Retirement planning in itself is already a daunting task, so imagine what it will be like in the next few years as those 76 million boomers approach retirement and the demand for retirement services increases. “The average age of retirement is 62 and a half,” says John Curry, managing director of retirement management services for Boston-based FundQuest, Inc. “And the first of the baby boomers are turning 60 this year.”
FundQuest, which was acquired last year by the French-based global bank BNP Paribas, provides Web-delivered wealth management solutions via banks, broker/dealers, insurance companies, and advisors. It has $30 billion in assets under management and administration through its U.S. and European turnkey asset management platform (TAMP) operations. Nearly a year ago Curry was hired to pull together FundQuest’s retirement planning division and introduce its services to the marketplace. The timing couldn’t have been better.
Curry says because the retirement market is only going to grow, there will be a need for better retirement planning solutions and more education for advisors. “We clearly believe that retirement income will be a [major focus for] the financial services industry over the next 50 years,” he says.
In response to this trend, FundQuest is working to build a business around retirement planning using its managed accounts platform. Curry says FundQuest is basically repackaging the managed accounts the firm offers to its wealth management clients to address retirement income issues. Using managed accounts, “what we’re hearing from some people is they want to do different things with the investment management angle for retirement,” he says. For instance, “they are interested in creating target maturity style funds with a declining equity allocation as you go through retirement.” In the world of retirement income planning, “a lot of people argue that we don’t have a product problem, we have a packaging problem,” he continues. “To a large degree, I believe that’s true. I do think there are product innovation opportunities at the margin, and doing some creative things with investment management as a differentiator I think are viable, legitimate strategies.”
Because managing retirement assets should be an interactive, ongoing process, Curry says, FundQuest’s retirement platform monitors a client’s retirement plan over 20 or 30 years. “Think about the kinds of products that are suitable for someone who is 55 and looking toward retirement. As they get closer to retirement other products start to blend in,” he says. “As you age, that same policy may be difficult to afford so you would dial down some benefits.” The retirement plan then evolves and grows with the client.
As a technology and investment management platform, FundQuest “is the Intel inside and not the big brand,” he says.
At age 41, Curry has almost 20 years of experience, mostly in retirement product development and wealth management. That’s why he is also on the board of directors and chairman of the training and education committee for the Retirement Income Industry Association (RIIA), a new trade group that focuses on retirement income. “One of the challenges is that the industry has been very product-centric,” he explains. “When you look at retirement income there is no silver-bullet product.” RIIA plans to create a study group to dig into such issues as how to determine withdrawal rates by age and risk management, and to create a comprehensive approach.
RIIA is in the midst of developing
a curriculum for practice management workshops and hopes to have some modules available this summer. “There has been a kick-up in education programs [recently],” he says, “and a ramp up in marketing for retirement planning.”
Curry says FundQuest expects to have three to five financial institutions using its retirement platform in the next 12 months. As with its other TAMP offerings, the retirement module will be tailored to the brand of the partnering financial institution.
Financial institutions are looking at retirement planning as a business opportunity and trying to see how it fits together with their overall business, Curry explains. “We are on the cusp of a [new] concept,” he says. “In five years we will wake up and go to work and not think about” the best way to conduct retirement planning. “We are in a transitional period.”
Megan L. F. Robert is a freelance journalist who resides in Fairbanks, Alaska. She can be reached at MLFR@magwriter.com.