Selling "retirement" is a tough job. Retirement is the end of an interesting career. Retirement is for old people. It is the final step in a long line of mileposts: graduating to grade school, turning 10, passing the drivers' license test, graduating from grade school, legal drinking, marriage, children, paying for childrens' graduations, grandchildren, retirement -- then death.

If selling retirement is tough, BlackRock's [profile] response seems to be selling dementia.

Dementia? To understand that strategy it is worth a step back.

Starting a "national discussion" on the need for retirement income solutions was the takeaway -- intended or not -- that DC chief Chip Castille's team brought to reporters Thursday morning at BlackRock's annual defined contribution survey briefing.

Some 25 or so reporters turned out to a presentation room on the eleventh floor of BlackRock's mid-town Manhattan office tower on Thursday to hear Warren Cormier share the results of the survey made by his Boston Research Group and the academic take on the numbers from Harvard behavioral economist David Laibson.

Plan sponsors like the findings of the six-year-running survey so much, Castille said, that BlackRock plans to bringing sponsors solutions from the surveys this coming fall. Castille's boss, Robert Fairbairn, was also in attendance this year. The head of BlackRock's global client group and executive committee member set the stage for the roundtable discussion with Castille, Laibson and Cormier.

Earlier, Harvard's Laibson challenged reporters to start a national discussion on retirement income.

"We need a national conversation about this issue," said the Harvard professor, adding that the public is "very confused" and does not "really understand" this product. "We need to inform the public and learn what they really want. That is your job," Laibson told the reporters.

Reporters in the room appeared to warm to the idea. One responded with a challenge of her own, suggesting that BlackRock's executives use the issue to become thought leaders.

While the topic of the briefing was not intended to be solely retirement income (other bullet points on the deck handed out to reporters included "reality of retirement beats expectations" and "plan engagement drivers have direct influence on retirement confidence"), Castille was unsurprised that it was the topic that dominated the discussion with reporters.

"The topic has a way of dominating discussions," Castille admitted after the briefing. He pointed out that BlackRock is not a direct beneficiary of any move to adapt retirement income solutions in plans. It manages money and does not offer insurance products, and few participants are ever likely to use the solutions.

BlackRock does partner with MetLife for its annuity solutions and is talking up its relatively new Target Term product that is a fixed-income only solution. Yet neither firm can realistically expect annuity adoption to rise out of the single digit market share it has seen for the past two decades.

Fairbairn also admitted that BlackRock does not directly benefit from the sale of retirement income solutions. Or what sales there are, but he stressed that the debate is important to BlackRock because defined contribution schemes, as the British Fairbairn calls them, are important to BlackRock's business that stretches from the United Kingdom and Europe across the Atlantic to North America and around the world to Asia and further.

"You could find me at one of these events next week in Australia," Fairbairn told The 401kWire.

"We are one of the fastest growing defined contribution managers," he said. That translates into a 15 percent CAGR for the business and a "huge portion" of BlackRock's product development spending. Retirement products account for roughly half of BlackRock's AUM.

Some of the bright minds at BlackRock are working away on solving the retirement income and other DC challenges in a "skunk works" deep in the bowels of the organization, he confided. He also confided that BlackRock will continue as an investment-only player and that there is "no interest" from Larry Fink's team in buying a 401(k) recordkeeper.

Today, Castille shared that BlackRock's strategy is built around what he calls its three core investing abilities: target dates, low risk and indexing.

"We are the only firm that brings these capabilities across the spectrum, from the very largest plans to the smallest," Castille explained.

So how does indexing lead to dementia? That was Laibson's idea.

"We told him he could discuss anything," said Castille.

Laibson explained to the two-dozen or so reporters that "roughly half of retirees have full-blown or partial dementia," and he showed his numbers that prove it.

"What have we created for them? Rollover IRAs," wondered Laibson. He then called IRAs the "wild west" of regulatory products compared to well-regulated ERISA plans. He, at least, seems a believer in annuity products even if participants are not. His point: annuities are better than rollover IRAs for the demented, as most of us will be.

"They [participants] need a check that comes every month and automatically deposits money in their account," said Laibson.

If the goal of the top executives at BlackRock was to kick off a media discussion with the BlackRock name embedded in the debate, they may have succeeded.

This article first appeared yesterday in our sister publication, The 401kWire. 

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