Products November 14, 2023

Envestnet, Empower Launch 401(k) Plan Solution for Financial Advisers

The retirement platform is geared toward wealth managers seeking a plan option and includes four options for providers of target-date funds.

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Envestnet and Empower have launched a 401(k) offering for financial advisers aimed at capturing growing demand from wealth managers for a cost-effective retirement plan option with fiduciary and investment support.

Envestnet’s Retire Complete overlays the firm’s 3(38) fiduciary service and investment selection methodology with Empower’s participant platform for use by advisers either offering, or interested in offering, qualified retirement plans to clients.

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“There’s 600,000 plans today, but there’s millions of businesses … without an employee retirement plan,” says Sean Murray, Envestnet’s head of retirement. “We wanted to create an easy button for wealth advisers to create a plan or move a plan into an appropriately priced model.”

Empower’s vice president of national accounts, Chris Doucet, called the relationship a “big win” for the recordkeeper in terms of the firm’s investment technology and adviser network.

“Advisers are always looking for ways to streamline working with Empower,” Doucet says. “We look at this as another way that we can engage with more advisers and connect with them and their clients from an opportunity standpoint.”

Retire Complete includes:

  • Fiduciary support and investment selection and monitoring from Envestnet;
  • Empower’s digital participant experience that can integrate a participant’s financial picture according to provided inputs;
  • Empower’s plan sponsor communication tools for employers to send tailored messages to participants;
  • A suite of investment options from Envestnet’s pre-set core menu, including active and passive investment strategies; and
  • Four target-date providers as the qualified default investment alternative, to be selected by the adviser from providers American Century, Prudential Financial, Putnam Investments (owned by Franklin Templeton) and T. Rowe Price.

That TDF option for advisers is crucial for the adviser community, Murray says, to provide them “familiar names” to consider when building the plan. “If we had not given that choice, we would have alienated a huge portion of our adviser community,” he says.

Envestnet and Empower are banking on wealth manager demand for the solution in part due to increased plan need stemming from SECURE 2.0 Act of 2022 incentives, along with state mandates for businesses to offer a plan.

Meanwhile, Murray notes, retirement plan advisories are continuing to build out their wealth management divisions to support both plan and financial advisement. With that backdrop, passing off a retirement plan request—which may have been a fine strategy in the past—may be a business risk.

“[Financial] advisers can’t ignore this business anymore,” Murray says. If they do, another advisory is “going to take that account.”

In an initial call with advisers, Envestnet and Empower saw interest from advisers both for startup plans and for those already managing retirement plans of at least $30 million in client assets, according to Murray.

Retire Complete is available to advisers via a request for log-in on Envestnet’s website.

In Practice November 14, 2023

Fewer Than Half of Workers Plan to Review Retirement Plan Contribution

Corebridge experts recommend employees take advantage of this month’s open enrollment to expand their retirement savings. 

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This open enrollment benefits season finds fewer than half of employees with a better outlook for their retirement savings than last year, but that is not prompting them to reconsider contributions, according to a recent survey released by Corebridge Financial and Morning Consult. 

“As employers identify employee communication strategies about retirement plans during the open enrollment period, but also throughout the year, it’s important that employers are monitoring the plan’s overall health, including reviewing such measures as participation and contribution rates,” Corebridge’s Terri Fiedler, president of retirement services, said via email. “Through these efforts, employers can define and monitor plan goals, identify trends and make informed decisions on actions that can help improve plan engagement.” 

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Only 41% of respondents reported an improved retirement outlook compared to last year, according to the survey released November 9. Meanwhile, 44% of workers said they would assess their contribution to their retirement plan, with even fewer (34%) planning to review their employer’s contribution and just 31% intending to evaluate their progress toward meeting their retirement goals. Those areas would all be a way for employees to address retirement security concerns and are actions, Fiedler recommended in a statement with the report.  

“Your employer’s open enrollment period is an opportune time to review your retirement plan holistically, identify gaps and needs, ensure you’re maximizing your employer’s contribution matching programs and take actions that will help achieve the retirement you envision,” Fiedler said. 

For those not planning to review or modify their employer-sponsored retirement plan during open enrollment, the most common reason cited was lack of consideration (27%), underscoring an opportunity for employers and financial professionals to engage employees on workplace retirement benefits, Corebridge reported.  

The survey results also highlighted gendered differences on retirement readiness, with women (33%) less likely than men (48%) to report an improved retirement outlook. Compared to other generations, Millennials in particular expressed optimism, with more than half (51%) feeling positive about retirement. 

According to Corebridge, there is a clear opportunity for both employees and employers to take action during open enrollment, which typically happens in November but varies by employer. Many employees, for example, can increase their retirement plan contributions: 45% of those surveyed plan to raise their contribution by 1% or more, according to the report.  

Corebridge also suggested workers should meet with a financial professional, a practice endorsed by 78% of participants and increasingly embraced by younger generations. 

“One of the most helpful ways employers can ensure employees are thinking about their retirement plans during the workplace open enrollment period is to engage them throughout the year,” said Fiedler via email. 

For employers, this can include sending targeted and personalized emails, as well as offering employees retirement education and planning resources that enable them to take actions– whether that’s utilizing digital planning tools, attending webinars and workshops, or meeting with financial professionals, she said.  

When enrollment season comes around, employees can be better prepared to evaluate not only where they are in their retirement journey, but how all of their benefits tie together. For example, if employees have disability coverage offered through their workplace, Fiedler said they should be considering how that can help them protect their retirement savings from unexpected events. 

“That said, when employers are developing their annual enrollment communications, we’d encourage them to include understandable, digestible information and reminders about retirement plans among all other benefits, such as details about enrolling in the plan, designating or reviewing a beneficiary or increasing their contribution,” suggested Fiedler.  

Conducted by Morning Consult between October 18 and 23, the survey involved a national sample of 2,312 working adults, with results from the total sample having a margin of error of two percentage points. 

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