Hello and welcome to this week's edition of 401k Real Talk. This is WealthManagement.com's Fred Barstein Omnichannel RPA Contributing Editor & CEO at TRAU, TPSU & 401kTV – I review all of the stories from the past week and pick the most relevant and interesting ones while providing open, candid discussions honest ones you won't get anyway. So let's get real!
Empower made a series of announcements about available retirement income solutions for their nearly 19 million DC participants with several partners.
Income America will provide guaranteed income within Empower managed accounts powered by Morningstar as a collaboration between American Funds, Great Grey, flexPATH and TIIA have partnered on a TD CIT with an embedded annuitization option.
Empower itself will offer managed expense reduction solutions as well as the option for participants to buy off-plan through MassMutual's Blueprint income marketplace. (MM sold its record keeping division to Empower in 2021.)
Positioning itself as a platform rather than a product builder, Empower's announcement should help with retirement income adoption as competitors will have to follow if they are successful. Let's hope DC's plan to address the decumulation phase of retirement is as it should be.
In what Fortune magazine calls a “the retirement megatrend”, more people are taking phased retirement rather than going cold turkey. As detailed by TR Price's Stuart Ritter in a recent TPSU program, there are two ways people can fail in retirement: 1. Not having enough money; and 2. Not preparing for their new life, which can be helped through a phased retirement.
Led by the pandemic when remote work became the norm and technology, it is easier for workers to continue to contribute while organizations can maintain their knowledge and relationships at a reduced cost of mentoring, not locking in new workers. who may also want more flexible work options.
The director's Chris Littlefield noted that the shift is towards people fitting work into their lives, not work lives with more companies learning how to “give” workers.
All of these can speed up retirement income approval.
As discussed in my last column about the need to manage rather than eliminate conflictwhich is almost impossible, details David Kaleda of Groom Law Group possible conflicts as wealth and retirement converge in the workplace.
With more firms integrating wealth and retirement plan advisory practices, conflicts are sure to arise as wealth managers must adhere to ERISA and the IRC when managing DC assets in plans, which will be exacerbated by the rule DOL fiduciary now at OMB due out in June.
So wealth advisors who recommend returns and those who manage client DC assets, if they are paid out of plan assets, may come under the jurisdiction of ERISA and the DOL, not just the SEC, creating conflicts that firms will have to manage .
As 401k plans explode led by state mandates and tax credits facilitated by PEPs with Cerulli projecting 1 million plans by 2029, wealth managers are taking note.
Not only are clients looking for help, but traditional advisors see opportunities to gain new clients within the plan.
A leading provider details in a WM.com column how earlier fears and concerns about DC plans by wealth managers are being overcome through outsourcing and partnerships that open up a world of opportunities as wealth advisers struggle to find new clients .
The defined contribution industry is all abuzz about the potential for PEP, CIT and retirement income. And while important concepts, someone forgot to tell the sponsors of the plan.
After hundreds of sponsor training programs, few if any have proactively sought out any of these services.
Which isn't to say they're unimportant—they're helping plans reduce fees, jobs, and external liabilities while enabling lucky participants to have enough assets to retire without worrying about run out of money.
Read my latest WealthManagement.com column how the problem is not only the language we use, which is filled with acronyms and code sectionsit's about framing issues in terms that normal people can understand.
So those were the top stories from last week. I listed a few others that I thought were worth reading:
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.