Products October 26, 2023

Candidly Launches Emergency Savings Solution

The education debt management platform expands with ‘more inclusive solution’ available as one of its SECURE 2.0-based retirement options.

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Candidly, an artificial intelligence-driven student debt and savings optimization platform, has launched an emergency savings solution that enables workers to activate automated features, such as setting up payroll deduction and rounding up spare change from everyday transactions to contribute to their emergency fund passively.

Candidly, which has been focused on educational debt management and payments, is making the new offering available to users as a workplace benefit through employers, recordkeepers and financial institutions, alongside the firm’s suite of student debt and SECURE 2.0 retirement savings enablement solutions.

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“Candidly’s emergency savings can be made available as a stand-alone solution directly to plan sponsors or embedded into a retirement plan adviser’s existing digital experience (often in collaboration with their preferred recordkeeper), offering a more inclusive solution that addresses the full wellness spectrum within the workplace,” Laural Taylor, CEO and co-founder of Candidly, says via email.

The idea of tying an easy-access emergency savings account to retirement savings gathered steam during the financial strains of the COVID-19 pandemic. The SECURE 2.0 Act of 2022 allows employers to make an emergency savings account part of a participant’s retirement plan in 2024, up to a maximum of $2,500. However, due to the operational complexity, Candidly found that demand was far greater for out-of-plan solutions and is servicing that out-of-plan demand for now.

Taylor says Candidly already has several partnerships in place with retirement plan advisers, with a “robust pipeline of plan advisers urgently seeking to respond to plan sponsor demand.”

“Similar to its student debt optimization platform, Candidly has developed deep relationships with retirement plan advisers and recordkeepers to bring emergency savings solutions to market that can direct savings into FDIC-insured, partner-preferred destinations,” Taylor says.

Candidly is also allowing current clients and participants to use custodial and/or deposit-based solutions that permit providers to integrate the emergency savings program into their own systems.

“By expanding offerings to include an emergency savings solution, Candidly provides an easy way for employees to redirect those dollars into emergency savings,” Taylor says. “In addition, this new solution is relevant even for those employees who do not have student loan debt and need to build toward a safety net. This enables Candidly to expand its total addressable market within the workplace with a relevant solution for 100% of the workforce.”

According to Taylor, a record number of American workers have taken a loan or hardship withdrawal from their retirement plan in 2022, translating to losses in retirement readiness, while participant debt has exploded to an all-time high.

Earlier this year, a study by the nonprofit Commonwealth and DCIIA, conducted as part of BlackRock’s Emergency Savings Initiative found that low-income households with at least $1,000 in emergency savings were half as likely as other households to withdraw money from workplace retirement savings accounts during the pandemic.

Compliance October 25, 2023

‘You Know What the Rules Are,’ Gensler Tells Crypto Industry

The oft-critical SEC chair repeated that the cryptocurrency industry is unusually non-compliant with securities laws.

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Securities and Exchange Commission Chairman Gary Gensler, speaking Tuesday at the 2023 Securities Enforcement Forum in Washington, D.C., argued that existing law is adequate to bring enforcement actions against non-compliant firms in the cryptocurrency industry.

Gensler has been widely criticized by Congressional Republicans for not issuing regulations that clarify the status of cryptocurrencies as securities. His response Tuesday, as it has been elsewhere, is that the Howey Test, which defines a security as an “investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others,” is adequate clarification, and there is nothing for the SEC to add.

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“You know what the rules are,” Gensler said, addressing the cryptocurrency industry.

The Howey Test is derived from the 1946 U.S. Supreme Court decision in SEC v. W.J. Howey Co.

Cryptocurrency investors are “no less deserving of protections than other investors,” Gensler argued, and the securities laws were not written so as to apply “only to stocks and bonds.”

The often soft-spoken Gensler repeated many of his favorite phrases when it comes to crypto markets: that it is “rife with scams, abuse, bankruptcies and money-laundering” and that the industry is unique in its “wide-ranging non-compliance” with securities laws.

Gensler specifically cited inadequate disclosures and the commingling of functions as two common violations. “We would never allow the New York Stock Exchange or a hedge fund or a broker/dealer to do what crypto dealers are doing.”

The comments come 12 days after the SEC declined to appeal a ruling ordering it to reconsider an application from Grayscale Investments to create a bitcoin exchange-traded fund. The application is expected by industry watchers to be approved in January 2024, along with other, similar ETFs.

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