John Hancock is turning to NextCapital to automate its 401(k) and IRA rollover business.
In a multi-channel partnership announced Tuesday, John Hancock will be rolling out NextCapital’s digital capabilities, including 401(k) robo advice and paperless IRA rollovers, to 2.7 million participants in John Hancock Retirement Plan Services over the next year.
Information will be automatically pulled from John Hancock’s record keeping to limit the amount of data input required by users, and NextCapital’s aggregation tools let clients pull in held-away accounts to enable holistic portfolio tracking, savings advice and goals-based planning. Clients can use self-directed tools to rollover an IRA or access automated advice for their 401(k) based on proprietary methodology from John Hancock and Manulife (John Hancock’s parent company).
Clients looking for additional help will have access to an advisor call center. The advisors can use the same platform to locate a client’s information, walk them through the process and provide advice. NextCapital co-founder Rob Foregger said having one platform for both the retail side and the advisor experience is an advantage of his company’s technology.
“There is a lot of false debate of human verses computer,” Foregger said. “A lot of what [we are] focused on is helping the advisor connect with the modern digital advice platform.”
John Hancock will continue supporting its existing managed accounts digital advice offering, allowing clients to choose between that and NextCapital for their 401(k). John Hancock Retirement Plan Services CEO Peter Gordon wouldn’t provide specifics on fees, but did say access to an advisor would cost the client an investment management fee.
In addition to using technology to provide advice at a scale previously unavailable, John Hancock sees digital advice as way it can remove conflicts of interest in order to comply with the Department of Labor’s fiduciary rule. Alois Pirker, the research director of Aite Group, said digital advice would be key for firms to meet DOL’s requirements.
“John Hancock’s forward-thinking embrace of digital advice will be instrumental in growing retirement market share in the coming decade,” Pirker said in a statement.
Whether the rule comes to pass is much less certain than it was in October. The new Congress has already introduced legislation seeking to delay the rule for two years, and members of President-elect Trump’s administration have expressed interest in repealing it altogether.
Gordon said the decision to introduce automated advice into John Hancock’s retirement business was driven more by market forces than regulation.
“The way I look at the DOL rule is it just accelerated forces in the industry going on for a long, long time,” Gordon said, adding that John Hancock’s “participant-first” mentality means providing non-conflicted advice anyway. “If the DOL thing collapsed or went the other direction, our stance would stay the same.”
Foregger echoed Gordon’s comments, adding that the whole industry is moving toward advice that is both scalable and customizable. Regardless of regulation, Foregger believes firms are realizing that fiduciary advice is a sort of Hippocratic oath for the retirement business.
“This is the right way,” Foregger said. “Conflict-free advice is where the industry is going.”