Greetings and welcome to this week’s edition of 401k Real Talk. This is Fred Barstein contributing editor at WealthManagement.com’s RPA omnichannel and CEO at TRAU, TPSU & 401kTV - I review all of last week’s stories and select the most important and interesting ones providing open honest and candid discussion you will not get anyway else. So let’s get real!
The brokerage and insurance industry are bemoaning the fact that the OMB has fast tracked the DOL’s fiduciary rule announcing it has finished its review which means the rule will be out faster than anticipated.
And even though lawsuits are likely to be filed, the financial services industry cannot wait to make changes hoping that the courts will vacate the rule as has it has in the past. A recent US Supreme Court rule has made it more difficult for litigants to judge shop though they can obviously shop the district which is usually in Texas.
The DC industry has mostly endorsed the rule which would make all advisors plan level fiduciaries while critics wonder why the DOL is wielding jurisdiction over IRA rollovers and insurance products which they claim the SEC and state regulators can handle.
It is the rule that never dies. Until it does.
Pontera announced a flurry of new hires to focus on partnering with record keepers. They have basically been flying under the radar allowing wealth advisors to manage their clients’ DC accounts acting as a cyber shield using client’s credentials without permission and often knowledge of the record keeper.
The new hires have deep industry experience with firms like Edelman Financial Engines, Fidelity, Principal, Voya and MassMutual who will try to navigate the regulatory and technology issues that record keepers might raise.
Regardless, people who want their advisor to manage their 401k accounts should be able to as the inevitable convergence of wealth and retirement at the workplace marches on.
Wharton’s Vice Dean Mauro Guillen at a recent 401k industry conference highlighted wealth and societal trends that will dramatically change the retirement industry including: 53% of retirees return to work not just because of money
The US population is aging - there are now 3 people at working age for every retiree compared to 5 previously which means the shift from government funded plans will not only increase DC plans in the US, it will change the rest of the world.
Women are playing a larger role who now have more wealth with a growing percentage the main bread winner. Yet birthrate for educated women is now just one.
Overall, Guillen recommends that we rethink retirement due in part to the longevity revolution noting, “The future belongs to those who can integrate the wisdom of age with the dynamism of youth.”
The hype around financial wellness compared to results and engagement has led many to question whether offering personalized financial planning to the masses is a pipe dream. Along with limited engagement and the cost to help less affluent people, the results have been discouraging. Does the defined contribution model offer present unique opportunities to deliver advice to the masses something which the B-to-C model that digital robo advisors proved is economically unviable?
Read my recent WealthManagement.com column about how one TDF provider partnering with an established wellness firm and an advisor might have found a model that works for the masses.
So those were the most important stories from the past week. I listed a few others I thought were worth reading covering:
- Ron Carson steps down just before firm hires Dani Fava, former CSO and wealth tech guru at Envestnet
- Empower settles lawsuit with former Personal Capital employees
- Research says that the federal savers match could dramatically increase savers
Please let me know if I missed anything or if you would like to comment. Otherwise I look forward to speaking to you next week on 401k Real Talk.