Elaine Sarsynski started her business career at an early age, picking asparagus with her four siblings on the family's vegetable farm in Hadley, Mass. “We began to learn about commerce, manufacturing, product development, sales practices, distribution, wholesale and retail,” Ms. Sarsynski said. “All of those things prepared me for what I am doing today because you learn the very basics of work, work ethic, product pricing and how to please a customer,” she said. “How do you get them to come back for the next bunch of asparagus or a bushel of squash? A lot has to do with customer loyalty and customer service as well as having a cute smile as a 7-year-old.”
Her career path advanced from the family farm to Wall Street to the insurance industry to local government and, now, to executive vice president and head of the retirement services division of Massachusetts Mutual Life Insurance Co., Springfield, Mass. She is also chairman, president and CEO of MassMutual International LLC, MassMutual's international insurance division.
After college, she joined Morgan Stanley & Co. in the firm's analyst training program. Living and working in New York for the first time required adjustments. “I had to take some Dramamine because it would make me seasick going up and down the elevators,” she said.
After Morgan Stanley and an MBA from Columbia University, Ms. Sarsynski joined Aetna Inc., in a career that would span 18 years, culminating in the job of corporate vice president of real estate investments. When Aetna decided to reduce its real estate and mortgage exposure, it asked her to take another job within the company.
From 1998 to 2005, “something else” included three years running a real estate consulting firm and a one-year appointment as economic development director of Suffield, Conn. She was then elected twice as Suffield's First Selectman, the town's chief executive officer.
She rejoined the corporate world first at MassMutual's Babson Capital Management unit and then as chief administrative officer of Massachusetts Mutual Life Insurance Co. By 2006, she was in charge of MassMutual's international insurance division.
A year later, while remaining as CEO of the international insurance division, she became head of MassMutual's retirement business, too. “My job was to reconfigure and reset the organization,” she said. A few years later, that job included managing what she said was the largest acquisition in MassMutual's history — the purchase of the retirement business of Hartford Financial Group that closed at the end of 2012.
Why did MassMutual buy The Hartford's business instead of growing its retirement business? I was pleased with our organic growth. We were on track to doubling our market share by 2015. The board asked me to take a look at the Hartford Retirement Plans Group, and we ... realized it was so complementary to our organization. ... We were starting to build our small-market presence. What the Hartford did was basically save us five years of building out that model. It got us where we wanted to be within a very short period of time.
What was the strategic rationale? The Hartford is known for small plans and their government business — the 457 business. We're known for midcap and large plans. We had roughly 8,000 plans; the Hartford had 30,000 plans. Their assets under management were about $51 billion; our assets under management were about $68 billion.
As of now, the total is about $125 billion (for defined benefit, defined contribution and non-qualified plans). They are very strong in small plans and some other niches that we were not involved in. It was very complementary.
How were you able to digest a business that had many more sponsor-clients than the old MassMutual? In 2008, we began a major technology overhaul of the retirement service (business) technology. All of our adviser and sponsor and participant portals were upgraded. Systems were upgraded. Record keeping was upgraded. ... The reason we could think about the Hartford acquisition is because we really had the organization, running a sustainable business model that was growing rapidly organically. And we had the system, the employees and the operational model to absorb the Hartford Retirement Plans Group.
What are the challenges for MassMutual and the rest of the retirement industry? What we want to measure is how many employees are on track to retire, let's say at age 67, with a replacement income of 75%. Yet the industry doesn't really measure that. What they talk about is how many people are enrolled in the plan. Let's say you have 90% of your folks enrolled in the plan and let's say their (average) accumulated balance is $65,000. That still doesn't answer the question: Are these folks going to be able to retire at 67 with replacement income on a monthly basis that's appropriate? You have to make it individualized. You have to use the data for that individual. ... If they're not on track, you put action plans in place so that they could propel themselves.
How do you encourage participants to make appropriate retirement-investing decisions? Ninety percent of participants in plans want you to do everything for them. So let's get the appropriate level of target-date funds, lifecycle funds, custom-choice funds in the plan, so that your default option — the QDIA — is appropriate for your constituents in the plan. About 75% of a plan's success is through that plan's structure. It's very critical. The rest is through the interaction with the participants, and you must have many ways to influence participants' behavior because everybody takes in information — and is influenced — differently. Some people call the call center; others use the website. Many of them want an education specialist (to) have a one-on-one meeting with them.
How do you use data to improve a plan? We can run scenarios and analysis on the underlying demographics of someone's plan. So we run the demographics and we can see — oh my goodness, your 25- to 30-year-olds in this category are enrolled in or overweighting in fixed income, or they've only deferred at 3% (of their salary). Let's get a deferral program targeted to them. Let's say they're women. We make sure we are targeting a woman-sensitive message to that group. Let's say we do demographics and we see that the 55-plus-year-olds are too heavily weighted in equities. Now, let's do a campaign so we start moving them toward a stable value product.
How does the cost of health care affect retirement planning? There's been quite a bit of discussion over work-site benefits over the past few years. The question, as we move forward, is how will an employer actually purchase a portfolio of work-site products and benefits for their employee base. That product lineup will include health care, retirement, dental care, critical care, accident and health (insurance), and it could include property and casualty (insurance). ... We see a convergence of work-site benefits over the next five years so that the employer looks at them as a portfolio of products. Then the consumer will be able to select and optimize the products for their particular situation. Tools and solutions will need to be provided for the employee so they will be able to say “I would like this much retirement support and this much health-care support” — whatever it happens to be. This is very different from how we think about today, where you buy a retirement program and you buy a health-care program.