Data & Research November 22, 2022

Plan Advisers Value Trustworthiness, “Personal” Touch from DC Recordkeepers

Retirement plan advisers respond to DC recordkeepers that are present, active, and trusted partners, according to an annual Cogent Syndicated brand survey.

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Retirement plan advisers value trustworthiness, reliability, and customer service when it comes working with defined contribution recordkeepers, according to the results of an annual survey by Cogent Syndicated.

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Among the key drivers of how retirement plan advisers valued a DC plan provider was having a human representative to support them and consistent and reliable service for themselves as well as their plan sponsors and participants, says Sonia Davis, senior product director for Escalent, Cogent’s parent company.

“The firm that actually sends a person to the meeting, that is quick to respond, that is present—those are the kinds of things that get noticed,” Davis says. “Advisers respond to recordkeepers who are super-service oriented and have a customer-centric approach.”

The annual Retirement Plan Advisor Trends study of more than 538 plan advisers gives DC plan providers and investment managers a view into how their outreach efforts through the year land with advisers. This year, it also found that advisers also responded to “strong wholesaler support and strong data security/cyber-risk management practices,” Davis says.

When it comes to methods of communication, email has served as the most common means of engagement with DC advisers, followed by website visits and advertising. Other plan providers have been successful in building brand awareness through external and internal wholesaler interactions. In contrast, the survey showed that just a few firms have been able to gain traction via methods such as live video conferences, social media, and mobile apps, according to Davis.

“It’s about the personal touch,” Davis says. “There is the potential of firms getting screened out for not being responsive to client needs … it’s really common sense, but it’s important to note that is what really moves the needle.”

Empower’s Climb

The survey’s brand recognition ranking often reiterates the strength of longtime industry players Fidelity Investments, American Funds, and Vanguard, which took the top three spots again in 2022. This year, however, Cogent highlighted the rapid climb in the rankings by Empower Retirement, a recordkeeper founded in 2014 that has been on an acquisition tear in recent years. Empower is now recognized by more than half of DC advisers managing $10 million or more in DC assets (55%), up from 44% in 2021 and 31% in 2020.

“In the case of Empower, from what we can glean, unlike firms that benefit from a strong consumer marketing presence, its success has largely originated from a more concerted effort to connect directly with advisers through education, support and conferences as it specifically pertains to retirement plans,” Davis says. “That one-on-one, more personalized approach can certainly take more investment, but appears to be paying off.”  

American Funds achieved best-in-class recall across the most popular types of contact except advertising, Davis says. Meanwhile, Fidelity maintained its lead in advertising, but Capital Group—which owns American Funds and is a sister brand—is gaining traction, according to the researcher. Vanguard, meanwhile, is making “notable inroads” for website visits and print material recall.

The Retirement Plan Advisor Trends  survey was started in 2015 with survey participants who have an active book of business of at least $5 million and are actively managing DC plans. Escalent is based in Livonia, Michigan.

Compliance November 21, 2022

SEC Collects Record $6.44B On 760 Enforcement Actions in Fiscal 2022

The regulator raked in close to $4.2 billion in civil penalties, nearly three times the $1.46 billion collected the previous fiscal year.

 

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The Securities and Exchange Commission has collected a record $6.44 billion in disgorgement and penalties during the fiscal year that ended Sept. 30, up from $3.85 billion last year, and easily surpassing the former record of $4.68 billion set in fiscal 2020. 

The regulator raked in close to $4.2 billion in civil penalties, nearly three times the $1.46 billion collected the previous fiscal year. However, disgorgement totals were down for the third straight year to about $2.24 billion, from nearly $2.40 billion in fiscal 2021 and $3.59 billion the year before that. In June 2020, the Supreme Court vacated a $26.4 million disgorgement fine levied by the SEC and limited the scope of what the regulator can demand via disgorgement. But the regulator has more than made up for that with increased penalties.

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The SEC said it filed 760 enforcement actions in fiscal year 2022, up from 697 the previous year. Among the enforcement actions, 462 were new or stand-alone enforcement actions, up from 434 in fiscal 2021; 169 were follow-on administrative proceedings seeking to bar or suspend individuals from certain functions in the securities markets, up from 143 the previous year; and 129 actions were against issuers allegedly delinquent in making required SEC filings, up from 120 last year.

To deter future misconduct and enhance public accountability, the SEC said it recalibrated penalties for certain violations, included prophylactic remedies. It said, for example, that the more than $1.2 billion paid in penalties for recordkeeping violations alone “made clear that the fines were not just a cost of doing business.”

Among the higher profile cases for the regulator during the fiscal year, it ordered financial services firm Allianz to pay more than $1 billion in penalties, disgorgement and prejudgment interest over an alleged fraud that hid the huge risks of a complex options trading strategy. The SEC imposed a $200 million penalty against Barclays for an illegal over-issuance of securities. The $100 million penalty it imposed on Ernst & Young over admitted cheating by their audit professionals was the largest ever against an audit firm.

Fiscal year 2022 also saw the second highest total of SEC whistleblower awards in both the number of whistleblowers awarded and the total dollar amount. The regulator issued approximately $229 million in 103 awards. The Whistleblower Program also received a record of more than 12,300 tips alleging wrongdoing during the fiscal year.

The SEC said it remains focused on enforcement in the crypto asset securities market. Earlier this year, the regulator said it would nearly double the size of its Crypto Assets and Cyber Unit by adding 20 positions to the team.

It also said its attention is focused on environmental, social and governance issues with respect to public companies and investment products and strategies. For example, it charged BNY Mellon Investment Management for making materially misleading statements and omitting information about its consideration of ESG principles in investment decision-making for certain mutual funds.

However, despite the record number of penalties taken in by the SEC, the regulator said its desire is not to take in more money, but for companies and investors to stop breaking the law.

“We don’t expect to break these records and set new ones each year, because we expect behaviors to change,” Gurbir Grewal, the director of the SEC’s Division of Enforcement, said in a statement. “We expect compliance.”

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