The Evolving Defined Contribution Landscape: Alts, ESG and Income in DCTheEvolvingDefinedContributionLandscape:Alts,ESGandIncomeinDC

Read the transcript

• –

  >> Hello everyone and welcome. Thank you for joining our Webinar Alts, ESG, and income in D.C. My name is Mikaylee O'Connor, and I'm a Senior Defined Contribution Strategist for PGIM, the investment management business of Prudential Financial. I am thrilled you are joining me in our panel in D.C. experts today as we dive into three important topics. And each of our panelists offer really a different lens, which is important for these discussions on newer and more modern approaches to improving outcomes for D.C. planned purchase [inaudible]. So with me today we have Greg Ungerman, Senior Vice President and Defined Contribution Practice Leader for Callan. We have Yanela Frias, President of Prudential Retirement, and Jenny Eller, Principal and Chair of the Retirement Services Practice Group and Fiduciary Practices at Groom Law Group. It is such a pleasure to have you all here today. Thank you in advance four your great insights that I know you're going to share with us. So before we dive in, I'd like to encourage our audience to ask questions through the Q&A box on your screen. We'd love more engagement, and thank you to those who submitted questions ahead of time. We will try to address those over the course of the next 45 minutes or so. So the plan for today is to start with a discussion on alternative investments, move into ESG, and then end with income in retirement. And as part of our discussion, I will be sharing snippets of research that PGIM conducted on each of these topics and asking our panelists to opine. So with that, let's dive in. I'm going to briefly set the stage on why are we talking about alternatives. So we have institutional investors such as pension plans, endowments and foundations, as well as institutional high net worth investors often incorporate alternative investments into their portfolios. Why? Well, very briefly, for the diversification benefits, which ultimately helps to reduce the world portfolio volatility as well as the attractive recurrent risk profile for many of these alternative asset classes. So the question is, should there be more access to these types of investments or individual participating in D.C. plans? I would say it's relatively well known [inaudible] alternative.

  >> Now they say it's a great topic and very timely, and again I appreciate being invited to talk about these items. My expectation is that the bright aligned with your stats here on slide three. I think private real estate, you know, has been kind of the first foray into alternatives in the target date funds or multi-asset class vehicles in a daily valued environment. And they've done so to a limited extent and it really has kind of fallen on the different private real estate providers to package their, you know, investment products in a D.C. friendly vehicle. What I mean by that is a collective trust that has liquidity provisions to allow a plan sponsor in a customized target date funds, for instance, to plug it in and enjoy the risk and return profile that is differentiated from the typical stocks and bonds. They always have to go back to the investment factors and beliefs of why are you offering a new asset class or adding a new asset class, and really understand the interaction from a rebalancing standpoint, from a return standpoint, an expectation. So just as the pension industry is dealing with lower expected returns, the same is true with participants, right? I mean interest rates have come down, so the target date providers, whether it's custom or off the shelf, are really scrambling to understand what does that mean on a go-forward basis. Perhaps these younger participants joining workforce, struggling to save for retirement, how are we going to achieve better returns on a go-forward basis. Because those expectations certainly have come down. So I'd offer private real estate as one example that's worked pretty well in the custom or off the shelf target date. And it's done so because it does have open-end funds that allow for them to be daily valued, as well as cash flow. When you look at hedge funds or private equity, illiquidity can be an issue. And you asked about process. And, you know, I put up, not to get too far into the weeds, but really five things to consider if you're in a customized target date plan sponsor or provider to understand valuation is one. Understand liquidity is two. Remember, these are daily valued, daily liquid funds in the D.C. community. So those two hurdles are very important to incorporate around private equity or other private investments. Third would be disclosure and communication, understanding what it is and how are we educating participants what they're invested in. Four, would be really to understand the return profile. Many of these funds need, as I said, need to be prepackaged. So is there additional cash that erodes the return of say private equity? You have to have 30-40% in cash for funding commitments and such. And will that materially change the expected return for that asset class to begin? And the fifth component is fees. Many of these alternatives do increase the weighted average fee of a multi-asset class fund when, you know, combining it with index funds in the publically traded markets. And that can be a hurdle or a consideration to understand, and are you going to be able to allocate enough to these alternative asset classes on a net basis compensate for the additional fees for these alternatives? So I'll stop there and make sure I answered your question, Mikaylee.

  >> No, that's great. Actually, a lot of the things that you touch on kind of flow very well into our next slide in terms of, you know, we wanted to better understand from a reluctance or hurdles that plan sponsors face, and the reasons why they did not consider alternatives either within their investment menu or their target dates. And so you can see here that the top three reasons identified include participant education, lack of communication; operational challenges, as well as litigation risk. Before we talk about participant education being the number one reason, I do want to actually talk a little bit about this litigation risk hurdle. So Jenny, starting with you, we see about 33% of plan sponsors listing this as the reason. You know, what I would be interested in is what are the types of plans that could be brought in litigation as it relates to alternative investments? And, you know, for plan sponsors out there that want to explore adding some sort of an alternative investment, what are the steps that they can do to maybe reduce that litigation risk and make sure that they are following a good fiduciary process?

  >> Sure. And thanks Mikaylee, and, like Greg, I'm super happy to be here, to be with everyone. So I think, you know, D.C. litigation, fee cases, it's just exploded, right? So I think people are just generally nervous about litigation in their defined contribution plans. Interestingly, we've really only seen one case involving defined contribution plan investments in alternatives in a target date fund. And that was where plaintiffs essentially said that the private equity and hedge funds that were included in the custom target date fund were too expensive and performed poorly compared to different things that were available. And that the plan fiduciaries failed to adequately monitor those investments. In that case, which was very recently decided in the 9th Circuit earlier this year, the plan fiduciaries actually won their motion to dismiss, which is not easy to do in a fee case. The intel plan fiduciaries here were able to show that they used a proven process in selecting the elements of their target date funds. And the court agreed that fiduciaries are not guarantors of ultimate performance and success. And that a risk that does not require fiduciaries to select the cheapest possible alternatives for plan investments. In terms of kind of, you know, what plan sponsors ought to be thinking about if they want to add or consider alternatives as part of a target date fund, you know, it's exactly what Greg was talking about. There is no substitute for a prudent process. And under a risk a prudent process should set you free. You should prevail at the end of the day. That's how the statute is written. A well-documented fiduciary process is critical all of the time. But if you're going to be a little bit on the forefront of investment thinking, then you should consider really making sure that you spend extra time and attention documenting a very specific investment rationale for each of the elements that you want to include, say, in a target date fund. This means really understanding exactly the types of things that Greg was talking about. Understanding how alternative are valued, how the liquidity works, what those features are, and then really document, document, document that process and the ongoing process you use to monitor. You know, I also think it's really important for people to understand that investment structures change over time. It used to be that the default fund in every defined contribution plan was stable value or cash. The theory being that at least participants wouldn't lose money. And then PPA came along and now target date funds are the default investment. For years mutual funds were the investment of choice in defined contribution plans because, you know, sponsors wanted people to be able to look in the newspaper and see the investment that they had. Well, that's clearly not a priority anymore. Very recently CITs overtook mutual funds as the most used investment in defined contribution plans. So, you know, all strategies are coming to a target date fund near you, and plan fiduciaries, I think, really should start thinking about whether it makes sense for their particular participants and their particular plan. And you have the tools to do this if you want to.

  >> That's excellent. Thank you Jenny. So heading over to you Yanela, we see the top reason for not considering alternatives in their D.C. plan is participant education. Now, you coming from a record keeper, talk to us about kind of the role of education and communication and what plan sponsors need to know on this.

  >> Absolutely. Good morning, great to be here. And, you know, people lead complicated lives, with many demands on their time and their wallets. Now at Prudential we have an integrated approach to participant engagement, which places retirement education within the context of a holistic financial wellness plan to really help employees become more financially fit and really understand all their options from the investment perspective. And then we use these results of essentially an online financial wellness assessment and work to develop communication and education objectives that meets a plan participant where they are. And we do this for all plans that we administer. And what we try to do is use targeted communications, really deploy through digital, electronic, print media, and in-person workshop to really help the participants identify their personal, financial wellness journey. And again, understand what their options are. And what we see is that adding the complexity of alternative as an investment choice is a challenge, can be a challenge, especially it's beyond target base funds. People tend to be savers, not investors, and really there're challenges that understanding potentially complex investment options can be overwhelming for individuals. And so we do think that education really, really matters because investing and choosing funds is really one of the most difficult things and tasks for participants. And therefore, we worry that adding alternatives, again, especially as an individual fund, could lead to inertia, and participants really not acting. So I think if a plan offers alternatives within target date funds, or they're going down the route of adding alternatives as individual funds, it really absolutely has to be supported by education about the asset class and ideally really as part of a holistic education. Again, if I shared with how we approach it, which is one of the benefits, and everything my colleagues here have said, the liquidity aspects of it, the risks, and why they do belong in a diversified portfolio. And we think once you get into that complexity, perhaps even as part of those one-on-one education sessions, is where you could really potentially impact and have participants understand the benefits. And therefore that could lead to --

  >> That's great. Thank you Yanela. So I know we could probably spend quite a bit more time going into details on alternatives, but I'm going to switch here and we're going to talk about ESG. Based on our recent research, we have roughly a quarter of D.C. plan sponsors having incorporated ESG into their D.C. plans within the last few years. So while it has gained some momentum, I still consider this an emerging area for most D.C. plans within the U.S. Defining what we mean by ESG, or responsible investing, can be somewhat difficult because there are different flavors and it's still a spectrum of implementation options. But here at PG we tend to think about ESG in four broad categories. You've got the first screening where you will use exclusionary screens, you've got sematic or tilting toward a certain responsible investment criteria, you've got integration where you incorporate ESG factors into the investment decision-making process, and then lastly, impact investing where, you know, there is some purpose to enact some sort of change. Now each of these kind of flavors may have different goals and objectives and come with different investment and fiduciary considerations. And to make it even more complex, guidance coming out of the DOL regarding ESG really hasn't changed over the years, which has created some level of, I feel, inaction within our D.C. community. So, Jenny, I'm going to kind of turn to you. Can you maybe briefly summarize the DOL and guidance over the years, where they may be going in the future, and then what this means for plan sponsors wanting to consider and implement some form of ESG?

  >> Sure. Sure. So to understand the history of the DOL guidance on ESG, I just want you to imagine a long, slow and painful tennis match. Over the course of almost 20 years, the Department of Labor has volleyed back and forth with itself, with the staff of the DOL always trying to keep the ball on the court even when faced with a series of really conflicting policy priorities by successive administrations. The original questions about ESG involved really impact investing. Often, those were investments by DB plans in, say, real estate development that could create jobs. It was in this context in the early 90s that the DOL laid out its guidance essentially establishing a test whereby the fiduciary first has to determine whether investment is prudent using all the tools of modern portfolio theory and the needs of the plan. Now I have kids in high school and college, and I think of this part of the process like a college search. There are thousands of colleges out there, and your kid could be happy at many of them. There's simply no single best school for any kid. There are, however, many schools that meet the basic criteria. And similarly there are many, many plan investments that clear sort of the prudent bar under a good, solid search for any particular plan. And what the DOL said originally was, look, so long as an investment clears that prudence hurdle, then a plan fiduciary can consider what they call collateral benefits such as job creation. More recently, the Obama administration took the position that in some cases, ESG isn't nearly a collateral benefit. So that's the integration that Mikaylee was talking about. And said, look, sometimes ESG factors are really part of the core economic analysis. If you have the ability to make that case, fiduciaries, then you don't have to think about ESG as collateral benefits. And it really allowed ESG to be sort of a core consideration rather than kind of a second step. The trump administration early in the administration first cautioned fiduciaries that you shouldn't be too aggressive with integration investing, ESG investing. And make sure that, you know, you're not using it as an economic consideration when it doesn't really merit that. And they said that ESG can't be used in target base funds, which really did put kind of a chill on some aspects of ESG. Finally, the administration went significantly further in its proposed rules, essentially setting up a zero-sum game whereby, you know, any consideration of ESG was deemed to kind of take away from the economic benefits to the plan. The final rule issued by the trump administration, which would be effective but for some non-enforcement guidance that the Biden administration has issued was really more closer to the original trump sub-regulatory guidance. So that's the tennis match. In terms of what fiduciaries should do today, it's really the same kind of thing we talked about earlier with [inaudible]. If you think ESG is a factor that can be helpful in the core economic consideration of your investments, and many, many investment managers feel this way, they integrate into their algorithms, into their considerations, all sorts of things, which might be called ESG, composition of directors and different types of con-strategies and that sort of thing. Then if you want to incorporate it in a core way, then do so and use the same sorts of techniques. The prudent process, you know, take a look at it, evaluate it, compare it, and document why you think this fund overall or this type of investment overall works. And if you think that, you know, what you're doing is more impact investing or there are collateral benefits such as greater participation by your participants, by your employees, you know, more investing, that sort of thing, then document that collateral benefit after you've undertaken and documented your prudent process. In terms of where we're going, I think the Biden administration is really going to try to find a way to allow ESG in target date funds. We know when you think about it, that's where a large majority of investing dollars go these days. We understand they're working on a new proposal right now, so stay tuned.

  >> That's great. So maybe they found what Jenny just said great. Where are you seeing the most interest, whether it be a certain [inaudible] or flavor of ESG, and how will that want to correlate with what Jenny was saying?

  >> Yea, you know we work with all different plan sponsor types, whether it's pension plans, endowment foundations included, all institutional investors. But, you know, my focus is primarily on the defined contribution industry, and there it's very much that those that have adopted it and offer a fund, I hesitate to say it's a check the box, but they want to be able to say that, hey, we have a dedicated ESG fund. I think the challenge becomes is, you know, what's more important, diversified asset allocation approach and kind of gets into what Jenny was talking about with target dates, how is a participant supposed to come to the table, their investment table, interacting with the plan, and wants to embrace ESG, but also wants to embrace diversified lineup. And I think that's where the asset management community is really evolving. And Jenny alluded to it. I think that's the number one -- well, there's probably many priorities of asset managers, but I know that's in the top one or two topics at each firm, you know, as they continue to evolved their processes and evaluation of how they go about investing. And ESG certainly is a topic. So I think the investment management industry really continues to evolve and will continue to integrate and evaluate ESG. And then how they bring that to the define contribution world, whether it's communicated to participants as an ESG fund or what types of tools plan sponsors and like record keepers and administrators can help participants evaluate what their current lineup has and how ESG centric they might be I think is an area of continued evolution that we'll see. And that includes the brokerage windows, you know. It's still under 50% of plans industry wide brokerage window, but that continues to be an area that a lot of plan sponsors that may not offer a direct ESG offering will take comfort and that participants can assess tools in brokerage window to find their ESG needs based on their investment objectives and approaches. So it's one more and it continues to be an evolution and that's something I think will make great inroads. It just takes a village, as my mom always says.

  >> Absolutely. So I've also noticed more plan sponsors are interested in how their partners are thinking about sustainability in ESG, not just, you know, offering a potential ESG investment within the D.C. plan. And so, Yanela, maybe you can talk a little bit about, you know, what Prudential is doing on this front as an organization.

  >> Yea, and actually, we do see that a lot of insurers, not just in terms of plan sponsors and within the clients within our retirement business, but the broader partners for Prudential across all our businesses. And we really do believe that transparency here about our goals and our progress towards sustainability and being a fully inclusive company really does provide our customers and our investors and employees with line of sight into our journey in this area. And for us it is an important component of how we live our purpose of solving the financial challenges of our changing world. So we've done a few things here. In March of this year, we released an environmental, social, and governance summary report highlighting sustainable actions that we are taking related to our environmental footprint to diversity and inclusion talents and governance. And this report really provides key practices and includes certain data and metrics associated with each of these categories. We also issued our global environmental commitment back in 2019 to ensure the long term value of both our operations and investments. And really by acknowledging the risks of global climate change, of meeting the challenges and opportunities that climate change presents to our business, and really reducing our own environmental impact. So there's a lot we have done here and we really, again, we do believe that we shared these commitments and report on our progress periodically because it is important to our clients, our partners, our employees, and our communities. And these key constituents really care about our practices because this is an effort that will require all of us to take action. And our constituents want to know, and our partners, that they are partnering with firms that share similar values and a similar commitment to progress within ESG.

  >> That's excellent. Being a newer employee to PGIM earlier this year, it's been really great to see all the work internally, what the organization has done, being part of a much [inaudible] organization and to see the resources being put behind the sustainability and the ESG efforts. It's quite impressive. All right. So let's move into the last topic of today. And I'm going to use the title of our most recent D.C. research paper, The Holy Grail of D.C. Income and Retirement. So with about 15 minutes left, we really will only be able to scratch the surface on this important topic, but I imagine that we'll have many more discussions on this in the coming months as well as years. But what we intend to kind of touch on today is, you know, where we're at, where we believe retirement income is going, and how we can get there, how plan sponsors can explore this topic. I'd like to share some of the primary ways that plan sponsors are currently helping participants with retirement readiness. Now according to our research, we've got close to roughly 90% of plan sponsors offering tools and/or advise on how to meet retirement readiness goals or spend down assets in retirement. And then roughly two-thirds of plan sponsors are communicating account balances to participants in terms of projected retirement income. And so, to this last point, Yanela, I'm going to kind of go back to you. I know PGIM partnered with Prudential Retirement on a paper called What Gets Measured, Gets Managed. And it's actually quite helpful in outlining some of the possible implications of the Secure Act Income Disclosure requirement. So, Yanela, as one of the co-authors, could you share some of the key takeaways from this paper? And maybe even comment on whether this disclosure could be one of the catalysts that propel retirement income forward.

  >> Of course. And I guess I would start by sharing that at Prudential we are committed to the retirement income space, and really continuously consider and evaluate all product development opportunities for income and decumulation strategies. We've been in this space for years now, and we strongly believe that these types of solution will help working Americans achieve that financial wellness and that independence in their retirement years. I think I would start with the fact that the reality is that D.C. plans were not built to replace traditional defined benefit plans. They were built as savings vehicles, but have now become the main source of asset accumulation towards retirement. But since they weren't built as savings vehicles, the focus has been on asset accumulation and the balance piece of it, and very little focus has been placed on converting those assets to effective decumulation strategies, that paycheck in retirement that every individual needs to focus on. So pair that with the fact that we are now at a point where the first generation of defined contribution-only savers is beginning to retire. And they're really facing two key questions. Do we have enough assets to generate the income we need in retirement, and how do we convert those accumulated assets into retirement income in the most efficient manner and in a way that it will last us for a lifetime? And so those are two key questions. And since many D.C. plan participants have little idea of how much lifetime income their plan balance will generate in retirement, I think the new disclosures will prompt their understanding of their future financial situation. So do they have enough? I think seeing it in black and white in terms of how much income will my asset balance generate is an important aspect that everyone should understand. So hopefully, this will result in actions that will lead to better retirement outcomes for millions of Americans. And so it is very likely that lifetime income disclosures will have a strong catalyst, be a strong catalyst to really help D.C. plans evolve from savings plans to retirement income plans. But there's a lot of work to do. So as you stated, you know, retirement income is the hottest topic in our industry right now, and we do know that there's a real need here. The question is how do we solve for those needs? What are the best solutions that we can provide as an industry? And there's really a lot more to come there.

  >> Oh, absolutely. I think you make some really great points about saving vehicle versus a retirement income vehicle. You can see, we actually asked plan sponsors what types of retirement income solutions they currently offer within their D.C. plan, and I really do think this reflects the fact that most D.C. plans are set up as savings vehicles today. So we have stable value and the income funds in a target base series are really considered the most common retirement income solutions today. And while I can't say that I'm, you know, too surprised by these results, like Yanela mentioned, we really should ask ourselves if these are really the most optimal solutions for retirees trying to actually create a reliable income stream. So I'm going to go to you, Greg. For those plan sponsors out there that would like to start exploring retirement income, I get a lot of questions of, I don't even know where to begin, or, this seems like a really big topic. What would be your guidance to them? I'm sure you've had many of these conversations with your plan sponsors.

  >> Yeah. Thanks. And it is a very topical issue that plan sponsors have been grappling with. You know, in my almost 25-year career working with defined contributions plans, most of it was on accumulation and just getting participants to save, recognizing the pension plans closing, freezing. This is going to be the primary retirement solution for participants. And really there's been a reckoning or a sea change if you will for plan sponsors to recognize one, the value that retirees bring to the plan in terms of scale. Obviously, that translates to lower costs, better investment solutions, investment products at very, very low fees in the institutional context. But also that's a value add for those retirees. So in terms of the steps plan sponsors have been taking, it's really [inaudible], you know, different types of participants, participant A, B, C. Put a different age on them, different cohort, you know, different income strength, and recognize that, hey, those 65, 70 year olds in the plan, one, are great for the plan, but two, it's great for those participants. And so what are we doing from both an education standpoint, so, i.e., turning that balance into a check. And I think that's a very important step, so providing tools. I think record keepers have done a great job over the last number of years. Instead of seeing your balance right when you log in, you actually see what that translates to as a monthly income and offering supporting ways to perhaps raise that monthly income in retirement. But importantly also they recognize the different types of investment products in the plan already that can serve those participants. So it's really a reframing for kind of the silent, perhaps majority, from an asset-based standpoint. Keep in mind those 60, 65 year olds tend to have much higher balances than the 25 year old. And so, it's really, really an important component. So taking inventory of all the different ways a perspective or current retiree can interact with the plan and help pay themselves a paycheck. And one of the biggest things I always ask is, hey, look at your plan documents, understand how can a participant pay themselves a paycheck out of your plan? You'd be surprised how many plan sponsors don't realize the only way a participant can access their money is a lump sum. And that flies right in the face of trying to educate participants in terms of paying themselves a paycheck. If their only option is to take out 100% of the balance, then they've got to go figure out where do I put it, who helps me, what do I invest with? I've got to start all over on something you've set up presumably for when they a 25 year old entering the workforce and having a robust career with your organization. I think that's something to keep in mind and that lens is really helpful for plan sponsors to take that inventory, almost do an audit on those types of people as it relates to your plan docs as well as how it relates to your investment solutions. I didn't touch on guaranteed products, but I believe that may be for a Q&A because that is another big topic because retirement income can mean many things to many people. Some all of a sudden think it's a guarantee or annuity, but others, you really focus on the service and the access to pay themselves a paycheck. And that's really where I start the conversation.

  >> Yeah, I know, absolutely. I think taking it in bite sizes, you know, I think the retirement income discussion is going to be an evolution, not a revolution. And so, if we don't make it so daunting of a path, it we think we're going to get a lot more uptick across my sponsors. Jenny, any legal or fiduciary considerations that you want to share with plan sponsors on how they may want to look at retirement income?

  >> There are actually some really interesting questions when it comes to lifetime income and how participants and fiduciaries should be thinking about it. First, I was thrilled to see so much kind of education happening because, you know, I think it's important for fiduciaries to remember that there is a lot of information that they can provide to participants about investing generally and particularly about sort of the decumulation phase and retirement income that isn't advice. It doesn't carry, you know, fiduciary responsibilities with it. It's just information that can be provided. And I really do think it's sort of a playground for some of those behavioral economic considerations about what moves people and what's important to them and how they can make progress. So, you know, I think participants benefit from that. There's a lot of creative things going on now, as we're talking about, you know, delivering in bit-size chunks information to participants say on acts and other ways they can better access some information. And then I also think, you know, it's notable that two-thirds of plans seem to provide some kind of lifetime income illustration, and, as people may know, later this year the requirement will be for all [inaudible] covered plans to provide a particular version of lifetime income illustration that the Department of Labor has issued in an interim, final rule. There may be some additions to that. We'll see over the summer. It's a very sort of specific type of illustration that's going to differ a little bit from what maybe people are typically used to seeing. It's as if the participant puts in not a dollar more and has an illustration for joint survivor annuity or a lifetime annuity. And interestingly, plan fiduciaries are protected from liability for delivering that information to participants in a way that they're not with respect to other types of illustration. So I think that's going to generate an awful lot of questions from participants, and that's, you know, probably one of the rationales for doing it is to try to get this conversation going so that people have a realistic idea of where they're headed at the moment and what else it might take. So I do think that things like systemic withdrawals, which aren't a huge piece of the retirement income solution right now, are really gaining some traction, too. So, you know, things to think about there when evaluating some of those features.

  >> Great. Let's look to the future. How do we better serve this increasing retiring population and keep them within the D.C. space? So our survey found that there really is a strong belief from plan sponsors around the need to offer retirement income solutions through a technology-enabled, customized or personalized solution for both free retirees and retirees. So I think we've heard a lot about personalization. It's just in our world as well as technology, so why not try to incorporate that into our D.C. plan. Greg, maybe I'll start with you and we can end with Yanela. What do you think makes this approach attractive to plan sponsors or what are your kind of reactions to this question and these results.

  >> Yeah, I mean there's no question technology is everywhere, and if you're not embracing it, you might be missing out on some great opportunities. I do think in terms of the crystal ball, I think the target date community would, you know, again that industry-wide average is roughly 70 cents of every dollar go into target base funds. There's certainly been, you know, a quickly evolving solution going back to the 2006 PPA has really given it a lot of traction. So I think target dates will continue to evolve. I think the challenge plan sponsors have is, you know, weighing. Are participants really going to, you know, benefit from managed accounts. I think more and more plan sponsors are at least discussing a hybrid model where it goes transitions from a target date to a managed account. And again, furthering this use of technology and customization for participants. I think these are -- the big question mark there is is it customized enough to justify the fees or would they have had the same outcome if they just stayed in the target date fund, continues to be, you know, an ongoing evaluation. So I think there's more to come on that front as well as more and more open architecture within the different record keeping frameworks to allow for more competition as it relates to both technology improvements as well as fee pressure to benefit those participants using it. So I think that's really the area we'll continue to see evolve, but it really is an incremental change, and I think it'll really be borne out at the target date solutions given their dominance for every new dollar coming in.

  >> Yep, absolutely. Yanela, anything to add?

  >> Yeah. I think what I would add is that, you know, we have a real opportunity here. American workers have really come to trust and expect their employers to look out for their financial wellness, whether it's health insurance, life insurance, or retirement plans that are offered through the workplace. So I think it is important to think about, you know, if their workplace and their employer can't help them, then I don't know how else we can help them really prepare for that retirement. And when determining how much retirement income an individual requires and can generate from their accumulated assets, you really need to look at their holistic financial picture. It's not just what's in the plan, but their Social Security, and then the other assets they have. So I do think technology-enabled solutions for retirees and pre-retirees as they're planning for their retirement to help understand their entire financial picture could be really helpful in helping them develop an appropriate decumulation strategy. And I think could really be what helps us shift into generating that paycheck for retirement. So I think technology could play a very large role. I do think there's a lot of work to do. I do think managed accounts as well could be helpful, but that adoption rate is quite low at this point, and it's a growing trend. But I think the better we use technology the better we will be able to help people, again, generate that income and that paycheck in retirement.

  >> Yeah, absolutely. I think a key that I think most plan sponsors are thinking about is how do we keep cost reasonable? And so technology, I think, is that way that we are going to be able to leverage cost efficiency and deliver better solutions, but we need to get there. I don't think we're quite there yet. I know we are actually over time. I do want to just do a quick recap of the three topics, and then have you go on all of your ways. As it relates to alternatives, I would just say, you know, not all alternatives are created equal. Conducting a robust and thorough review is important. And the industry has made significant progress with certain asset classes as it relates to operations, fees, transparency, and assisting with education and communication. On the ESG front, is the tide changing? Will we see more adoption of the ESG going forward? It definitely seems to be going in that direction. Just know that there is a spectrum of ways that plan sponsors can explore and implement ESG all through investments as well as engaging with your partners. And then lastly, this topic of income in retirement, I mentioned this already, this is really going to be an evolution. That evolution is already starting. We're not going to see some revolution come of the next year or two. But by focusing really more on generating income as it relates to our communication, embracing technology, looking for ways to provide more personalized and customized solutions that truly do help individuals. And then ultimately leveraging institutional investments, which is why you would stay really in the D.C. plan. I do think we are in a position to really help individuals meet their retirement income needs. So with that, I want to thank Greg, Yanela, and Jenny for their insights today, and to the audience for tuning and asking questions. For those who we did not get to in terms of your questions, we will certainly follow up. We really appreciate everyone joining, and I hope you have a great rest of your day. Thank you.