401(k) Stories

The days when RIAs were the outsiders at the 401(k) party are fast coming to a close. What's new is that the mass of 401(k) assets is getting critical at about $3 trillion; fiduciary advisors are getting appreciated; fat fees and questionable kickbacks are getting exposed and stepping out of line is getting dicier as the Department of Labor tightens the regulatory screws.

The old reasons why the 401(k) business is attractive are still in place: there are fresh assets pouring in every month and when employees leave jobs or retire, they produce rollovers that build up IRA accounts for financial advisors. The drawbacks of getting into the 401(k) business are still in place, too. Dealing with retirement assets is really a second line of business and it remains -- unless you overcharge with hidden fees -- a low margin business with high potential fiduciary liabilities.

Still, the outsourcers, infrastructure and accumulated knowledge for RIAs to capitalize on is growing daily and a the mega-shift of assets away from brokers is making the 401(k) business riskier and riskier -- to ignore.

Andy Sieg could preside over commission elimination for brokers handling non-retirement investments.

Using DOL as cover, Bank of America cuts the Merrill Lynch bull as it adds a robo, stops paying brokers to stick around and kicks John Thiel upstairs

The Charlotte, N.C.-based lending giant bagged the Wall Street beast in 2009 when the price was right -- now it's cutting off its traditional food supply

October 18, 2016 — 10:41 PM UTC by Brooke Southall

Brooke's Note: The question of whether Wall Street will ever reverse the decidedly one-way flow of assets from stockbrokers to RIAs comes down to whether it can overcome its own innovator's dilemma. In short, it has been more profitable to milk profits from the old transactional model than ...

Aaron Schumm: I had the luxury of working with 100,000 advisors and hearing what they needed to help their business.

Two years after the $199 million FolioDynamix sale, Aaron Schumm jumps back in the B2B RIA game but not to compete -- yet

Staked to $4.5M of F-Prime and FinTech Collective cash, Vestwell will stay in 401(k) for now but roll its business model over soon enough to IRAs

October 4, 2016 — 6:22 PM UTC by Janice Kirkel

Brooke's Note: In covering the RIA business, we follow the money and we follow the people. We also follow the technology and the evolution of business models. In this article, we got to follow all four of those elements and that is what makes Aaron Schumm's new ...

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Mark Boyko: In the case of a long-term account like a pension plan, a money market fund will not withstand scrutiny.

In new wrinkle, ERISA complaint of Edward Jones employees centers on failure to offer yield-chasing money market alternative

The 401(k) lawsuit in the name of 38,000 participants resumes the parade of lawsuits against the giant broker-dealer based on revenue sharing arrangements

September 6, 2016 — 6:04 PM UTC by Irwin Stein

Brooke’s Note: We talk ceaselessly about the high, often ludicrous, fees charged for the active management of equities in portfolios. These fees, coupled with 12(b)-1 fees, end up at the center of discussions about fiduciary care. But banks and brokerages also quietly rack ...

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Matt Fellowes: You have annuity companies coming out with new tools and fund companies but there isn't a solution out there that is really different.

With a 'unicorn' as the stated objective, Morningstar hijacks its own venture founder, backs him with VC funding and sends him out into an annuity world

HelloWallet founder Matt Fellowes left his team with eyes on extracting profits from baby boomers looking to spend down their nest eggs

August 12, 2016 — 5:55 PM UTC by Lisa Shidler

Brooke’s Note: When you read about the founder of a company with the postmodern name of HelloWallet pocketing a righteous chunk of $52 million to found a new company that involves putting investor savings into annuities, it is tempting to ask why its name ...

Sheldon Geller: It is the plan sponsor, not Fidelity, who makes the fiduciary decision as to whether to offer the investment advice service to their employees.

Delta employees sue Fidelity for 'illegal kickbacks' from Financial Engines

The case may turn on whether Fidelity, by acting as recordkeeper and administrator, qualifies as a fiduciary and therefore breached its duty as it accepted Financial Engines' advice fees

July 6, 2016 — 6:58 PM UTC by Irwin Stein

Irwin’s Note: Brooke is constantly telling me to report what I see and to keep my opinions to myself. But, having been a practicing securities attorney for more than 40 years, and since my opinion here is about other attorneys, he has given me ...

Jeff Carney is returning to his US retail roots as Personal Capital board member.

Personal Capital gets $75 million investment and an ex-Schwab retail chief in Jeff Carney

The Bill Harris-founded call-center RIA, which manages $2.4 billion in assets, hits it $500-million bogey for valuation

May 19, 2016 — 11:30 AM UTC by Lisa Shidler

Brooke’s Note: Personal Capital adds to a growing correlation between the uptick in people predicting the demise of robo-advisors and the uptick in the amount of capital that they are able to raise. We have really yet to see any company that can even ...

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Bing Waldert: 401(k) plans are difficult [when it comes] to generating income. You can set up a withdrawal but only at a certain age. If you need to take out a big chunk because of a big medical bill, you can't do that.

Why luring 401(k) assets to IRA rollovers in a post-DOL-rule world remains child's play, which keeps $7.6 trillion in the IRA game and growing

Clients still hate 401(k) inflexibility around withdrawals and the DOL granted advisors the upper hand in getting clients to sign away protections with regard to pricier products

April 20, 2016 — 8:25 PM UTC by Lisa Shidler

Brooke’s Note: Sometimes the DOL rule hubbub gets so clamorous that we’re distracted from the nub of conflict. The Department of Labor declared that assets migrating from a 401(k) plan to an IRA account remain precious retirement assets that should be invested ...

Edward Siedle: Overstaffing, underfunding, a lack of transparency and too much politics [are unacceptable].

The exit of CalPERS' turnaround CEO Anne Stausboll raises the question of whether the pension Goliath's changes are too little, too late and mostly superficial

Stausboll made a big showing of cutting hedge funds and other active managers but her last big act was to pay up for a New York office tower, funded by the sale of a diversified real estate portfolio

April 18, 2016 — 8:12 PM UTC by Irwin Stein

Brooke’s Note: That cluck-clucking you hear in the wake of the DOL rule is the sound of chickens coming home to roost. The fowl began to scatter in 1978 when 401(k) system was put in place as a means of improving on state ...

William Hurley: We're really focused on small businesses that can't afford administrative responsibility. They can't afford the fiduciary risk. They can't afford the cost to offer this to their employees.

Robo-deal catapults Goldman Sachs into defined contribution business that's as downmarket as it gets

The Wall Street giant buys Honest Dollar, which makes SEP IRAs easy for 1099-receiving workers

March 21, 2016 — 7:29 PM UTC by Sanders Wommack

Brooke’s Note: If you are Goldman Sachs, you don’t worry about buying goodwill, clients or branding. You don’t even worry about culture — you have a serviceable one that gets deals done and inspires books. But that culture may not extend too well ...

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Margaret Hartigan: We are now in the next phase which is identifying and onboarding our first customers.

As Pershing struggles to get a robo firmly fixed in the RIA frame, NextCapital rushes in to blur the picture

The Chicago 401(k) robo will use Pershing custody to go after the retail market and Pershing has hopes it'll work with its mega-RIAs

February 23, 2016 — 9:25 PM UTC by Lisa Shidler

Brooke’s Note: Can Pershing become robotically relevant? Can NextCapital hobnob its way to success by focusing on giants by convincing them it can disrupt the disrupters by beating them to the robo disruption? All that and more is contained in this article, which involved ...