Loreen Gilbert In The Media Retirement Plan Industry Trends: What Employers Need to KnowThere are many interesting and important trends we are seeing in the retirement plan industry. Employers sponsoring a retirement plan (plan sponsors) will want to consider which of these trends should be incorporated into their retirement plans and evaluate how well their current investment advisor as well as their plan vendor (recordkeeper) are keeping up with changes in the industry.New Tax LawThe Tax Cuts and Jobs Act became effective at the beginning of 2018 and it is the largest overhaul of the U.S. tax system in over thirty years. Most people do not yet realize what the tax law means for them, but once taxes are filed for 2018, we expect retirement plan contributions to shift in a few ways. First, those who lose itemizing their deductions because the standard deduction has doubled, will look to pretax retirement savings to reduce their taxable income. Also, taxpayers who see their taxes going down, will consider the benefits of a Roth 401(k) contribution.Financial WellnessWhile health wellness has been the focus of many human resource departments, there is an increasing interest in financial wellness programs for employees. Whether it is dealing with student loans for Millennials or retirement readiness for baby boomers, financial matters are at the forefront of workers’ minds. Employers addressing those financial pressures can help their employees reduce financial stress and hopefully be more focused on their job. Seek out an advisor experienced in running financial wellness programs to help tailor a program that works for your employee demographics.Open Architecture PlatformsMost, but not all, recordkeepers have moved away from requiring a plan sponsor to only use their funds in the retirement plan. However, those proprietary platforms do still exist. In addition, many recordkeepers limit the number of funds from which to choose, which then limits the retirement plan fund choices. Plan sponsors should look to see what open architecture platforms are available for their plan. Open architecture plans offer thousands of investment options and are not bound by fund requirements and limitations. Having too many funds offered on the lineup can create paralysis for participants, but at the plan level, employers should be able to choose from a broad array of investment options.Model PortfoliosMost plan sponsors understand the benefits of having target date funds in the retirement plan, including potentially using the target date funds as the qualified default investment alternative (QDIA). In addition, many plans also include risk-basedportfolios from which employees can allocate based on their risk profile. The next iteration of allocation strategies is to offer model portfolios, whereby the funds are put together from the fund lineup in the plan. These portfolios are often actively managed portfolios where the investment advisor adjusts the asset allocation.ESG Investment OptionsESG is an acronym for screening companies based on Environmental, Sustainable and Governance policies. It is a broader screening than the old socially responsible investing, which used a negative screen for the so called ‘sin’ stocks of alcohol, tobacco and firearms. In a study conducted by Natixis Investment Managers in 2016, three out of four defined contribution participants surveyed said that they would like to have more socially responsible fund options included in their retirement plan. In addition, seven out of ten surveyed said that they would be more likely to increase contributions to their retirement plan if they knew their investments were doing good in the world.Retirement Income StrategiesAs the demographics show that more and more people are reaching retirement age, plan sponsors are looking at deaccumulation strategies. Withdrawal strategies pose different risks than accumulation strategies, namely the sequence of return risk. Think of it as dollar cost averaging in reverse. Dollar cost averaging helps you as you are accumulating money because when the market is down, you are buying more shares and when the market goes back up, you will capture a gain. However, in retirement, if you need to sell shares as they are going down, you are selling more shares and will not recapture the value when the market goes up. In-plan retirement income strategies can assist employees with an income stream and at the same time, prevent excessive money from leaving the plan in the form of rollovers. We expect more products to hit the market that would provide an income stream to participants directly from their employer-sponsored plan.Potential Market Correction and Eventual Economic RecessionWe are now a decade into the bull market run and while bull markets do not die of old age, they do eventually die with some impetus leading the economy into the next recession. We don’t know when that will happen, but we do know that we are closer to the end of the bull market than at the beginning. Therefore, plan sponsors should reevaluate fund offerings now, taking an analytical look at downside capture instead of solely focusing on the best past performance numbers. Specifically, this is a good time to review which target date funds are being offered, comparing risk profiles of various target date fund options.Fiduciary RuleImplementation of the fiduciary rule has been pushed down the road; however, most everyone in the industry is better prepared for an eventual change. The most important note for plan sponsors is to make sure your retirement plan advisor is acting in a consultative manner as a co-fiduciary, such as in a 3(21) or 3(38) capacity. Seek out an advisor with the designation of Accredited Investment Fiduciary (AIF) which ensures your consultant is trained in acting as a fiduciary. In summary, many plan sponsors haven’t thought through all of these topics. As an investment advisor to retirement plans, we present these topics and much more to plan sponsors, providing solutions tailored to each company’s plan objectives. Contact us to conduct an analysis of your current retirement plan so that your plan becomes a successful tool for employee recruitment, retention and morale.Loreen GilbertLoreen Gilbert is a registered representative with and securities offered through LPL Financial, Member FINRA/SIPC Loreen Gilbert is the President and Founder of WealthWise Financial Services. Gilbert serves as Chair of National Association of Women Business Owners Institute (NAWBO Institute), which provides resources and tools to women business owners around the globe. Gilbert was awarded the Remarkable Woman Award as “2016 Business Owner of the Year” and “2017 Advocate of the Year” for NAWBO-Orange County, California. She was recently honored by Enterprising Women Magazine as the national winner of the 2017 Enterprising Women of the Year award in her category. Gilbert has been covered by US News & World Report, Investor’s Business Daily, Yahoo! Finance, Money Magazine, Reuters, USA Today and Financial Advisor Magazine. Gilbert also hosts on-air segments for KX 93.5 FM where she resides in Laguna Beach, California, to educate listeners on financial matters. Her iTunes podcast is called WealthWise Moment. Contact us at (949) 748-1177 or wealthwisefinancial.com.