Covid, convergence, consolidation and the 2021 RPA roundtables

Aggregators realize that in-plan retirement income solutions are needed, while CIOs understand that advisers need to be able to help participants navigate the myriad of benefits offered at work.

With more strategic decisions being made at home offices as retirement plan advisers turn their focus to serving clients, the four recent RPA roundtables revealed the status and direction of the adviser-sold 401(k) market. Each roundtable was unique, with senior management at record keepers, broker-dealers, aggregators and chief investment officers, but three major themes resonated:
1. Covid as a catalyst.
2. Convergence of wealth, retirement and benefits at work.
3. Industrywide consolidation.

Each of the five-hour programs, which were held over two days, from September to December, started with a discussion of the major opportunities and challenges that each attendee faces. The programs ended with ways to collaborate, not just with each other but also with the provider sponsors in the room.

Two areas to collaborate were brought up in all four programs:
• Data — how to access, leverage and protect participant data.
• Helping the 97% of the workforce who have limited assets.

The record keepers also want to find ways to service the potential boom in micro-market and start-up plans that is resulting from government mandates. Broker-dealers were asking the government to simplify the hodgepodge of retirement plan options. Aggregators realize that in-plan retirement income solutions are needed, while CIOs understand that advisers need to be able to help participants navigate the myriad of benefits offered at work.

Record keepers have a huge advantage when it comes to access to participants and their data, as well as control over the technology. Regardless, they realized that they must find ways to collaborate, not compete, with advisers who brought them plans, as economics are forcing both groups to move beyond plan-level fees. With the Prudential retirement unit acquisition by Empower on the heels of the MassMutual deal, consolidation was top of mind, even before the Newport deal with Ascensus was announced. Some felt threatened, while others saw consolidation as a chance to recruit talent.

Access to reliable participant data — like the information wealth managers have for individual clients — was a key issue for broker-dealers, along with leveraging the technology and much more robust resources of their wealth management groups. ESG funds and pooled employer plans were of interest, but most attendees indicated that their firms will be reactive, not proactive. Helping the ignored participants and finding the wealthy ones is critical to this group as well.

Aggregators were concerned that some providers are or could become competitors in the areas of serving and monetizing participants, asking for clear rules of engagement — especially for those who say one thing but act differently. There was lively discussion about the effect of private equity ownership of RPAs firms as well as about ways to assimilate acquired groups and leverage scale. Recruiting and retaining talent were issues most had not resolved.

Finally, CIOs from record keepers, broker-dealers and aggregators discussed how to integrate the many tech apps they and their advisers use, transparency issues with collective trusts, the need for and issues with in-plan retirement income and how to create an intimate relationship with participants that is the key to wealth managers’ success.

The gravity of the issues and what is at stake for the leaders of the RPA industry show that while we have a long way to go, the opportunities as well as the challenges are both exciting and a bit frightening. The operative question is, “Can we collaborate and execute?”

Fred Barstein is founder and CEO of The Retirement Advisor University and The Plan Sponsor University. He is also a contributing editor for InvestmentNews’ RPA Convergence newsletter.