WAVE STRENGTH PODCASTPacific Life’s Paul Hance on Defined Contribution Lifetime Income

Voiceover: Welcome to the Wave Strength: Innovative Solutions for a Secure Retirement. Presented by Pacific Life.

Jim Breen: Hello, everyone, and welcome to another episode of The Wave Strength Podcast series. I'm your host, Jim Breen, with Pacific Life's Institutional Division. And joining me today in studio is Paul Hance, also with Pacific Life's Institutional team. Paul, thank you so much for taking time out of your very busy day to join us on today's show.

Paul Hance: Yeah, I'm excited to be here, Jim.

Jim Breen: Excellent. So, Paul is the Chief Financial Officer for Pacific Life's Institutional Division. Today for today's episode, what I really wanted to dive into was, you know, our DCLI, or defined contribution lifetime income, space. There's so much going on in the market. There's so much happening, even from a legislative standpoint, and also too movement within Pacific Life and the great resources Pacific Life is pouring into this... I can't say new anymore, now almost three years old Institutional team. Maybe you can give a brief rundown as it pertains to the state of our focus right now on Defined Contribution Lifetime Income.

Paul Hance: Sure. Absolutely. So, we see a huge opportunity to help serve Americans with Defined Contribution Lifetime Income. We've been making a significant investment in this area, both from a resource and a technology perspective. So, we recently had the great honor of having Mike Oler join us to lead our Defined Contribution Lifetime Income space; he brings a wealth of experience in this space. We also have Destiny Laura, who's leading our Participant and Financial Education area, which we really see as a critical success factor in this area to help our participants and Americans in general really understand both financial education and the value of our products.

Jim Breen: Yeah. And key roles too, because, allowing us to have even greater focus on areas that, as you mentioned, are so important. And Destiny and I, and Mike and I, have worked from a marketing perspective on a lot of different projects already, but so many wonderful things to come. And focusing on that participant as it pertains to lifetime income and lifetime income solutions; such an important conversation. And I'd like to jump into that a little bit, Paul, and talk about ways in which we are focusing on that participant and their entire journey. And you shared a little bit about these two new important roles that have been added to our team. But let's talk about the participant; let's talk about that journey and maybe share your thoughts.

Paul Hance: Yeah, absolutely. So, we've been doing a lot of thinking around how do we best communicate to participants on our products, our solutions in a way that is simple and transparent and easy for them to understand and appreciate. If we go back 30 or 40 years, a pension plan was very easy to understand; you work for a certain number of years, and you get this pension based upon your salary. So, now what we're working on is how do we communicate in language that our participants understand so that they can fully utilize our solutions to provide that same financial security as a pension used to.

Jim Breen: And it's important because you mentioned, you know, as an industry, also too even looking back those 30 years, we have a tendency to perhaps front load a lot of the information: here is the product or the solution, and this is what it does. But also here is every other individual little piece of whether it's minutia of how the product works or the legal or the compliance sections of that solution. And all of a sudden, the participant is inundated with just so much they lose sight of maybe the important elements of that product or solution, and they get lost. But here we are, we're refocusing and looking at ways that we can engage that participant, maybe not just at that one moment, but across that entire journey, whether it's entering the workforce or approaching retirement.

Paul Hance: Yeah, and I think that it's really important for us to communicate to the vast majority of people that do not work in finance. I think we oftentimes forget that, but less than 6% of the population actually works in finance. So, it's really important that we focus on what are our participants hearing and understanding, not what we're saying. Because if we communicate in our own jargon and the participant doesn't actually hear and understand what we're providing and how it works, then we've lost the participant, and we've lost that opportunity to really add financial security for our participants.

Jim Breen: It's funny you bring that up because we just did a webinar; it was a Pacific Life and Franklin Templeton webinar. And in that webinar, we discussed a lot of data points that were obtained in Franklin Templeton's Voice of the American Worker Survey, a great survey. But in addition to that, we went and filmed some person on the street videos where we really just wanted to find out where people were in their own journey and their own story. And that's something that resonated with folks. And look, I know it's something that I need to do; I just don't know how to get there. And a few of the responses that were consistent in both our respondents, both on the West Coast and in the Midwest where we were, was that need for education, resources. And resources that maybe weren't, you know, I'm talking to you, I'm telling you how to do that more so let me show you how to do it; let me show you the way in which it can be done to teach you so that you understand what's happening.

Paul Hance: I think it's really important that we curate that in a way that's incremental so that our participants can understand it. You know, we can't start with finance for 420, right? We're talking about efficient frontiers; incorporating annuities into portfolio, increases your return for the same risk. You know, that works well for you and I, but we have to start with where the participants are with Finance 101, go to 201, and work our way up so that we build that right foundation so that by the time the participant gets to retirement, they're confident in their retirement and they know how to have a secure retirement. But at the same time, we're not overloading them at the end.

Jim Breen: Yes!

Paul Hance: It's important that we have that journey along the way so that they have that confidence along the way that they'll both have the right financial assets, but also the right education so that they can have that confidence in retirement.

Jim Breen: Also, too, you know, you mentioned not trying to burden them or inundate them as they approach retirement; create a process of sorts or a program, right? Where they can have that, those resources and grow into them according to their journey. Like you and I, we have kids. You know, when you first enter the workforce, perhaps, you're not thinking about retirement as much, and then you get married, you have kids, then the house, then you're thinking about the soccer game or the this or the that. And we approach, and we enter into that journey at different times, at different stages, and all of us are at different points of that journey. And to be able to have those resources that meet us where we are so important. Another couple folks that we spoke to in those person on the street videos commented that they felt that high level of anxiety as they were approaching retirement, and they wish they would have had those resources earlier so that when they approach retirement, they wouldn't be in that situation of high anxiety. And really, that anxiety, it can really add stress and really have implications on your well-being, on your health. And if we're able to provide education earlier on, right, it would eliminate that.

Paul Hance: Absolutely. Yeah, because it's one of those things where you don't want to procrastinate about things, but you also... we have to make it frictionless; we have to make it easy. Because to your point, people are busy, especially during their peak working years; oftentimes, people have kids and families, and we need to make it really simple and really easy because if it's not, it's not simple and easy, it will always be well-intentioned, but it always be tomorrow; I'll always, I'll work on that tomorrow when I have more time. And then suddenly, you're 50, or 55, or 60, and you realize, well, A) I wish I had more education so that I could prepare best for retirement, and B) I wish I had that education 20 years ago so I could do the right things when I'm 40 in terms of saving and preparing for retirement.

Jim Breen: You know, a lot of what you're talking about in terms of the participant, you know, let's talk a little bit about Pacific Life, and maybe the strength and stability and the history of the company, a mutually held company, which is very significant for what we are. And I would say that because of that mutual nature, we have a bit of a paternalistic approach; we are able to have that deep focus on our clients and customers. And I think that's really another way in which we're able to consider the participant in a very unique way.

Paul Hance: Yeah. So, we're pretty unique in terms of being owned by our customers. We're also further unique in terms of not having the pressures of policyholder dividends, not having the pressure of shareholder dividends. So, really our focus is, by virtue of being owned by our customers, how can we add the most value for our customers? And that value can be both in terms of financial returns, but it can also be in terms of peace of mind, it can also be in terms of education. And that's really our focus as we work for our customers, ultimately, and that's what we're focused on doing.

Jim Breen: So, Paul, you mentioned frictionless, a frictionless experience. Why don't you elaborate a little more about your thoughts on that?

Paul Hance: So, we need to be able to connect with everyone. You know, folks today, there used to, whether it's on your Amazon's or whether it's on your phone, there's recommendations that show up in front of you. So, you know, Amazon knows how old my kids are, right? They know what to recommend to me. And as a busy person, that's useful; that's a useful service. And if we can think about that retirement journey, people are in different phases of their retirement journey, and how can we best help them with the appropriate information, the appropriate education at the right time in that journey is valuable, very valuable for the participants and our customers to be able to get the information that best fits where they're at in their journey. It's also very important, as we think about this generation growing up in the era of TikTok, Instagram, etc., we need to connect with people where they're at, right? I love to read long books; not everyone loves to do that, but we need to connect with everyone. So, we need to think about how can we best reach our audience because if we write the perfect 20-page brochure or 100-page prospectus but no one reads it, that's not helping our participants be more educated; it's not helping our participants understand how to have the most secure retirement.

Jim Breen: Yeah. Social media, it's such an important part, I think, of that solution, especially as we look at the new generation or generations as we even look further down the road because social media is nothing new, right? I mean, even look back to, I know it's laughable now, but even in the way in which people communicated on MySpace, even, and here we are, fast forward now to things like TikTok and, as you mentioned, Instagram. We really need to look at those as part of the recipe to the ultimate solution; part of a resource of sorts that folks can use is, as we see now, TikTok; they're launching the #TikTokTaughtMe movement, right? Where folks are receiving a lot of information, both financial and otherwise, in specific select groups within the platform. It's a very interesting way to connect. Yeah, you know, it's an important part of the overall solution, especially as we look forward.

Paul Hance: Yeah. Absolutely. I think it's very important that we meet our audience where they are. And we need to connect with everyone and help everyone get that appropriate financial education. I know we had a lot of success recently partnering with an advocate, Michelle Curran.

Jim Breen: Yes.

Paul Hance: Who is a was a very highly skilled, successful Air Force pilot. So, I think that's conversations like that where we can engage with advocates that don't necessarily come from the same financial bubble that we live and operate in every day. And that really helps us make sure that we're connecting and reaching everyone, which is what we need to do when we think about defined contribution lifetime income. It's not just about the 6% of people that work in finance or the high net worth people. We want everyone to have a secure financial, have a secure retirement, and have that financial security.

Jim Breen: Exactly. And with the Michelle Curran example, somebody on their own journey, obviously. But the ability for her story to resonate with our audiences was incredible, right? And as you say, I think because we took that leap and that opportunity to communicate a message of, "Look at this person who has set goals, and they've achieved a lot in their life. And here are some suggestions on how you might be able to set goals in your own life as it pertains to retirement, for example." And so, you know, the engagement we saw from that event was incredible. But to your point, I really believe that a lot of that had to do with the fact that she's an everyday person; she's a regular person with an amazing story, right? But she was able to connect. And it's like we've talked about, it's about that story; it's about meeting people where they are in their journey. And I really believe that that's, like you say, Paul, is such an important part of these lifetime income solutions. Well, Paul, I want to thank you so much for joining us here live in the studio today. It's been a great opportunity to again have you on the show and talk to you.

Paul Hance: It's been great, Jim. Thanks for taking the time. I appreciate it.

Jim Breen: Absolutely. And obviously can't wait till you're back next time. And to our audience, I want to thank you so much for taking time out of your day to join us on The Wave Strength. And I want to encourage you to head over to Spotify, Audible, YouTube and search for The Wave Strength and like and subscribe so you can stay current to our content. Also, I'd love to encourage you to add your comments and thoughts into the comment section to join in the conversation and let us know your thoughts about this topic. Thanks again, and have a great day.

Voiceover: This has been another episode of the Wave strength presented by Pacific Life. Don't forget to catch us on YouTube and make sure to subscribe. Although this podcast is presented by Pacific Life, the opinions and views expressed are those of the hosts and participants and do not necessarily reflect Pacific Life's views on any of the topics discussed. Pacific Life refers to Pacific Life Insurance Company (Newport Beach, California) and its affiliates, including Pacific Life & Annuity Company. Insurance products are issued by Pacific Life Insurance Company in all states except New York and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state. Each insurance company is solely responsible for the financial obligations accruing under the products it issues. This podcast was recorded on October 18th, 2022.

Jim Breen: Thanks for joining us on today's show. We'd love to hear from you. Join the conversation below and leave a comment on your thoughts on what the industry can do better for participants as it pertains to lifetime income solutions. And if you'd like more interesting content, click one of these links over here.