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The past year saw the defined contribution market searching for the forest through the trees, says Drew Way.

A senior retirement analyst at New York-based Corporate Insight, Way tracks 19 of the largest service providers, mapping product rollouts and offerings to participants at a granular level.

“The DC industry seems to have taken a step back, and is now looking at the whole financial forest, instead of the individual trees that represent just DC plans,” said Way in an interview.

“Design and performance discussions will always be prominent fixtures in the DC industry, but in 2015 we’ve seen the conversation shift toward more holistic, yet at least equally important, questions: How do we get our employees to enroll in the plan to begin with? And, How do we get our participants more engaged in the plan/contributing more,” said Way.

Industry is definitely developing broad-based education initiatives with the objective of creating a more financially-sound workforce, as opposed to only focusing on how to best optimize plan options, he said, reinforcing the perception of many industry leaders’ as conveyed in BenefitsPro’s year in review series.

Going forward, it may not be enough to merely encourage increased deferral rates, said Way.

“Both providers and sponsors realize that large segments of employees may not be able to afford to increase their contribution rate due to things like credit card and medical debt and student loans,” noted Way.

Getting participants the tools to better manage their overall financial health will become integral to presenting a retirement strategy, he said.

Way saw nearly all of the providers he tracks add some form of new educational content in 2015, with more than a quarter of those providers completely overhauling the educational component of their platforms.

Innovations like retirement income projection tools will continue next year, expects Way.

So will the prominent trend of increased mobile offerings. “While the retirement industry still lags behind other financial services sectors such as banking, credit cards and brokerage with regard to mobile technology, retirement providers are closing the gap,” he said.

“Mobile accessibility has become a crucial component to the overall customer experience of retirement plan participants, and the increased reliance on mobile over desktop in terms of computing places a significant emphasis on a highly usable mobile platform,” added Way.

“More firms will add transaction capabilities to their mobile platforms, as well as mobile-optimized versions of some of the more advanced desktop site educational content, such as retirement income projection tools,” he said.

Way’s vantage as an industry analyst comports with much of what the executive leadership in the industry sees as trending for next year.

Here’s the view of 2015 and a look ahead at 2016 from three executives–Jason Crane of Transamerica, which has just published its Prescience 2019 report; Crystal Hardie Langston, the leader of Vanguard’s relatively new VRPA program, designed to service small businesses; and William Yoerger of OneAmerica, which recently established its competitive commitment with the acquisition of BMO Financial Group’s retirement business.

Jason Crane, Vice President, managing director, Retirement Sales, Transamerica Retirement Solutions

Transamerica administers $152.53 billion is assets for nearly 4 million participants in more than 25,000 plans

What was the biggest development in 2015 from your perspective?

Crane: Transamerica has already recognized the importance of mobile in communicating with employees today.  We know that more people access the internet today via mobile versus desktop or laptop.

And we’ve found that retirement plan participants who are digitally engaged save more on average than those who are not.  Earlier this year, we offered the next generation of our mobile app, My TRSRetire, to more participants to help them take control of their retirement planning. 

The app’s user-friendly interface makes it convenient for retirement plan participants to understand if they are on target to meet savings goals, get an entire overview of their accounts, and even complete transactions and update allocations.

Transamerica also expanded 401(k) retirement plan coverage to more U.S. workers at smaller businesses.   Many smaller businesses don’t currently offer retirement plans to their employees because they need a cost-effective retirement benefit that will be easier to administer while affording them some fiduciary protection. 

We designed a new 401(k) especially for these smaller employers, offering them Transamerica’s expertise and well-known service along with easy enrollment and features that will help employees reach their savings goals. This new FastTrackSM Retirement PlanSM is designed so that more small business employees can benefit from a workplace retirement plan.

Transamerica also began plans to expand in the large and mega-plan market with the agreement to acquire Mercer’s US defined contribution administration book of business.

Upon completion of the deal, that defined contribution business will transition to Transamerica Retirement Solutions, which will become a top ten defined contribution record-keeper based on plan participants and assets.

The number of retirement plan participants serviced by Transamerica will increase by 917,000 to approximately 5 million. Assets under administration will increase by $71 billion, to approximately $216 billion.

In addition, Transamerica will become the preferred defined contribution record-keeping provider for Mercer’s total benefit outsourcing and total retirement outsourcing clients going forward.

The added scale in participants and AUA, coupled with new business opportunities and additional expertise in the large and mega corporate market segment, collectively demonstrate the strategic fit of this acquisition for Transamerica.

What developments do you expect for the defined contribution space in 2016?

Crane, Transamerica: Transamerica has just released findings from its latest study– “Prescience 2019: Expert Opinions on the Future of Retirement Plans”—which examined trends in retirement plans with $25 million to $1 billion in assets.

The field of retirement plan experts predicts that more plan sponsors will rely on plan design rather than participant education in order to drive retirement readiness. 

Automatic enrollment is expected to grow as a feature in retirement plans, and the default contribution rate is expected to rise as well. 

The experts we surveyed also reported that sponsors will rely more and more on mobile applications to communicate with participants, especially as the workplace becomes increasingly fragmented due to a rise in people who work at home or in remote locations.

Has there ever been more competition for sponsors’ business?

Crane: The retirement plan marketplace has always been competitive, never more so than it is today. Plan sponsors and their advisors want to optimize the plans for both the employer and employees.

This year, Transamerica has focused on expanding our distribution for retirement plans to reach more plan sponsors.  We brought to market a new workplace retirement plan program with Merrill Lynch that expanded retirement plan options for not-for-profit organizations, marking the first time that Transamerica offered a 403(b) retirement plan program with Merrill Lynch. 

Merrill Lynch also made available Transamerica’s mutual fund retirement plan product on its Advisor Alliance platform in 2015, following many years of offering Transamerica’s Group Annuity retirement plan product.

Transamerica also joined forces to distribute corporate retirement plans with Edward Jones for the first time in 2015. Expanding the distribution of retirement plans with strategic alliances will remain a focus in 2016. We’re striving to make workplace retirement plans an accessible benefit to more workers in the both the non-profit and for-profit employment sectors.

Crystal Hardie Langston, principal and head of Vanguard Retirement Plan Access

VRPA, Vanguard’s small business 401(k) service, was launched in 2011 and experienced record growth in 2015, now servicing more than 220,000 participants in over 4,400 plans

What was the biggest development in 2015 from your perspective?

Langston: There continues to be greater clarity and focus on costs in the defined contribution industry–particularly on the investment side of business.

As Vanguard research has shown, the investing public is smart, recognizing that costs matter, and investors are truly “voting with their feet.” The retirement world is no exception, and we believe small businesses should also be able to offer high quality, low cost retirement plans for their employees.

We entered this small plan market just a few years ago, recognizing that small businesses were under-served and overcharged. And, they shouldn’t be overlooked–small businesses represent more than 99 percent of American employers!

Prior to launching VRPA, we received many unsolicited requests each year, asking us to please provide a comprehensive solution for small plans. And, just a few short years later, the rapid growth of Vanguard Retirement Plan Access is proof that this a viable and much needed service.

We designed Retirement Plan Access to be an extension of our low-cost leadership. Small business plan sponsors have access to Vanguard’s lowest cost funds and share classes on this platform.

Case in point, this year, we expanded Vanguard’s target-date offerings by introducing our Institutional Target Retirement Funds. These 12 new funds are only 10 bps–and they are offered to our Retirement Plan Access clients.

This was certainly a big development for Vanguard, and for our clients.

What developments do you expect for the defined contribution space in 2016?

Langston, Vanguard: Particularly in the small market, we definitely anticipate the continued prominence and positive impact of advisors on the retirement plan industry.

Financial advisors are becoming more sophisticated, have deeper knowledge, and can offer enormous value to small businesses plans.  

As a result, we are constantly evolving our offer to better partner with advisors.

We also believe the legislative and regulatory space will become more important and influential in shaping this marketplace. Case and point are the on-going fiduciary discussions and debate. At the end of the day, it is all about protecting the end investors.

Has there ever been more competition for sponsors’ business?

Langston, Vanguard: Competition is fierce, and rightly so. We believe that services will be driven by continued and increasing focus on a few growing and emerging trends.

Fees and fee transparency: There will be continued focus on fees and fee transparency, which is a positive. Providers need to be more responsible about what they are charging.

We have been a leader in fee transparency from the outset. Vanguard has consistently advocated—and practiced—full and candid disclosure to investors of the costs of investing, and we have been vocal on the need to improve fee transparency over the years. We will certainly continue to make great strides in this direction.

Indexing: We believe passive investing will continue to grow– in traditional index funds, index-based ETFs and index-based target date funds. Costs matter, and indexing is the purest form of low cost investing.

The future is bright–the cost of investing continues to come down, and that is all the better for investors.

Financial wellness/participant education: Sponsors are certainly expressing more interest in financial wellness solutions. Most participants don’t make their retirement savings decisions without considering other issues in their financial lives.

Even more importantly, however, sponsors want to know that what they are offering to employees will actually move the dial on savings.

Technology: Innovations in technology will continue to move the dial in the retirement industry. Meaningful advances in the fields of investments, behavioral economics, and technology are having a dramatic effect on how we design plans and participant education, interact with participants and, ultimately, on our ability to improve participant outcomes.

William F. Yoerger, President of OneAmerica Retirement Services division

OneAmerica administers $56 billion in assets for 1.2 million participants

What was the biggest development in 2015 from your perspective?

Yoerger: Mergers and acquisitions. Clearly the pace has increased, and there will be more. It has to be done effectively, similar to the way we’ve brought on BMO Financial Group’s Milwaukee-based, U.S. retirement services business, to protect deal value.

In our opinion, that starts with a business and cultural fit with the company and the employees of the organization we acquire. If they fit into our culture and we are treating them right, which we are, that leads to a happier, more appreciative plan sponsor.

A second development is the continual focus on fees. Unfortunately, as an industry, we’re starting to make it more of a commodity than a value proposition.

And by that, people are saying “Well, what’s the price?” versus the classic formula of value equals benefit, divided by cost. The U.S. Department of Labor clearly states that fees need to be reasonable, and reasonable doesn’t mean cheapest, and that’s one of the challenges the industry has.

Thirdly, improving participant retirement readiness through improved enrollment website user experiences, such as our QuickEnroll option, and continuing to promote financial wellness; because, in our spend-first, save-second society, it’s crucial to motivate people to rethink their purchase priorities and focus on the future, so they can retire with more security. We feel it’s never too late for a person of any age to make change.

What developments do you expect for the defined contribution space in 2016?

Yoerger, OneAmerica: Release of the Department of Labor new fiduciary standard. That’s probably the single most transformational thing to happen since ERISA in 1974.

We’ve been through a number of changes, including the Tax Reform Act of 1986 and the Pension Protection Act. This one’s a biggie.

Has there ever been more competition for sponsors’ business?

Yoerger: There were more competitors 10 years ago. Those that are going to succeed will have to invest in the business and look forward to additional acquisitions.

It’s not unimaginable that five years from now there will be 15 providers really committed to the business that are going to make it. We fully expect OneAmerica to be one of those.