Becoming More SECURE and Finding Greener Pastures

The retirement industry is dynamic, and there are always new developments its professionals must adapt to and consider. An expert panel at the recent NTSA Summit offered some insights into two recent factors having a significant impact on the industry and those it serves. 

Panelists included Lenore Reiner, Executive Director, Calvert Research and Management; Andy Remo, Director of Federal & State Legislative Affairs in Government Affairs, American Retirement Association; and CarlaAnn Eisele Goedtke, CFO for Investors Choice Financial Services Inc. They focused on SECURE 2.0, enacted Dec. 29, 2022, as well as what pursuing a focus on environment, social and governance (ESG) in running a plan entails and means. 

SECURE 2.0

 

Advisors are disseminating information about SECURE 2.0 to plan sponsors, Goedtke remarked. “This is what they need to do this year,” she added. 

Goedtke reported that the biggest 457 plans have simplified their rules. Further, she said, they are leaning on recordkeepers, who “will be very influential in following some of the provisions” of SECURE 2.0. 

However, said Goedtke, “confusion breeds opportunity.” Remo agreed, remarking that there is “an opportunity for an advisor to be a value add — a subject matter expert.” Goedtke struck a similar tone, saying that there is an opportunity to educate and advocate — to educate participants, help service providers better explain benefits and what participants need to do, and bring continuing education to certified public accountants. 

ESG

 

There are misconceptions concerning ESG and its application to benefits administration, Reiner said. For instance, she said, there is a view that in applying ESG, a provider “just screens for companies that do what they don’t like.” But a focus on ESG, Reiner said, entails careful scrutiny regarding how a company manages off-balance sheet capital. 

ESG is not ultimately about ideology, but about value, said Reiner, remarking that it’s “a process, not a product.”

Reiner said that ESG is “a way to drive outcome” and that her firm works with companies to improve their practices through ESG. There are “real potential benefits,” she said. Further, she noted that “99% of millennials want to invest this way,” adding, “This is a huge opportunity.” 

Reiner also noted that the new Department of Labor rule concerning ESG does not oblige companies to apply it. It’s “a big misconception” that the rule mandates ESG, she said, noting that it really says that companies “may” use ESG, but does not require them to do so.