Fintech Friday: Streamlining the Uber-Confusing Retirement Income Space

Retirement income is all the rage—or at least the idea of retirement income is all the rage.

Advisors, plan sponsors, and, yes, participants increasingly acknowledge the need for some sort of guaranteed income stream to combat longer life spans and, thus, longer retirements.

It was a major theme at the recent NAPA 401(k) Summit in Nashville. Several retirement income-focused sessions were on the agenda, and panelists mentioned Nestimate in almost every one.

According to founder and CEO Kelby Meyers, the early-stage fintech company’s mission is to “empower guaranteed income in the 401(k).”

“Guaranteed income is coming to a 401(k) plan near you,” Meyers said, referencing BlackRock CEO Larry Fink’s recently released annual letter to shareholders. “Fink described this development as a watershed moment for retirement plans. He predicted that income solutions will become the most widely adopted strategy in defined contribution plans. You will either be the advisor to demonstrate your knowledge and ability to protect participants’ income, or someone else will. This moment in time offers advisors the ability to differentiate themselves in such a monumental way that I have never quite seen before.”

A veteran of the annuity space, provisions to encourage in-plan annuities in SECURE 1.0 got Meyers thinking of their potential, yet calls to industry contacts revealed a stunning lack of awareness about what the act contained.

“People on the phone were like, ‘Well, what do you mean about the SECURE Act?’” Meyers said. “It was just the timing with COVID and everything else. I quickly saw this [gap] between the 401(k) RIA and insurance spaces. They weren’t communicating on either side of the houses. I quickly saw that there would be a need for something like this to equip advisors and fiduciaries to feel confident with implementation.”

A systemized process to analyze and implement guaranteed income products while minimizing the reporting and documentation burden was needed, and what Nestimate offers.

“We do that through a software analytics solution that guides the user through a process and gives them a fiduciary leg to stand on, as well as the ongoing monitoring associated with guaranteed income contracts,” Meyers added. “We created that to be scalable for the average advisor and the firms they work for. The differentiator is in guiding them through a process that takes in-plan demographics and the wants, needs, and objectives of that plan and then narrows it down based on those demographic and needs factors.”

It’s an “apples to apples instead of apples to oranges” for the wide array of available annuity products.

Just over a year since its launch, the firm counts several of the top five annuity carriers as clients.

“It’s the first in the market, which is an exciting opportunity for us,” Meyers said. “The next step is building relationships with distribution partners.”