Riskalyze Launches Retirement Solution With Vestwell

The two firms hope to allow advisers to access a new version of Vestwell’s retirement planning portal on the Riskalyze platform.

A newly announced partnership between Vestwell and Riskalyze is meant to help advisers scale their practice, while enhancing the client experience, “all with compliance and a fiduciary mindset at the core,” the companies say.

Advisers will be able to log into the Riskalyze platform to generate 401(k) proposals and to onboard clients electronically. In addition, plan participants will have access to pinpoint their own “Risk Number,” helping them find the right asset allocation.

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Alongside Vestwell’s 3(38) investment management services, the new joint offering will include access to several of the asset managers in Riskalyze’s Autopilot Partner Store. This will give advisers, plan sponsors and plan participants access to additional investment strategies, while still allowing Vestwell to assume Employee Retirement Income Security Act (ERISA) 3(16) fiduciary responsibility on behalf of advisers and plan sponsors, the firms explain.

Overall, the new offering “will allow advisers to document their alignment and compliance with the pending Department of Labor (DOL) fiduciary rule, and demonstrate that they are acting in the best interests of plan participants.” The integration “will remove an adviser’s administrative burden to sell, implement and service retirement plans while handling both the HR [human resources] participant notification process and the 5500 tax filing on the adviser’s behalf.”

The offering will be available to Riskalyze users including registered investment advisers (RIAs), independent broker/dealers (B/Ds), investment managers, plan sponsors and employees. To learn more about Vestwell’s retirement planning platform, visit www.vestwell.com. For more information about Riskalyze, visit www.riskalyze.com.

Workers Like the Idea of State-Sponsored Auto-IRA Programs

Many states are looking at how they might implement government-sponsored IRAs, commonly known as auto-IRAs, which provide automatic enrollment of eligible private-sector workers.

A new analysis from the Pew Charitable Trusts, “Worker Reactions to State-Sponsored Auto-IRA Programs,” makes a clear argument that workers in the U.S. broadly favor the option of turning to the government for savings opportunities when an employer is unwilling or unable to provide a retirement plan.

The analysis suggests these types of plans could likely help a lot of people who are more or less shut out of the defined contribution (DC) retirement plan arena: “At least one-quarter of nongovernmental, nonagricultural full-time workers do not have access to an employer-sponsored retirement plan, and fewer than 15% of households contribute to an individual retirement account (IRA).” Given these facts, policymakers, particularly at the state level, are examining ways to bolster retirement savings, Pew reports.

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“California, Connecticut, Illinois, Maryland, and Oregon have already passed legislation enabling them to do so,” the analysis states. “Under these plans, workers without access to a workplace retirement plan would see regular deductions from their paychecks sent to an IRA managed by a private financial services firm. Workers could opt out, and the employers’ role would usually be limited to setting up the payroll deduction and perhaps distributing informational materials.”

Typically, Pew researchers explain, the state’s role is limited to choosing the firm to manage the funds. As is the case with traditional workplace DC plans, research shows that using automatic enrollment dramatically increases participation.

As part of Pew’s analysis, a sizable group of participants were “asked about such programs both early in the survey and then after hearing critical details.” The largely positive responses were little changed before or after the brief education about state-run IRAs. Only 13% said they would likely opt out of an auto-IRA run by their state.

“Still, a quarter said they are unsure whether they would take part, although they would be automatically enrolled by default if they remained undecided,” Pew reports. “That means they would start saving, but these workers might be more likely than others to opt out at a later date.”

Fully 73% of workers say they favor automatic enrollment for this type of a state-based retirement planning solution, while 68% also favor the more aggressive step of automatic escalation of contributions. Importantly, there was no significant difference in the percentage who said they would opt out between workers asked about an auto-IRA with a 3% default contribution and those asked about a 6% rate.

“Slightly more of those asked about the 6% default said they would choose to lower the default percentage, but more of this group also said they would stay in the program as is,” the analysis concludes. Also important to note, differences in attitudes across demographic groups were not large, though certain groups, such as Hispanics, Millennials, and part-time workers, typically have less access to employer-sponsored plans than whites, Baby Boomers, and full-time workers, respectively.

The full analysis is available for download here

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