Deals & People October 14, 2019

Broadridge Acquisition of Fi360 Underlines RIA Fiduciary Evolution

Leading up to its own acquisition by the larger Broadridge organization, Fi360 had been actively acquiring other fiduciary solutions firms, aiming to build a comprehensive suite of RIA services.

Reported by

Broadridge Financial Solutions last week announced it has entered into a purchase agreement to acquire Fi360, a growing provider of fiduciary-focused software, data and analytics for financial advisers and intermediaries.

In recent years, Fi360 has grown organically and through its own acquisition activity. Last year, for example, Fi360 acquired the Center for Fiduciary Management (CFFM). The firm has also been active in forming integrations and working partnerships with fiduciary-focused retirement plan providers.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

Speaking with PLANADVISER about this latest development, Michael Liberatore, president of Broadridge’s mutual fund and retirement solutions business, and Bill Mueller, CEO of Fi360, say they are very optimistic about the opportunities for synergy between the two firms. Liberatore notes that Broadridge, through its work with retirement plan recordkeepers and plan service providers, already touches tens of millions of retirement plan participants on an annual basis.

“Our adviser clients speak about the need for better tools to help them prospect, win and manage plans,” Liberatore says. “Our view at Broadridge is that Fi360 has the most comprehensive and effective set of solutions to do this while also demonstrating a deep commitment to fiduciary practices and responsible management.”

According to Liberatore, there are other niche providers in the RIA industry that are “really good at one thing or another—prospecting, benchmarking, etc.” But, he says, “We determined that Fi360 has the most comprehensive sweep of services.”

“We are excited about putting what we do on a bigger stage,” Mueller says. “If you look at the two firms, we have similar philosophies about open architecture and agnostic services. So, working with Broadridge is a great opportunity for us to expand what we do, both on the tools/solutions side and on the fiduciary training side for advisers. Broker/dealers, wirehouses and large RIAs are increasingly interested in this type of oversight support for their retirement businesses.”

Liberatore says Broadridge sees the RIA marketplace as being naturally complementary to the firm’s mutual fund trading intelligence business.

“We’ve always had a strategy to be close to the advisers that are heavily focused in the retirement market, and this acquisition will certainly help us connect even more deeply with those advisers and provide better solutions to them,” he says. “On the analytics side, we’ve been working with asset managers to help them gain transparency into the retirement plan ecosystem. We think the combined team will drive new product offerings across trading and custody and on the data analytics side. That’s one of the reasons we decided it was not enough to just partner with Fi360. An acquisition could mean one plus one equals more than two, in this case.”

Considering how the fiduciary services marketplace has evolved in the last decade, Mueller says the future looks bright.

“We see continued evolution towards fee-based fiduciary advisory services,” Mueller says. “Frankly, this is not so much a regulatory-driven event. It’s more of a market-driven event at this point. When I think about our clients and their challenges, it’s been an evolving discussion from being the broker of record to becoming a 3(21) fiduciary and now a 3(38) fiduciary. There has been a progression along this fiduciary scale and we’re continuing to move towards a higher fiduciary bar—in terms of more oversight and just a higher level of professionalism in general. This is great for the industry, and we are eager to support this trend by providing the tools, platform and data to make the job of being a fiduciary easier.”

Liberatore echoes that idea, noting the ongoing shift to fee-based advice and imminent regulatory changes, including the SEC’s Regulation Best Interest, are increasing the scrutiny on firms to ensure that they are demonstrating prudent advisory practices.

“Our goal is to help firms stay ahead of this evolving regulatory landscape,” he concludes. “Integrating Fi360’s solutions set with Broadridge’s leading wealth and retirement solutions will enable better support for clients as they build and maintain responsible fiduciary practices.”

Data & Research October 14, 2019

Willis Towers Watson Outlines DC Plans 3.0

Willis Towers Watson’s Thinking Ahead Institute says defined contribution plan designs and communications will leverage technology to deliver a far more customized experience for participants.

Reported by

In a new report, “Shifts for the DC Organisation of Tomorrow,” Willis Towers Watson’s Thinking Ahead Institute outlines what it calls defined contribution (DC) plans version 3.0. The findings are based on surveys and interviews of 10 leading companies on four different continents with a median size of $80 billion in assets serving a base of 900,000 participants.

“Target-date funds (TDFs) offered what was the beginning of customization for defined contribution plans, by taking into account an individual’s age,” Bob Collie, head of research at the Thinking Ahead Institute, tells PLANADVISER. “As technology advances to address each individual’s situation, then DC plans will begin to really be tailored to individual situations.”

The new research also asserts that the DC version 2.0 is now emerging, with a focus on retirement income solutions. Collie says version 3.0 will be customized by “hyper-customization and integrated whole-of-life wealth management” that takes into account all of a person’s savings.

“The need for change has been clear for a long time,” Collie says. “Even 10 years ago, we talked of a version 2.0 of DC that was built around the purpose of providing income throughout retirement. It’s only recently that real progress has started on this front. But momentum has been building, and we expect things to develop quickly from here.”

The institute also expects DC plans to embrace the growth of master trusts and other multiple-employer platforms.

Collie adds: “DC has become the world’s dominant retirement savings vehicle, and work is needed if it will live up to the responsibilities of this role. The next few years will be pivotal ones in the development of retirement plans all around the world.”

The report says that “post-retirement income arrangements are primitive” and that there is a need for “longevity tail insurance.”

The Thinking Ahead Institute also expects that the need for retirement plan providers to keep up with technological developments will squeeze out small players.

The institute says there is a real problem with the coverage gap in the U.S., with roughly half the private-sector workforce not participating in an employment-sponsored retirement plan. People are also not saving enough, and there is a need for plans with automatic enrollment to increase the deferrals. Plans also need to address leakage, as people move from one job to another, the institute says.

Ninety-three percent of the respondents to the survey and interviews said their organizations make effective use of their investment managers. Collie says he believes the reason they did not express concerns about their investment lineups is because there has historically been so much emphasis on the investments offered in a plan.

With the growth of master trusts and multiple employer plans, the institute believes more retirement plan sponsors will be able to outsource many functions of their plans. “This development will offer employers more choice in what role they’d like to play in the provision of retirement benefits,” the institute says in its report. “It will, most likely, become easier to outsource not only merely investment or administrative functions, but also the key fiduciary role of operating a plan.”

Collie also believes that because technology will enable customization for each participant, the pendulum will move away from set-it-and-forget TDFs and automatic enrollment to obtaining more personal information from each participant—resulting in more engaged participants.

«