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.
LinkedIn Poll: The sale of Guideline to Gusto indicates that the fintech record keeper business model is:
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
The US retirement market rebounded in Q2 according to the ICI. The $45.8 trillion, which increased 6%, is dominated by IRAs with $18 trillion, up 7% from Q1, and DC plans at $13 trillion, up 6.4%.
401k assets, up 6.6%, broke the $9 trillion mark for the 1st time ever with 62% of assets still in mutual funds including $2.1 trillion in TDFs.
DB plans were mostly stagnant going from $2.9 trillion to $3.0 trillion.
Since 2007, retirement assets have increased 154%, IRA assets 236%, DC plans 166% and DB plans just 23%. The % of retirement assets now in participant directed plans is a whooping 67% with state plans accounting for 20%.
Next story:
Stone Point, a major shareholder in Ascensus, has acquired OneDigital along with the Canadian Pension Plan valuing the firm at $7bn. Along with benefits for smaller plans, OneDigital is a leading RPA aggregator with $143 bn AUA and has acquired numerous RPA and more recently wealth shops as wealth, retirement and benefits converge at the workplace.
Along with Ascensus, Stone Point has a stake in Kestra, a broker dealer started by NFP.
This is the 4th recap by OneDigital since its inception 25 years ago and likely means continued acquisition activity. They recently hired Christian Mango from a smaller aggregator, Alera, and lost Jania Stout who is leading Prime Capital’s retirement division.
Next story:
Jumping on the convergence bandwagon, Ascensus has hired Josh Randle from Transamerica to lead their investment management and wealth services reporting directly to CEO David Musto.
The hire may signal more aggressive initiatives by Ascensus to provide advice and wealth services to participants in their DC plans as well as leverage opportunities to co-manufacture investment products. Mostly a service bureau with fixed, not asset based fees, Ascensus faces the same issues as other record keepers as plan fees decline. The question is whether they will partner with advisors or go direct.
FINALLY
After the acquisition of Sageview by Creative Planning first reported by WealthManagement.com/RPA, it’s worth reflecting on what it means for advisors and the entire 401(k) and 403(b) market which continues to mature, evolve and consolidate.
Unable to build a scalable wealth business or move significant assets into managed accounts, Sageview’s owner, Aquiline, which bought the firm in 2021, likely did not see a clear path to success while Creative Planning, a leading wealth and retirement firm with a $16bn valuation has been aggressive buying Lockton’s and Mesirow’s retirement practices.
Read my recent WealthManagement.com/RPA column on why this deal in particular may be a sign that the RPA aggregator industry in entering the 3rd stage of the consolidation curve and what it means to other RPA aggregators and advisory firms.
And last but not least, after the acquisition of Guideline by Gusto, the LinkedIn poll asked whether the deal proved that that fintech business model is unsustainable as Retireholic’s JD Carlson has suggested. 34% agreed with JD with 32% disagreeing and another 24% indicating that it may be too soon to tell – 10% were unsure.
A Correction: The recently released Fidelity Plan Sponsor Survey did actually track advisor changes indicating that 20% of plans switched advisors last year with 36% actively searching. The reasons for a change last year were led by the advisor retiring and the new advisor was able to help with administration offering more services at a lower cost. Reasons to consider a change include the new advisor is more knowledgeable and informed at a lower cost able to help with fiduciary duties.
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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Fiduciary insurance executive confirmed as EBSA director
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The risks and rewards of PE in DC plans
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Law firm accused of mishandling 401k funds
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Nestimate, a recent Wealthies winner, raises $3m AND
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Daybright buys Platinum 401k to lead their PEP/MEP initiatives
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 #September