Offering More Than Just Investments: Jason Crane of Transamerica Talks the Changing Landscape of Retirement Plan Design

Jason Crane has been in the business of retirement for over 15 years. As a wholesaler for Transamerica, he has a proven track record of providing companies and their employees with high-quality retirement plan products. With his most recent role though, he's working to help employers take more into consideration than account balances, investment performance and the bottom line. 


In our interview with Jason, who is also the keynote speaker for our 2016 Employee Benefits Symposium, he talks about the changing focus in the retirement space, how technology plays a part and what this means for an organization's future. 

How did you get into financial services and what sparked your interested in working in the employee benefits sector? 

I ended up first working in group health insurance and 401(k) plans and as I evolved over the course of a few years, I came to abhor group health insurance and actually really enjoyed retirement planning. About 3 years after I entered the workforce, I began working for Transamerica and have been here just shy of 15 years. 

What do you think it was that most attracted you to retirement planning? 

Part of it was a desire to extract myself from health insurance, which essentially requires an annual visit to alert employers how painful the increase in fees are going to be for that particular year and a lot of "playing defense." What I really enjoyed about the discussion relating to financial planning and retirement planning specifically was that it's a conversation that impacts every one of the employees. For health insurance, in a typical year, 1 out of 5 employees may use their health coverage for anything beyond a simple check-up. Compared with the retirement plan, where quite literally 100% of the participants see the benefit of the program. It was a far more engaging, positive discussion and I really started to enjoy the prospect of counseling people on constructing their plans in such a way as to change the way people think about their future and put programs in place to help people save for the life they want. 

I feel like most people would actually think the opposite of what you said. Health insurance is such a big deal today, but "retirement" has such a specific connotation, people don't necessarily think of it has something everyone will need. 

I think in previous generations, the word "retirement" was specific to the act of retiring and therefore it was something people put off until they were in their late 40s, 50s and 60s and now our generation has done a pretty good job of defining it as an "experience," something that needs conscious, active planning and preparation. It has certainly been among my passions over the course of the last 15 years to not just sell, but to engage in conversations with people to change the way they think about structuring plans in order to benefit their employees. 

With your role at Transamerica, can you discuss what your focus is right now? 

As of the last couple of months, I've shifted into a role (Managing Director of Business Development), which essentially owns all of our distribution partnerships with advisory firms, consultancies, broker-dealers for all product lines inclusive of retirement, annuities and mutual funds. 

My role affords Transamerica, along with our clients, an opportunity to take a more holistic look at their financial future as opposed to relegating the focus to specifically retirement, mutual funds, annuities or life insurance, etc. We have leaders of sales, distribution marketing and so forth, but they span all products. The rationale behind that is such that we can deliver a consistent experience to our consumers, regardless of which products they buy. It also results in an environment where we're helping our customers think beyond one particular product solution. We're focused on expanding the conversation beyond any one particular product. We let our clients know what we believe in as an organization; it's not a product push, it's not about differentiating yourself through price, it's about letting them know what we stand for and that tends to attract companies who believe very much the same thing that we do.  

That's definitely a general theme. There's a lot of information out there about the distrust of the financial services industry, especially when it comes to millennials. The bigger message of what you're trying to sell has become so much more important. You can't just simply pitch a product and expect to get anywhere nowadays. How does this approach benefit companies and individual employees? 

For years and years, our industry has been focused on getting people into the retirement program. Participation rates were essentially the barometer for plan success and we've since evolved a little bit into taking a critical look at deferral rates and how actively people are contributing to retirement programs, which is a great step forward. Many financial advisors were stuck for so many years focusing on the investments, which isn't irrelevant by any means, but doesn't really determine if someone is going to be adequately prepared for retirement. A lot of our communication is meant to encourage people to understand the factors and behaviors that will actually help people prepare adequately and, to my point earlier, taking a more holistic perspective.

It's an extensive conversation and to boil it down very myopically, the example we often point to is when we're encouraging plan sponsors to adopt provisions of a plan that we know, empirically speaking, are going to end up benefiting the participants, but yet cost the employer money today. The challenge we have as an organization, is helping to broaden their perspective that with the absence in that kind of investment today, the organization is going to be far worse off down the road in the form of  heightened benefit costs and worker's compensation. Also, worth consideration is the potential loss of talent in the event that they are unable to promote and evolve from within the organization because people 60, 65, 70 quite literally can't afford to retire. Those are the conversations we're having with clients and I think that's where the marketplace is going: To converge health and wealth and get the participant isn't it about just getting into the 401(k) plan. I think we're doing people a disservice by helping people believe that entering into the plan via a 3% automatic enrollment rate will sufficiently prepare them for retirement. There are conversations we can have beyond just simply talking about the features of a recordkeeping platform that I think we are continuing to evolve the discussion we're having with our clients. 

Are there challenges you face when you talk about these bigger concepts with clients, plan sponsors, or employers?

Besides the fact of just basic inertia or the idea that retirement is a benefit that can easily be pushed to the back burner in favor of more pressing priorities or challenges in the organization, the financial aspect is the challenge. For example, there's empirical data that shows most employees are going to fall short of their own retirement savings goals in the absence of deferring something between 12-15% of their pre-tax income. You can probably appreciate the fact that a very small percentage of employees actually do that. Part of the reason is that the plan design doesn't encourage them to save as much as they otherwise might in the form of stretching a matching contribution, implementing automatic enrollment not at 3%, but maybe at 6%, or 8% aggressively, having a program in place to have automatic-escalation, such as the participant deferral rate increases every year on a routine, pre-ordained basis without them having to take any proactive steps. All of those things we know will end up resulting in people contributing more into the plan, which is the biggest factor in determining whether they're going to be adequately prepared.

However, when you get people into the plan at 6%, 8%, 10%, or 12%, oftentimes if an employer has a matching contribution in place, that means it's going to be more costly for the employer to support that program. That's where the conversation is stunted oftentimes if our audience is a CFO and our responsibility is to work alongside advisors to inform clients about what the long-term financial implications will be in the absence of enacting these programs. If having a stretched matching contribution or automatic enrollment at 6% or safe harbor program, is going to cost an extra $100,00 this year, in the absence of doing anything it may result in a $2 million expense 10 years from now. The industry is trying to help quantify for employers what the cost will be in more scientific terms. We can talk generically about how slip-and-fall accidents will increase as the employee workforce ages and we all know that the cost of health insurance coverage doesn't decrease as someone ages. Anecdotally speaking, everyone can appreciate it, but we're talking to a set of individuals that make decisions based on a set of empirical data and that's where the industry is, partnering with third parties, developing our own analytics and algorithms to help employers understand the costs down the road. 

What sort of ramifications do you see across the board in terms of the other parts of a benefits package such as healthcare, worker's compensation, etc.?

As an organization, our belief is that what we need to offer to participants is not necessarily just a series of products, but a platform that affords them the ability to shop the market for any number of products, many of which are not proprietary to Transamerica. For example, if we can house their retirement account, their 401(k), defined benefit, so on and so forth, within the context of a platform that educates them on the virtues of having life insurance or the benefits of investing in mutual funds or preparedness for Social Security, and lead them to produce solutions that aren't necessarily our own, I think that's the next frontier to make sure participants understand all of the steps, not just deferring 3% into your 401(k), but all the steps they need to round out their financial security through and beyond their work lives, but to open access beyond the confines of any one provider. 

How do you see vendors specifically trying to implement these strategies now and in the future? 

My sense is that organizations like Transamerica are fast coming to the conclusion that we're not going to be able to build sufficient solutions in-house. We don't have the resources. we don't have the acumen. Firms in Silicon Valley and elsewhere are far more equipped and far more nimble and have the resources to build the technologically sophisticated solutions that we can simply integrate and implement. My experience, just as of recently, has been there's a much bigger appetite to source third parties to help with these solutions, rather than the legacy perspective that I think we and other firms had, which was that we had to build it for it to have value for our customers. 

I think the general consensus is that financial services isn't seen as an industry that's on the forefront of technology. We're usually a little bit behind because we're so heavily regulated, among other reasons. What's your opinion on that? 

Most of the platforms in financial services, particularly in the retirement space, are still working on doing things like developing mobile apps even. Most of those apps aren't even transactional in nature. You can check your balance, but you can't change investment allocations, you can't adopt into some form of a managed account, you can't reconfigure the allocation of your portfolio. We're behind the times, I think, because we're all constrained for resources. I can't speak for every other firm, but I know some of them have been bottle-necked, not just by virtue of the regulatory environment, which is valid, but also because we've taken the position that we had to build it from within. While that can be true, particularly if you have a proprietary recordkeeping platform, much of it can be outsourced. I think in respect to the platform solutions that are meant to provide participants with a more holistic perspective on their planning and to afford them access to products within the framework or beyond the framework of any singular provider, my sense is the marketplace is going to be more open to leveraging that from third parties. As an industry, we have to play catch-up because that's how the next generation is engaging with technology. I think rather than feeling like for years the consumers was going to have to adapt to the stodgy nature of the financial marketplace, we realized we have to change the way we engage with consumers. 

It seems like no matter who you're talking to, whether it's a CFO or someone else, their focus always revolves around return on investment. How do you approach that? 

That is definitely the question and one that's very much under development. Specific to the retirement space, like I mentioned, we've evolved from determining success rates of the plan from the actual investment performance, participation rates, to even deferral rates, to readiness instead. So, most retirement platforms have some kind of algorithm determine how "retirement ready" they are and that's certainly a big step in the right direction. That, however, is obtuse to many of their needs with respect to many other financial considerations. Are they covered on the protection side? Do they have adequate health insurance?  There's a burgeoning marketplace, due to the fact that we have 10,000 baby boomers retiring every day, for assistance with the migration from an employer healthcare coverage model to Medicare. There are all of these markets that are going to come about due to the opportunity to explain tot he customer how well situated they are and where they may need to purchase coverage to fill those gaps. I think that's all going to lead to this platform-based environment where you can really gain the trust of the consumer if you help to educate, help to drive behavior and particularly drive behavior that aren't necessarily provided by the same institution, even if a singular institution is equipped to provide them. It's like the Progressive model for car insurance: The concept is they engender a lot more trust with their customers because they're going to give them their price, as well as the price of 3 or 4 of their competitors. That's a really inviting model. 

It's much more about transparency nowadays. 

Like you said, as a byproduct of millennials, and even Gen X & Gen Y to a certain extent, this distrust of any information presented to them, particularly by somebody in the financial industry. That's a generation we've learned recently that make decision based upon doing an extensive amount of research on their own and leveraging technology. 

It's our responsibility to help them quantify the cost-benefit analysis for now and later, which can be very difficult. Even just having this conversation can enlighten CFOs. They appreciate that it isn't just about trimming 4 basis points off the retirement plan, it's about having a platform that will enable their participants to better engage. 

I think we just need to do a better job of helping people appreciate what's at stake. Many people feel that as long as they implement automatic enrollment, they've done their part. The retirement plan is now becoming viewed as one component of a holistic solution for our customers that also encompasses investments, insurance and more. Retirement plans are no longer an end unto themselves and they are really part of the means to the end in helping to make sure people devise a more schematic approach to preparedness.