Next Generation Thinking Deck - wpbcportland.org

Next Generation Thinking Deck - wpbcportland.org

Brad Vaughan Vice President DCIO Sales Consultant November 11, 2015 1 THE TRADITIONAL SHIFTING YOUR DCDC MINDSET MINDSET THE BABY BOOMER 401(k) EXPERIENCE: 19812015 1981 2015

Target risk funds 401(k) Menu design 404(c) Catch-up contributions Auto-enrollment Retirement income

Target date funds as QDIAs GENERATIONAL DEFINITIONS In 2015, they are age 20-33 age 51-69 76 million age

34-50 80 million 59 million Baby Boomer 194664 "Baby Boomers vs. Millennials: Who Would You Rather Hire?". Time Magazine. Gen X 196581 Millennial

198295 BUTTONED-UP VS. CASUAL SUPER STAR VS. TEAM PLAYER TECHNOLOGY: TOOL VS. LIFESTYLE POTENTIAL OPPORTUNITIES Build credibility with sponsors and drive better outcomes Recommend plan design and service enhancements that cater to frequent job changers Develop an effective rollover strategy to capture existing assets from previous employer plans Leverage social media tools; explore ways to build an online community of employees within a plan

Engage with points of influence to develop a peer network; find ways to incorporate peer benchmarking THE RETIREMENT FOUNDATION IS DETERIORATING AND THERE ARE MAJOR IMPEDIMENTS TO SAVING SALARY SALARY UNEMPLOYMENT UNEMPLOYMENT DEBT DEBT

SLOW AND STEADY TO BOOM AND BUST Dot-Com Bubble S&P 500 1,800 Real Estate Bubble 1,000 0

1981 1995 1996 2014 WHAT WEVE SEEN AT T. ROWE PRICE Percent of Non-TDF Users Age 2034 With Greater Than 80% of Their Account Balance Invested in Cash 30% 25% 29%

20% 26% 26% 2013 2014 15% 10% 5% 0% 2012

Source: T. Rowe Price Retirement Plan Services 401(k) accounts that are currently active, have a positive balance, and do not include any assets invested in target date funds. Cash includes money market and stable value funds. POTENTIAL OPPORTUNITIES Build credibility with sponsors and drive better outcomes Promote an age-appropriate default investment for auto-enrollment Elevate the initial default savings rate Couple that with steeper auto-escalation increases Provide younger participants with the opportunity to delegate (or validate) retirement investment decisions T. ROWE PRICE MILESTONE STUDY 2,000

participants 200 plan sponsors #1 FINANCIAL GOAL BY AGE GROUP Saving Saving for for retirement retirement 44% 44%

Paying off off debt debt 35% 35% Paying Paying Paying off off debt debt 19% 19% Just getting

getting by by 35% 35% Just Just Just getting getting by by 18% 18% 10% 10%

Saving Saving for for retirement retirement THINKING ABOUT RETIREMENT GOALS Employees start setting their goals in their 30s/40s Source: 2010 T. Rowe Price Milestone Study. Im starting to think about my retirement

goals in my 20s/30s AWARENESS WITHOUT ABILITY CREATES FEAR, DENIAL, AND ANXIETY Im worried Creditors are calling Need to pay the bills How do I save for retirement? School loans

TOP 3 MILESTONES TO SAVE MORE FOR RETIREMENT Ages 5059 Ages 2029 Current events/economy 27% Becoming a parent 29% Health 21% Current events/economy 19%

Reaching a certain age 20% Marriage 17% Source: 2010 T. Rowe Price Milestone Study. PLAN CHANGES DON'T POSITIVELY IMPACT SAVINGS BEHAVIOR 1.2%% Source: 2010 T. Rowe Price Milestone Study.

Typical Plan Changes Company match formula Investment changes Paperless New Enhanced loan provisions statements website change 0%% COMMUNICATION PREFERENCES Ages 5059

49% 46% Ages 2029 41% 34% 30% 22% 1:1 1:1 Consultation Consultation

Online Online Tools ToolsWith With Personalized Personalized Recommendations Recommendations Source: 2010 T. Rowe Price Milestone Study. 33% 19% Educational

Educational Webinars Webinars 28% 18% Electronic Electronic Communications Communications Print Print Communications Communications

POTENTIAL OPPORTUNITIES Build credibility with sponsors and drive better outcomes Promote communications and tools around holistic financial topics Recognize the need to connect with participants on an emotional and personal level Bundle retirement savings messages with key milestone events to maximize participant adoption Tap into the innate desire to compete, to achieve results: GAMIFY to engage. WANT TO LEARN MORE? Access our new advisor site:

troweprice.com/millennials Access our complete repository of DC resources at: troweprice.com/dc IMPROVING YOUR DC PLAN: NEXT GENERATION THINKING To learn more about our investment services, contact your T. Rowe Price representative. T. Rowe Price Investment Services, Inc. CZOBHSCE_NextGenPPT 2015-US-8262

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