Hello and welcome to this week's edition of 401k Real Talk. This is Fred Barstein Contributing Editor at WealthManagement.com's RPA Edge and CEO at TRAU, TPSU & 401kTV – I Review everything from last week's stories and pick the 5 most relevant and interesting offering an open honest and frank discussion that you wouldn't get anyway. So let's get real!
Some big ones DC record keepers reported year-end results led by Empower and Fidelity further widening the gap between the Fab 5 RPA providers and the rest of the almost 40 other national record holders.
Empower showed an impressive 17% increase in assets to $1.5 trillion with 18.5 million participants, while Fidelity DC's assets rose 22.3% to $2.3 trillion and 2.3 million participants, pushing them away from other elites such as Vanguard, Principal and Voya.
Empower's wealth division grew 268% over the past 3 years to $72 billion which still pales in comparison to Schwab which reported $8.56 trillion in assets, 35 million brokerage accounts and 5.2 million DC participants.
Other major DC providers include the two payroll companies, asset managers such as American Funds and T Rowe Price, both leaders in TDFs, fintechs and regional data custodians TPAs that use cheaper, more efficient technology. accessible and shared.
So while provider consolidation is expected to march forward, advisers will still have plenty of good options.
Pontera announced a partnership with Captrust to enable their advisors to manage clients' DC accounts as part of their overall financial planning.
While Pontera has appeared to focus more on wealth firms and broker-dealers, RPA Aggregates like CAPTRUST, which is the $817 billion leader, can use Pontera not only to work with wealth clients, but also participants in their DC plans. Expect others to follow as the convergence of wealth and retirement gathers steam.
As expected, the brokerage and insurance industries pushed back against the DOL's new fiduciary rule at a recent congressional hearing, arguing that the agency has overstepped their jurisdiction and will harm investors served by brokers and brokers. insurance.
Michael Kitces, who also appears to oppose the rule, wrote recently that the solution may be to require financial advisers to clearly label themselves as “sales people” rather than advisers providing unbiased advice.
The point is that most DC participants are unsophisticated, which is why the DOL is focused on limiting behavior rather than the greater disclosure that the SEC envisions.
And does it make sense for an advisor to wear the hat of sales person and fiduciary for the same clients, just as we want our doctors to also represent pharmaceuticals?
of EBSA Division of the DOL announced $1.4 billion in recoveries last year, similar to 2022, with $844.7 coming from enforcement actions. There was a focus on completed and equipped participants as the DOL prepares for their database in 2025, as required under SECURE 2.0 and the recently announced automatic portability rules. $444 million was returned to workers who filed 197,000 claims with the agency.
All eyes are on choices that could change the character of the DOL and its willingness to defend the fiduciary rule in court, as well as the Supreme Court's Chevron case, which would further limit the agency's ability to make rules.
As plan sponsors wake up going from being consciously incompetent to being consciously competent, they will drive change in the DC industry that has previously been led by record keepers, advisors and asset managers.
Read mine The last WealthManagement.com column about how plan sponsors will dramatically increase the pace of change and force advisors and providers to leverage the workplace to holistically help employees with all of their financial and benefits issues.
So those were the top stories from last week. I listed some other stories that I thought were worth reading:
- LPL makes massive acquisition of Atria
- TDF's assets amount to 3.5 trillion dollars
- OneDigital makes big purchases in Chicago
- TIAA settles SEC fees
- Morningstar provides insight into PE in DC plans
Please let me know if I missed anything or if you would like to comment. Otherwise, I look forward to talking with you next week on 401k Real Talk.