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!
In what is likely their final and epic battle, the DOL defended its fiduciary rule in a Texas court, where regulations go to die, against a motion for preliminary injunction and to vacate the rule preventing enforcement with some provisions due to be effective September 23rd. Remember that the Trump administration did not defend the 2016 rule.
The agency claimed that ERISA does not exclude covering insurance agents and that the new rule complies with the 2018 case that overturned the previous iteration being more modest in scope noting that the market realities are that insurance agents are not merely “salespeople”.
The 2024 rule would cover all plan level advice which few argue with, but the existential question is whether all financial professionals providing advice or guidance to participants whether about rollovers or buying an annuity must act in their client’s best interest which, by the way, is something people expect.
Lurking is the pending Chevron Supreme Court case which allows courts, not agencies, to decide issues when regulations are ambiguous essentially emasculating agencys’ rulemaking authority.
In a case where the rich keep getting richer, the P&I annual asset manager survey showed assets up 15.6% buoyed by a 26.3% S&P increase led by Vanguard, Blackrock and Fidelity.
Driven by concerns about fees and increased litigation, the ground swell towards passive strategies continues as index funds not only grew faster but they also beat their respective active competition in all categories.
Fees are the one thing investors can control which makes the larger active managers with scale who can reduce fees, more competitive, especially with the growth of CITs, as many large advisory firms and broker dealers winnow their partner roster looking for more than just asset management which could lead to continued consolidation like the Putnam/Franklin deal.
In a move that shocked the RIA world, taking $3 bn off the table, Fisher Investments sold a minority interest to an Abu Dhabi fund valuing the $275bn firm at $12.75 bn at an estimated 20 times EBITDA. Though likely not a benchmark for smaller firms, it does show continued interest in investment advisory companies especially by sovereign funds, as a related Abu Dhabi fund purchased 20% of CI Financial.
Though touted as an estate planning move, the infusion of capital could signal acquisitions which Fisher has mostly eschewed. Though maybe not related, there are rumors of change at their 401k Solutions group led by Nathan Fisher who has grown their small market advisory division to an estimated $5bn.
The Wealthies finalists were recently announced with Retirement Plan Support and Advisory Services categories ballooning to eight categories as WealthManagement continues to be the only RPA media outlet covering the convergence of wealth and retirement at the workplace.
Categories include: 401k Service, 401k Technology, Record Keeper & Aggregator Corporate Leader, Broker Dealer, Record Keeper & DCIO support, and Retirement income services.
Congratulations to all finalists and I hope to see you all at the Wealthies Award dinner September 5th in NYC immediately following the RPA Broker Dealer Roundtable followed by the Aggregator program October 14-15.
For literally decades, the in-plan retirement industry has been saying, “the time is now – things have changed.” Yet there has been precious little adoption by DC plan sponsors, participants, record keepers and advisors. At the recent gathering of the 4th annual RPA Retirement Income Roundtable & Think Tank hosted by P&I, CIOs and product managers from aggregators, record keepers and broker dealers along with product manufacturers and connectivity companies gathered to ponder the question of how and when this industry “will give birth”.
Big challenges remain but so do the obvious opportunities with retirement income at the crux of the convergence of wealth and retirement at the workplace. Read my recent WealthManagement.com column about how the industry is collaborating to bring much needed help to DC participants as the DB-ization of DC plans continues.
So those were the most important stories from the past week. I listed a few others I thought were worth reading covering:
- RPAs put AI to work
- T Rowe launches retirement income comparison tool
- CITs continue to grow but limitations remain
- Future Capital launches service to help wealth advisors manage held-away assets
- Milliman wins TDF lawsuit
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.
