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Unscrambling the nest egg
Thrivent hopes its innovative TRIO retirement planning tool will help the financial services company grab a slice of baby boomer investment pie.
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Would you pay for a tool that helps you determine which financial moves to make so you don't run out of money in retirement?
Thrivent Financial for Lutherans is banking on it. The Minneapolis-based insurance and financial planning company launched TRIO -- Thrivent Retirement Income Optimizer -- earlier this year. TRIO is designed to help maximize income while minimizing risk. The computer-based tool helps Thrivent advisers determine the proper steps to take with a client's portfolio using 1,000 market simulations and the three TRIO investment guidelines -- diversifying assets for long-term growth; locking in income for the long-term with a series of partial annuities, and withdrawing money in a way that ensures it lasts longer than you do.
As baby boomers enter retirement, these are the trillion-dollar questions for all financial services firms, who each want a piece of the generation's $7.6 trillion in assets.
Many companies have so-called Monte Carlo simulators -- retirement calculators that run investment information through different future scenarios and provide strategies.
While TRIO may appear similar at first glance, the way TRIO uses these questions as rules triggering specific actions is unique, according to Mark Anema, Thrivent's vice president of accumulation and retirement income solutions. The program might advise that a client buy a partial annuity, rebalance investments, or alter the portfolio's withdrawal rate. The action varies depending on the year. For instance, guideline No. 2 "forces you to sell volatile investments in a high market to buy a guaranteed stream of income," he explains.
TRIO also prompts advisers to run the program annually for clients at a cost of between $300 and $500.
Pluses and minusesMoshe Milevsky, executive director of the Individual Finance and Insurance Decision Centre in Toronto, and an expert on retirement income, said the program's annual cost will be "a tough sell to get people to pay for a program that at first glance is available for free at a number of other websites."
But he likes that TRIO allows clients to factor in assets from all income sources, even if some of the money is invested with another financial services company. The open nature of the tool is "quite original," Milevsky said.
Most financial services companies have focused their retirement income strategy on products such as annuities and mutual funds that shift investment allocations for clients nearing or entering retirement.
Thrivent decided against that route because it wanted the cost of the tool to be transparent. "If you put it in a product, you never know what you're paying for it," according to Anema, who said that Thrivent does sell products with embedded fees -- products it hopes will attract all of a client's assets after TRIO makes its recommendations.
TRIO, which took about a year to develop, is gradually being rolled out to Thrivent financial consultants. Currently about 650 consultants have access and a couple of hundred retirees or near-retirees have enrolled so far.
The company has also applied for a patent for the service.
Kara McGuire • 612-673-7293
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