January 11, 2019

Can you provide some color on the Workplace Solutions business and whether you see a potential competitive threat looming from the recently announced partnership of BlackRock and Microsoft to develop software targeting these clients?

Workplace Solutions helps participants in employer-sponsored retirement plans save more and invest better for retirement. Our core products—managed retirement accounts, fiduciary services, and target date offerings—are typically distributed through recordkeeping relationships. According to the initial press release from BlackRock and Microsoft, the two organizations appear to be developing a direct-to-consumer or retail solution for retirement savers based around some kind of annuity or life-time income solution. We feel strongly that the best way for us to grow our business and improve participant outcomes is to continue to expand our distribution footprint within the institutional space, specifically through recordkeepers, advisors and broker-dealers. Additionally, we’ve built a strong competitive position through our data integrations with recordkeepers. These integrations, which we’ve gradually built out over the past 20 years, enable us to deliver on-demand digital advice to individuals within their employer-sponsored retirement plans and to deliver seamless solutions to plan sponsors and advisors.

While many robo-advisors and startups have attempted to penetrate the employer-sponsored DC market that we target, we believe that their lack of recordkeeper integrations may limit them from gaining much traction. In terms of the life-time income solution that BlackRock and Microsoft appear to be creating, our managed retirement accounts solution currently offers participants drawdown solutions that are designed to provide them with a sustainable income in retirement by source. Additionally, our managed retirement account solution can provide participants with recommendations to an annuity if such a product is available to them in their plan. Our recent move into the advisor space and broker-dealer space will also enable us to continue to find new ways to deliver solutions focused on both helping participants grow their retirement savings and spend those savings down once they reach retirement.

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