Mark Dowdell, national practice leader at Gallagher, on the growth of the benefits landscape
With three decades of experiences in the retirement and investment marketplace, Mark Dowdell, national practice leader at Gallagher, says that over this time he’s seen great evolution in the sector.
“When I started my career in 1992, defined contribution plans were becoming the way of the future,” he explains. And many sponsors were making that investment decision. That decision ended up being turned over to plan members. And so, from a governance perspective, not only did it require communicating with the employer about how their money was behaving, it was wrapping your head around the choices that were available to plan members.”
But, it became a bit easier when target risk funds came along - although these funds did not fully address the need for de-risking strategies. It wasn't until the mid-2000s that this really began to improve.
"Target date funds made the plan member experience a whole lot better," Dowdell adds. “The CAP Guidelines [also] created a great framework to help advisors, plan sponsors, committees and plan members figure out what to do with these plans.”
And while he notes that these guidelines have not evolved much since their inception, Dowdell is optimistic about the forthcoming consultation draft of the CAP Guidelines, hoping it will bring necessary updates.
In the past decade, there’s been a onus for non-pension plan sponsors to formalize their governance procedures and investment policies.
"There's been a real push over the last decade for group RSPs and deferred profit-sharing plans to formalize governance procedures and investment policies,” adds Dowdell.
And, while advisor fee transparency has also improved, there’s still room for progress.
"There are more advisors now that are entering into service agreements with their clients, formalizing that and being transparent about the fees they're getting paid," he says.
Looking ahead, Dowdell identifies significant challenges facing plan sponsors. One of the most pressing is the issue of decumulation—how plan members manage their money once they retire. Another challenge is ensuring inclusivity in retirement plans. Historically, defined contribution pension plans were seen as the best option, but they may not suit everyone.
“As we've come forward and viewing plans through an inclusivity lens, the fact that the money's locked in for someone that may not work their entire career may not be the best thing for that employee.”
And this inclusivity challenge has led to discussions about assisting employees in saving for their future through various plans, such as pensions, RSPs, and Tax-Free Savings Accounts.
"It's really opening up the discussion around assisting employees to save for their future savings goal in the plan of their choice," Dowdell adds.
This future will, undoubtedly include the advent of new technologies and the adoption of AI by industry leaders. However, this is underscored by the unease Dowdell sees people feeling when they’re dealing with their own financial planning.
"I see friction in myself and inertia in just sending a net worth statement to my financial advisor because it's homework," Dowdell adds, contrasting this with the ease of using a benefits app to submit a claim in moments and highlighting the need for technology to streamline financial planning processes.
Dowdell is optimistic about how technology can reduce this friction, particularly through demographic and payroll data integration by record keepers.
"The record keepers are getting demographic and payroll feeds, so they know a lot more about me than they did in the past," he says, adding that he believes that pushing information out to plan members, rather than pulling them in, will help those with limited financial knowledge better understand their financial futures.
And, at Gallagher, they’re wasting no time in exploring the opportunities AI could present both their internal teams and the people they serve.
"At this point, Gallagher is looking at how we can leverage AI for not only our internal processes but for our clients. I do know that the record keepers are investing heavily in this area to be able to [see the] benefits.”
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