompany match formula
change
New loan provisionsPaperless statements
Source: 2010 T. Rowe Price Milestone Study.
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COMMUNICATION PREFERENCES
Source: 2010 T. Rowe Price Milestone Study.
1:1 Consultation
49%
46%
Online Tools With Personalized
Recommendations
41%
34%
Educational Webinars
22%
19%
Electronic Communications
30%
33%
Print Communications
28%
18%
Ages 50–59 Ages 20–29
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POTENTIAL OPPORTUNITIES
Build credibility with sponsors and drive better outcomes
− Promote communications and tools around holistic financial topics
– Recognize the need to connect with participants on an emotional and personal level
– Bundle retirement savings messages with key “milestone” events to maximize participant adoption
– Tap into the innate desire to compete, to achieve results: GAMIFY to engage.
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WANT TO LEARN MORE?
Access our new advisor site:
troweprice.com/millennials
Access our complete repository of DC resources at:
troweprice.com/dc
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IMPROVING YOUR DC PLAN:NEXT GENERATION THINKING To learn more about our investment services, contact your T. Rowe Price representative.
CZOBHSCE_NextGenPPT
2015-US-8262
T. Rowe Price Investment Services, Inc.