Schwab Retirement Plan Services Partners With Newport, Conduent to Expand Capabilities

Schwab will offer increased services in nonqualified deferred compensation and defined benefit plans, highlighting a push toward large retirement plan sponsors.

Schwab Retirement Plan Services, a division of Charles Schwab Corp., announced Wednesday partnerships with retirement solution providers Newport, an Ascensus LLC company, and Conduent Inc. to expand Schwab’s nonqualified deferred compensation and defined benefit plan services.

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Schwab announced that it entered the relationships to expand services in the “larger segments of the retirement plan market,” with services that will start in 2024. Schwab will remain as plan provider, with support from Conduent and Newport, and plan sponsors and participants will continue to access their DB and deferred compensation plans through Schwab’s platform.

“We believe these relationships with Conduent and Newport will be a strategic accelerator for us in terms of long-term growth,” says Traci Stahl, chief operating officer of Schwab Workplace Financial Services. “We are continually getting requests from plan sponsors with complex needs that we can now serve through these partnerships. … They don’t want to be using multiple providers—they want to be with one provider that can meet all of those complexities.”

Schwab has been offering NQ and DB plan services for years, but with a focus on 401(k) plans and without some of the capabilities that Conduent and Newport will add, Stahl says. Many of Schwab’s clients, Stahl notes, end up having additional needs due to mergers and acquisitions that can change the make-up of their companies.

Schwab Retirement Plan Services ranks as the eighth largest 401(k) provider by assets, according to PLANSPONSOR’s most recent recordkeeper survey. The provider reported record attendance in its 401(k) educational sessions with participants in March, highlighting its focus on connecting directly with participants about financial management needs.

The expanded capabilities for NQ plans will include nonqualified plan administration; plan design, legal, tax and accounting resources; detailed plan sponsor financial reporting; direct participant payments and W-2 income statement services; and asset liability management, among other areas.

“We’re proud to work with Schwab Retirement Plan Services and offer Newport’s highly respected nonqualified deferred compensation expertise and services to their clients and participants,” David Musto, president and CEO of Ascensus, said in a statement.

Stahl noted key aspects as being the ability for Schwab to manage nonqualified plan documents for plan sponsors, as well as the direct income payments and W-2 income statements the firm can now administer.

On the DB side, the partnership will bring clients with traditional pension plans and cash balance plans services including: data analytics, compliance and reporting tools; support for data remediation and audit services; interactive calculators for participant planning; de-risking strategies, including pension risk transfer, annuity conversion and term vested lump sum payment programs; and administration for frozen DB plans.

For DB plans, Stahl pointed to the de-risking strategies and the administration for frozen and terminated defined benefit plans as key areas clients are requesting.

Charles Schwab has been discussing the additional capabilities with retirement consultants and has “received an extremely positive response,” Stahl says. “They are on those existing relationships, and now can offer these enhanced services.”

Correction: Story corrected to clarify that the expanded services are for nonqualfied deferred compensation services and DB plans.

Prudential’s Three Pathways to In-Plan Retirement Income

The head of Prudential’s retirement strategy division discusses the firm’s key focus areas for getting guaranteed income annuities into participants’ savings.

Dylan Tyson has been talking and thinking about retirement income for more than a decade. In that time, he has served as head of Prudential Financial’s pension risk transfer business, annuities division and now, for the past year and a half, its retirement strategies group.

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Now, Tyson says he sees real movement prioritizing retirement income, even among everyday consumers. He recalls a shift in public consciousness from when people thought of investing as stock brokers yelling into a “huge cell phone” giving buy and sell orders. That evolved to people discussing diversified portfolios with well-balanced mutual funds. Fast forward to today, Tyson says, when people work with “wealth managers” and, most recently, are focused on the transfer of “generational wealth.”

Dylan Tyson.

“Once you adopt the wealth frame, what have you adopted?” Tyson asks. “You are no longer in a solution frame like a portfolio, you’re no longer in a transaction frame, you’re in an outcomes frame. … What’s wealth? It is assets, liabilities, capital and the expenses that you have around it.”

Tyson says this new framing fits perfectly in Prudential’s core business of insuring risk through pooled assets and guaranteed outcomes. He believes this moment, with the coordination of recordkeepers, asset managers and annuity providers such as Prudential, can get guaranteed income products into qualified retirement savings at scale.

“What’s the main purpose of a retirement plan?” Tyson asks. “I think the main purpose of a retirement plan should be to provide retirement income. … From the ground up, are we doing everything that we can and need to make sure that that is simple and easy to buy?”

Tyson’s focus comes as Prudential’s retirement division is now removed from its former recordkeeping practice, which it sold to Empower in 2021. Now the division, operating alongside massive insurance and asset management operations, is laser-focused on creating a retirement income stream to supplement social security, according to Tyson.

“The benefits of longevity pooling are ones that can allow folks to have more money to live in retirement and not to worry about it so they feel they have the ability to spend and feel confident,” he says.

Three Focus Areas

Creating retirement income solutions, Tyson admits, cannot be done alone. He says his team has been working with recordkeepers and asset managers to come up with a solution that can stick—with a focus on three key areas.

The first, he says, is working with recordkeepers on purchasing, in-plan, a single premium immediate annuity.

“Those are rock solid,” he says. “They deliver fixed income plus longevity protection together, and [we want] to go through and help people see what that is and how it can help them.”

The second area is partnering with asset managers to work on their investment offerings for recordkeepers and plan sponsors. (One such asset manager is Prudential’s own PGIM, though Tyson says his team is working with many other parties as well.)

“These would be in different forms or fashion, looking at target-date funds and the asset glide path that is there,” he says. “How does income fit within that? How is that able to create a smooth experience for folks?”

The third area Tyson specified is bringing to market “longevity protection” as its own distinct element of retirement saving alongside growth and risk management. He says participants can manage their risk, including the upside and downside, whether in a retirement plan our outside of one while working with a financial adviser. Wherever the assets sit, Prudential wants longevity protection to be an element of portfolio construction, as opposed to something that sits alongside it.

“For most people, being able to add definition and to take the volatility out of [saving] eliminates the ticking time bomb from an otherwise well-constructed and holistic financial plan,” he says.

Opt Out Only

Whatever the method of working annuities into qualified retirement plans, Tyson says it has to be an automatic default option for long-term success.

“That will be immensely important for the retirement security of folks, because it will change the economics,” he says. “You’ll be able to assume that people will actually use it, and you can invest with that overall approach.”

When asked about the obstacles to making annuities a default, Tyson believes the largest one is simple and straightforward implementation. He notes that, when a company has to explain a product in great detail to a client, there is a cost associated with that process that flows into the pricing. If something becomes a qualified default, he says, those costs can be avoided, and plan sponsors can have confidence that the fiduciary obligations and administration of the products are being met.

“To me, getting to ensure that our ability to provide risk mitigants is built straight into the financial planning process [is key],” Tyson says. “That’s the theme that cuts across both qualified and retail wealth.”

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