Riding the Wave of the Future

“Weather data. Stock data. If you don’t label it, you really don’t know which is which,” he says. “You’re working with the same mathematical properties.” Gadenne’s next gig? Working as a resident entrepreneur at the Bank of Boston, where his accomplishments included launching the 1784 mutual funds family and developing a technology-focused investment advisory unit for the firm’s private bank.

In the early 1990s, he co-founded Rational Investors, which provided advice in 401(k) plans over the Internet. In 1999, Standard & Poor’s bought the firm and Gadenne became the general manager of S&P’s retirement services division. After his own “retirement,” which lasted 59 days, Gadenne co-founded another start-up, Retirement Engineering, Inc. The firm is developing products, planning methods and advice software for financial institutions that compete in the retirement income market. This past July, REI received its first U.S. patent for investment products the firm has pioneered.

Gadenne organized RIIA after hearing persistent industry chatter about the need for an association that would address retirement income issues across the traditional product, process and business silos. It got to work fast. RIIA has already introduced an education and training program that will result in a new designation: Retirement Income Expert.

As David Macchia, a RIIA committee chairman, notes: “I think Fran?ois’ voice is one of the most important in all of financial services. He’s had some important insights, including understanding early on that the need to have an organization to come together across industries is essential to creating the future of retirement income security.”

Already, Macchia sees progress.

“We have financial services companies which are viewing the retirement income opportunity in a different way than they probably would have absent Fran?ois’ vision,” says Macchia, CEO of Wealth2K, a strategic marketing consulting firm in Massachusetts that focuses on the financial services industry. “More and more, they are looking at their role in retirement as less of an incremental change to an existing business model, but more as a fundamental change, if not a new business model. Now that’s a key insight.”

At the moment, Gadenne says advisors are “sitting between chairs” and that progressive companies have begun to realize that they need to do a better job helping advisors become experts at retirement income distribution planning. That doesn’t mean only product, he says, but process.

“It’s still a muddle. The first reaction of players is to do the first wave — basically see if they could make incremental changes to their business model. Insurance [companies] put income riders on variable annuities. Mutual funds went with target-date funds. Software firms came up with systematic withdrawal plans. It’s all first-wave. It is meeting some level of success, but it’s not meeting all the success one would like to see,” notes Gadenne.

“The question now is how do we go from Phase One to Phase Two? What the heck is that second wave? Those are things we’re putting squarely on the table,” he adds. “I don’t think there will be a solution, but lots of solutions. Do I think one size fits all? No. But we are getting there. We’re getting there.”

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Freelance writer Ellen Uzelac is based in Chestertown, Md.; the former West Coast bureau chief and national correspondent for The Baltimore Sun, can be reached at [email protected].