Welcome to this week’s edition of 401(k) Real Talk, where Fred Barstein, contributing editor for WealthManagement.com’s RPA channel, reviews all of last week’s industry news and selects the five most important/interesting stories.
Worth reading/listening/noting:
Read the full raw transcript below:
Greetings & a warm welcome to this week’s edition of 401k Real Talk. This is Fred Barstein contributing editor at WealthManagement.com’s RPA omnichannel and CEO at TRAU, TPSU & 401kTV – I review all of this week’s stories and select the most important and interesting ones providing open honest and candid discussion you will not get anyway else. So let’s get real!
FIRST STORY
As retirement income in DC plans slowly gain traction, perhaps a new hurdle has been overcome with a recent DOL opinion letter indicating that Alliance Bernstein’s Guaranteed Lifetime Income product can be used as a plan’s QDIA.
SECURE 1.0 granted plan fiduciaries safe harbor on selection of annuities while the recent executive order directed the DOL to clarify fiduciary duties for lifetime income along with alternative investments.
A pioneer in lifetime income for DC plans, AB’s strategy acts like a TDF getting more conservative over time and then allocates a portion of the assets at a certain age designated by the plan fiduciary to the guaranteed income option which is fully liquid and can be adjusted by the participant.
AB requested clarification because the DOL had not explicitly addressed lifetime income as a QDIA.
Next story:
As more wealth firms like Creative Planning, Mariner and Hightower see opportunities to acquire retirement plan advisory firms, others like Concurrent may be taking notice.
With $16bn in wealth deploying an affiliate model with advisors in over 75 firms, Concurrent announced a deal to buy a minority interest in Next Retirement with $10 bn boosting retirement assets to $14 bn. Concurrent recently hired David Montgomery from OneDigital to lead their retirement plan efforts. Next is led by legendary RPA Paul Neuner who had been at Wells Fargo.
Will other RIAs see opportunities to gain more wealth clients through DC plans? Morgan Stanley’s example of gathering $300bn from the workplace over the last 5 years along with Captrust’s success and Creative Planning’s bold moves like the reported acquisition of Sageview, may lead more RIA firms to partner or acquire RPA firms like Concurrent.
Next story:
Citing data from Boston College’s Center for Retirement Research, Capitalize, a firm that helps participants find lost 401k accounts, reported that the number of lost accounts has doubled in the last decade accounting for $2.13 tr which would be 16% of all DC assets.
Capitalize estimates that 4.2m 401k accounts will be left behind in 2025 up from 3.5 m in 2023 with the average account balance of $66,691.
Whether these numbers are accurate or not, lost accounts are an issue recently addressed by the DOL through their lost and found database and auto transfer rules as well as the Portability Service Network, a consortium of the 6 largest DC record keepers.
FINALLY
With the new administration, technology and the race to serve participants in defined contribution plans, new products and services are popping up engendering heated discussions. So which ones will have the greatest impact on participants, plan sponsors and the DC industry over the next three years?
Read my recent WealthManagement.com/RPA column which countdowns the top 10 – can you guess what is #1?
FINISH
So those were the most important stories from the past week. I listed a few others I thought were worth reading covering:
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Final regulations on Roth catch up contributions released
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CIOs say ERISA litigation is stifling innovation
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Betterment reports that 50% of advisors are using AI
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Mutual of America partners with IRA Logix
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Pontera study reports that investors don’t feel like they have control over critical decisions in their workplace retirement plans
Please let me know if I missed anything or if you would like to comment. Otherwise I look forward to speaking to you next week on 401k Real Talk.
#401k #Real #Talk #Episode #October