Tim Rouse (Executive Director, Spark Institute) and Larry McQuaid (SS&C Technologies; Co‑Chair, Spark Retirement Income Committee) discuss the Spark Institute’s new Retirement Income Subcommittee, its mission, deliverables, and how advisors, plan sponsors, and recordkeepers can use the committee’s tools to evaluate retirement income solutions. Topics covered include the Spark data workbook, standardized evaluation guidelines, lexicon efforts to reduce industry jargon, how the framework supports fiduciary due diligence (including DOL proposed guidance), and the upcoming interactive “Retirement Income Solution Finder” and RFP resources to help plan sponsors make informed selections. Ideal for retirement plan advisors, recordkeepers, fiduciaries, and anyone involved in selecting retirement income products.

Jeffrey Snyder, Broadcast Retirement Network

Joining me now is Tim Rouse, the Executive Director of the Spark Institute, and Larry McQuaid. He is with SS&C Technologies and he’s also a co-chair of the Retirement Income Committee for the Spark Institute.

Gentlemen, welcome to the program this morning.

Tim Rouse, The SPARK Institute

Oh, thanks for having us, Jeff.

Jeffrey Snyder, Broadcast Retirement Network

Yeah, it’s a lot to say, but look, we’re always appreciative of having Spark, which in my opinion, having been in our industry for over 30 years, it is the preeminent advocate for retirement security. And I’m not just saying that, I really believe that. And I think more people should check out what Spark is doing because they are really advocating for financial security.

And today we’re going to talk about retirement income. Tim, I want to come to you first because you kind of oversee everything. Why did Spark create the Retirement Income Subcommittee?

Tim Rouse, The SPARK Institute

Well, Jeff, we created the Retirement Income Committee because plan sponsors and their advisors consistently told us they needed real help feeling more confident when evaluating and selecting retirement income products. These solutions can be very complex and every provider presents information differently, which creates hesitation on the part of consumers. So our main goal in creating this committee was to give plan sponsors and advisors practical, standardized tools that allow them to compare options objectively and make better purchasing decisions with greater confidence.

Because we know from any consumer study that when the consumer feels more confident in the decisions that they’re making, they’re significantly more likely to buy and then recommend a product. And consumers that recommend, a consumer recommendation is far more powerful than any sales effort. So ultimately, our goal is to assist American employers and their workers achieve better retirement outcomes.

And this committee is helping to do that.

Jeffrey Snyder, Broadcast Retirement Network

Yeah. And Larry, I mean, Spark has a rich history. I think I’ll go back to 403b regs, the RFP of groups coming together to do exactly what Tim said, which is uniformity across the industry and really help with the selection process.

But let me ask you, you’re a co-chair, what’s the mission for the Spark Retirement Income Subcommittee?

Jeffrey Snyder, Broadcast Retirement Network

You know, Tim really sets us up great. I mean, he touched on a lot of topics, but when we looked at these products and we looked at the passage of the SECURE Act, we knew that the popularity of these products was going to increase. These, as Tim mentioned, are extremely complex products.

You’re bringing together three industries, right? Retirement, asset management, and insurance. Each has their own rules, their own regulations, and most challenging, their own language.

So we’re looking across the board, how can we stay in this? How can we help record keepers, plan sponsors, advisors, and ultimately have them help the participants that can use these products because they are very important in helping them achieve their goals to retire with dignity. Now, the first deliverable we looked at was around data.

You know, years ago, Spark put together a Spark file, the data file, and we wanted to look at that and say, okay, how can we help record keepers understand what data points are most important when they’re placing these products on their platforms? Because their platforms weren’t set up to handle these products. So we put together the Spark workbook, the retirement income Spark data workbook, which highlighted the data points and how they’re going to be used, whether you’re creating that annual statement, whether you’re supporting the product within the participant views, or whether you’re, you know, going through the drawdown phases.

So we highlighted those, we parsed those out, and there’s a nice workbook that a record keeper can work through to help them when they’re setting up their own retirement income programs. The next was the framework around the evaluation guidelines. We felt this was extremely important, and as Tim mentioned earlier, this was designed to really help people look at retirement income products side by side and do an evaluation for them.

Going forward, we’re looking at guidelines around requests for information so that record keepers, plan sponsors, advisors can understand what products to pick. And then we’re also working on the most challenging part, which really is a lexicon, trying to, you know, understand, you know, terminology and acronyms that are used in retirement and how that relates to insurance, because they can sometimes be the same word, but have completely different meanings. So the mission really is to help record keepers, plan sponsors, and advisors, and ultimately the participant, understand these products so they can use them to help them to retirement dignity.

Jeffrey Snyder, Broadcast Retirement Network

You know, you mentioned jargon, and ours is an industry filled with jargon, and you’re right, different terms mean different things in different contexts. Let me ask you, is that part of the bigger challenge for retirement plan advisors, investment consultants, plan sponsors, fiduciary, people around the table? They’re not experts in our field, but what are the challenges for the selection of these product types?

Jeffrey Snyder, Broadcast Retirement Network

I think the challenges are, you know, understanding, you know, retirement market, as well as insurance and asset management. So you bring up a really good point there and a really difficult question. So how can you, you know, look at different products and compare them side by side and understand, you know, the difference between a GLWB, a GMWB, a DIA, a SPIA, a QLAC, and what is appropriate for you and your marketplace.

It can be very confusing, and hopefully this framework will be a good starting block to help people begin that analysis.

Jeffrey Snyder, Broadcast Retirement Network

Tim, I want to bring you back in here before I go back to Larry. Obviously you run, you’re the Executive Director of the SPARC Institute. Are you seeing more interest from not only the members, but outside groups in the ecosystem around retirement income products?

Tim Rouse, The SPARK Institute

Absolutely. And that’s one of the reasons why we’ve established the Retirement Income Committee itself, because we are hearing from plan sponsors and advisors the basic belief that these are important products. But for me to feel confident, like I said, in buying them, I need to be better educated.

Jeffrey Snyder, Broadcast Retirement Network

Yeah. And same question for you, Larry. I mean, as someone, you’re in the trenches, in fact, your firm creates a lot of the middleware that helps kind of make this happen behind the scenes.

What’s your estimation in terms of the greater adoption? Is there interest from the fiduciary community?

Jeffrey Snyder, Broadcast Retirement Network

I think there’s significant interest. And, you know, there were a couple barriers to entry before around availability and also the number of products that were available. And we’re starting to see on our platform and across the industry, a real uptick in the assets in these products.

And we’re seeing the demand go. We’re seeing the conversation in the industry change from nice to have, to must have, to now, how are we executing?

Jeffrey Snyder, Broadcast Retirement Network

Let me ask you about the framework. How should, in your estimation, you know, and this comes from the mission, the view of the committee. This is not, by the way, this is not something that just happened overnight for those who maybe aren’t in our industry.

These things take months and months and weeks and weeks to develop with many iterations. But for advisors and consultants that can download this framework, how should they use these tools?

Jeffrey Snyder, Broadcast Retirement Network

Yeah, we see it as a starting block for them to begin their analysis, right? There is a lot of information here on the products, but it really allows you to look at the different products that are available, get an understanding of, you know, what the income capabilities are, spousal benefits, withdrawal rates, guaranteed payout rates, fees, etc. But it allows an advisor, a plan sponsor, to look at these side-by-side and do a comparison.

Once you understand what type of product you’re going to select, then you can go through the workbook. You can look at the evaluation, line up three or four of them, and begin your analysis to meet your fiduciary requirements around safe harbor.

Jeffrey Snyder, Broadcast Retirement Network

You know, it’s almost analogous to when I buy a car and I’m shopping one brand versus another. And a lot of the tools online allow you to kind of look at the kind of the pros and cons of each and their key features. So that would make a lot of sense to me as a reformed record keeper and now advisor.

Let me ask you about our friends at the Department of Labor released some new proposed regulations awaiting comment. The comment period, I think, ends shortly. How does this tool and the evaluation, these tools in the evaluation framework fit into these new proposed regulations?

I’m sure you guys in the committee had to take that into account.

Jeffrey Snyder, Broadcast Retirement Network

Yeah, very much so. Yeah, I believe the comment period ends June 1st. We’ll go from there.

But as you looked at what they laid out around alternative investments, which is not just based on alternatives, but also products like this, but all investments in general, the fiduciary process, right, they have six areas that they need to work through, and the first being performance. So they need to be able to look at the performance of the products and make sure that they’re comparing a reasonable number of products against each other. But they have to be like products.

The next is around fees. You know, it was pretty explicit in there that you don’t have to pick the lowest fee, and that you need to do your due diligence around it, and it’s expected that products like this that have retirement income components, they’re going to be a little bit more expensive because of that guaranteed and that downside protection. The next is liquidity.

The product needs to meet the liquidity standards so that if a participant moves jobs or enters into retirement and needs to take withdrawals, that the product is liquid. It can be priced to accuracy. That’s the second one is valuation.

It has to be priced timely and accurately. This could be a challenge for alternatives, not so much for retirement income products, but there are solutions for alternatives, which you’re able to use in outside U.S. GAAP accounting standards at some firms, but you really need to have a third party evaluate those. And then the last, the next two areas are benchmarking.

You have to benchmark it against a reasonable index that coincides with the product, and then complexity. This is where it gets challenging, and this is where I think we help quite a bit, is the fiduciary has to be able to demonstrate that they have knowledge around the complexity of the product and fully understand its capabilities in the recommendation process. So that’s how we think the evaluation sheets can help.

It is definitely not an end-all, but it definitely is a starting block to begin that analysis.

Jeffrey Snyder, Broadcast Retirement Network

So, Tim, obviously a lot of work that Larry and the subcommittee are doing. A lot of work has been done. A lot of work, I would imagine, to continue.

What, in your mind, what’s next for, you know, obviously there’s a decision-making process. You don’t just get to arbitrarily make the decisions, but what’s next for the Retirement Income Committee?

Tim Rouse, The SPARK Institute

Well, you’re right that Larry and his team have done a tremendous job in getting us to this point, and it was not an easy task, but they did a yeoman’s job in getting us to the point that we’re in right now, and I’m very thankful for that. So the next big thing that we’re working on is an interactive web tool that we’re calling the Retirement Income Solution Finder. It will let plan sponsors and advisors adjust approximately 10 slider bars representing various key buyer preferences, things like strength of the guarantee or liquidity needs, fees, portability, things that Larry mentioned earlier.

And based on the users who sets their priorities, the tool would then intelligently show them which specific products in our framework best match what they’re looking for. So going back to what Larry had mentioned in terms of the steps that you would need to do with regard to the DOL guidance. And if that’s successful, the next logical step is that we would then say, here are the five or six products that best align with your criteria.

Would you like a set of sample RFP questions to help you take the next step and actually select a provider? We’re trying to build a smooth guided pathway that takes people from, I’m interested, but I don’t know what I’m actually looking for, all the way to actually making the purchase and feeling good about the decisions that they made.

Jeffrey Snyder, Broadcast Retirement Network

Yeah, well, obviously a lot of work being done, a lot of work to do. I feel like the retirement industry, we’re iterative. So you’re constantly refining, making things better.

We’re certainly different than we looked 40 years ago. And I’m bullish on the future. Tim, Larry, great to see you.

Thanks for joining us. And we look forward to having you back on the program again very soon.

Tim Rouse, The SPARK Institute

Thank you, Jeff.