One of the few benefits of being around for a long time is perspective. Although the world is constantly changingthere are periods when significant changes occur, such as after World War II, the Sixties and the Vietnam War, the advent of personal computers and the Internet, the Great Recession, and, most recently, COVID-19. As the world wakes up from its first global pandemic in 100 years, which has acted as a catalyst for change, the fire it sparked is burning brighter than ever and will forever change the 401(k) or defined contribution industry.

Today we have an election that seems bigger than which party or person wins. There is global turmoil, with war raging in Europe and the Middle East, as the Cold War heats up again with global powers aligned. Personal computing and the Internet created social media, which may or may not explode due to AI. Finally, there are major demographic changes with 10,000 more baby boomers retiring each day than millennials, while remote work and the gig economy threaten the traditional workplace.

The pandemic created severe job losses, which eventually turned into a war for talent, raising the importance of pension plans as a recruitment and retention tool.

So how do DC's plans fit in and how will they be forced to change as a result?

What was once a relatively sleepy and insular industry is now the sex, with private equity money pouring into advisory firms, fintechs and record-keepers. Driving demand is the hope to serve and monetize the 97% of DC participants without access to a personal advisor, as well as the explosion of new plans due to government mandates, tax incentives and PEPs.

Although some say convergence is a fad, those providers, lobbyists and advisers are threatened by what they know is coming. In a recent LinkedIn survey, 86% indicated that the convergence of wealth, retirement and workplace benefits is not a fad – 8% are unsure.

Fueled by technology, AI and ChatGPT, live advisors (maybe avatars?) will likely be able to better serve the masses at scale. A recent study by Schwab reported that 61% of DC participants feel their financial situation requires advice – 61% are happy to receive advice via AI and ChatGPT, although a live person is preferred three to one.

In another LinkedIn survey, 48% of respondents thought AI/ChatGPT would have a major impact on bringing advice to scale, with another 37% believing it would have an impact. Only 11% thought it would have a limited impact with 4% unsure.

The changing political and legal landscape is dramatically affecting DC plans: will participants receive fiduciary protections within the plan and when they apply; will the entire system be nationalized with a government match that reinforces social security or at least a federal mandate instead of a patchwork of different state plans?

Litigation against DC's plans rages on. It has gone beyond plan fees and funds and is now attacking forfeiture accounts and pension risk transfers. Overturning the US Supreme Court on Chevron the decision has shifted power from the agencies to the courts, which could result in more lawsuits.

And while the flight from DB to DC planes is officially over $25.4 trillion in participant-directed accounts compared to $3.3 trillion in pension plansthe journey has just begun for state and local government plans as ERISA 403(b) plans such as universities and health care organizations have woken up to apparent abuses by in-house and limited providers who will hopefully migrate to K-12 plans where the teachers are literal. torn apart by powerful lobbyists.

The workplace is changing dramatically not only because of demographics, but also because of remote workers and the gig economy. The current DC system needs to undergo another major overhaul, as it did after the Pension Protection Act of 2006, which phased in auto plans and professionally managed investments.

That's only half the battle, as people expect to receive 43% of their retirement income from their DC plan, according to recent Schwab research. Retirement income, a nascent industry, struggles to gain adoption. In my most recent LinkedIn survey, 50% of respondents thought only 13% of plans would offer retirement income options in the next three years, even within TDFs and managed accounts, with almost 70 % believing it would be available in less than 25% of plans.

And while investment and record keeping improved dramatically, resulting in huge price drops, benefiting participants and improving outcomes due to bold fiduciary RPAs who support transparency and conduct due diligence by started almost 20 years ago, an even more important catalyst will be advisor due diligence and RFPs. as this is the most important plan decision that sponsors will make having an even greater impact on results. Although most advisers resisted this move as did record holders, the best providers prevailed and prospered at the expense of those who could not compete when their service and fees were exposed and did not change.

So as more money pours into the DC and fintech industries, as more wealth advisors serving clients with a plan hoping to accumulate assets in the workplace begin to engage, and as more people want and expect help with pre- and post-retirement financial planning, 401(k) plans, providers and advisory firms will receive more attention and, as a result, evolve or die.

A very dangerous time for those who resist change invested in maintaining the status quo. As Mark Twain once said: “Denial is not just a river in Egypt.”

Fred Barstein is the founder and CEO of TRAU, TPSU and 401kTV.