There are only a select few still questioning whether the convergence of wealth and retirement at the workplace is real, for whatever reasons they may have, whether ignorance or vested interests, in trying to maintain the status quo, afraid they will become irrelevant. Though the industry is still early in executing, there is no doubt convergence is real and actually is an existential issue defined so well in this year’s record keeper and broker/dealer roundtables as well as a recent McKinsey report.
This sense of urgency to capitalize on convergence is palpable, reshaping the defined contribution industry, epitomized by Broadridge’s recent acquisition of iJoin.
By way of background, iJoin launched almost 20 years ago as a digital onsite enrollment tool. It has gone through various iterations and owners, ending up under current CEO Steve McCoy, creating participant user interfaces for smaller record keepers who could not afford to create their own.
But behind the interfaces, iJoin has focused on tech that leverages participant data, creating automated workflows and marketing capabilities to make that data actionable for advisors and record keepers focused on the crux of convergence—IRA rollovers, managed accounts and retirement income.
Broadridge entered the DC market in a big way in 2010, buying Matrix then acquiring fi360 in 2019. Due diligence tools are helpful, but data is critical, which is why Broadridge recently moved fi360, led by John Faustino, under their data division from Matrix.
At the recent RPA Broker/Dealer Roundtable hosted by Broadridge in New York City, many of the firms noted that record keepers have become more willing to supply participant data in the past 12 months, something wirehouses have been able to do for a while. The question then becomes how to use the data and make it actionable in a timely manner while protecting it, answering thorny legal questions on usage, something many firms have not figured out yet.
That is why the combination of iJoin, which McCoy admitted has been cash and resource-strapped without any outside investments and forced to focus on smaller record keepers, and Broadridge, with almost $7 billion in revenue and a close to $30 billion market cap, is well positioned to fuel advisors’ and record keepers’ efforts to execute on the convergence by leveraging data.
Faustino stated that Broadridge has great cybersecurity resources, something critical not just to the DC industry but also to participants, according to a recent JD Power study.
Though iJoin partnered with Penchecks on their IRA rollover solution, which just won a WealthManagement.com Industry Award for 401(k) technology, it is eager to work with and license its tech to other firms.
“Advisors are demanding that record keepers connect to their bridge to wealth solutions,” stated McCoy. “They want to go to one site for plan and participant data. We have been focused on capitalizing on convergence over the past two years.”
When they started serving RPAs, firms like fi360 and RPAG, as well as Envestnet, Morningstar and Catapult/PlanTools focused on due diligence tools to automate their efforts. The pivot for some, like Boardridge, has been managing data, while RPAG became a feeder for flexPATH CITs primarily and will only continue now as part of Great Gray, led by new senior leadership.
Under new owner Bain Capital, which took the company private recently, Envestnet is well positioned to leverage its wealth data capabilities to power the DC industry’s shift to wealth services while Morningstar has become the de facto leader in advisor-managed accounts.
Larger record keepers that have established user interfaces may look to firms like iJoin and Broadridge to help implement, manage and distribute data safely, as well as the tech to make that data actionable, focused on the most obvious and most needed wealth services like IRAs, managed accounts and retirement income.
“In-plan retirement income has to be automated, unlike retail annuity sales,” noted McCoy. “Just as advice at scale has to be.”
Combinations like iJoin and Broadridge will only continue as the DC industry looks to partners like iJoin and Broadridge, which can help leverage the convergence of wealth, retirement and benefits at the workplace.
Titanic shifts like convergence unveil business realities that will define winners and losers. Record keepers will either develop wealth services or be forced out of the market at bargain basement prices like OneAmerica. Some will go direct, like Fidelity, Schwab and Vanguard, while others, like Manulife John Hancock, will choose to support their partners. Others will attempt to straddle both sides. “Triple F” RPAs will struggle mightily, and wealth advisors will only engage in 401(k) plans if they can uncover new wealth clients.
As Dylan wrote:
And you better start swimmin’
Or you’ll sink like a stone
For the times they are a-changin’
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