Every day we engage with complicated algorithms and automations when we use social media or search engines – and yet, “googling” is universally recognized as a quick and easy way to find information. This is because the experience is easy for end-users, even if the underlying product is highly complex.
When it comes to delivering guaranteed lifetime income (GLI), the same principles can be applied. Due to advancements in technology and product, it is now possible to deliver intricate annuity products seamlessly within a 401(k) plan menu.
However, it’s not as simple as just plugging in the products. The digital experiences surrounding the delivery and servicing of these products must be straightforward for plan participants. Managed Accounts and Target Date Funds (TDFs) offer a viable option for delivering guaranteed lifetime income with a structure that reduces action required on the participants’ part. Embedding GLI in either of these strategies provides an opportunity to meet customer needs without adding additional work for the plan participant.
With the experience streamlined, participants can focus more on the value the product provides instead of the complexity of its design. After all, product simplicity is only one facet of the overall customer experience. Products also need to be able to address key participant pain points, and meet expectations.
A product like a Fixed Index Annuity (FIA) with Guaranteed Lifetime Withdrawal Benefit (GLWB) may offer several customer-centric features, including guaranteed lifetime income, the potential for growth, accessibility, flexibility, and portability, all of which help improve outcomes for a range of participant priorities. A caveat that’s been used with such products in the past has been their complexity. However, by leveraging one of the aforementioned strategies, we can deliver such innovative products seamlessly within an employer-sponsored retirement plan.