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 everything from the past week's stories and pick out the most relevant and interesting ones by offering an open, frank and honest discussion that you wouldn't get anyway. So let's get real!

The DOL's most controversial longer-tail rule has hit another hurdle with Republicans in both chambers, joined by Democratic Sen. Manchin. trying to break the rule of faith through the Congressional Review Act. Although it is unlikely to succeed since President Biden would have to sign it, that could change if Republicans win the White House. If it goes off the rails, the courts will be the most likely route.

The rule is pretty sweeping with critics like Brad Campbell, former DOL EBSA director and partner at Faegre Drinker explaining in a recent webinar with colleague Fred Reish that the DOL may have overstepped their bounds. The dispute primarily concerns IRA amendments, with most activities by advisers or insurance agents considered fiduciary advice.

What's more surprising is how the rule could affect brokerage firms and insurance agencies, as organizations found to have violated the new rule receive what Fred & Brad called the “death penalty” that prohibits them from they and their representatives to work on recharge for 10 years. . Although insurance agencies that work with independent representatives will not be fiduciaries, they will have to supervise their agents annually.

The existential question is whether firms should start preparing to implement certain provisions that take effect on September 23 or take their chances and wait to see if the courts either strike down the rule or issue an injunction.

Although the conclusions of white paper from Cerulli sponsored by Edelman Financial Engines about managed accounts, gathered from three focus groups and surveys of 823,401 thousand participants, were predictable, had some interesting insights about the need for advice and how to deliver it at scale.

Only 16% of participants without access to a managed account were very confident about their investment strategy compared to 47% who had access. Predictably, participants were very confused about how TDFs, managed accounts and other investments work.

Half of the participants said that talking to a financial advisor is the most valuable aspect of financial advice. The main reasons most participants don't turn to an advisor is that they don't think they have enough assets and are concerned about costs.

So the real question is whether managed accounts in themselves provide a practical means of providing cost-effective advice, in which case the current price can be protected, or whether it is just a tool used by advisers to scale advice and to increase engagement. Because currently, participant results in managed accounts compared to TDFs do not justify higher fees and have relatively low usage.

Pontera continues to win more consulting firms for their service to enable advisors to manage client 401k accounts with the latest Stiffel covering 2,400 reps and 200,000 clients announced at their national conference by their CEO. This follows recent similar announcements from Commonwealth and Captrust.

To provide holistic advice, wealth advisors must include 401k assets, but the means to do so are less obvious. Individual advisors or firms taking on 401k plan client credentials is not realistic in today's data privacy and cybersecurity hypersensitive environment, so outsourcing to a cybershield provider like Pontera makes sense even though it will hurdles to overcome with regulators and data controllers as services. it becomes more widely used by high-profile consulting shops. Require RPAs to also use the service with record holders who do not wish to share participant data.

We all know that AI and ChatGPT are coming to the rules-based and overly complicated DC industry, but few are sure how. A large benefits consultant shared how the technology is being used by HR professionals for benefits.

AI is being used to create content, especially during open enrollment to explain insurance plans, coverage and costs, as well as ways to customize benefits that can be adjusted throughout the year using data analytics. Additionally, AI can be used to reduce work for call centers and HR professionals.

Imagine if DC participants and their families received an introductory video about the plan and benefits when they join an organization plus additional reminders throughout the year when new features (like managed accounts) are added or there are changes in participant situations (marriage/children) inviting them to provide additional information that will increase engagement. It's not too far.

We always hear, “this time it's different” about looming areas like retirement income, but I'm usually skeptical. So when I hear or say that the DC industry is going through a radical change like never before, which we have often heard, I really think “this time is actually different” which will dry up the gap that isolated us . Barriers include burdensome rules and regulations, arcane technology, and a highly complicated food chain and distribution system that are not deep enough to withstand societal pressures.

Read my latest WealthManagement.com column in relation to these pressures which include:

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.