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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.

Chieh Huang: At Boxed, we're a technology company at heart, so working with Betterment is a natural fit for us.

Betterment adds 50 firms to its new 401(k) plan -- and IBM and Marcia Wagner connections

Smaller companies with Betterment-ish-sounding names like Earnest Operations and Boxed are the early guinea pigs but big dogs are on the robo's 401(k) board of directors

January 27, 2016 — 7:24 PM UTC by Lisa Shidler

Brooke’s Note: The skepticism of the legacy 401(k) world toward what Betterment is doing in the 401(k) business is so total and thick with certainty. The two experts quoted here give more than a taste of that. First prize is 50 new ...

Duane Thompson: Its harshest critics might compare the process to a giant anaconda that, having swallowed its prey, now lies motionless for several months as it slowly digests its meal.

Snakes and ladders: What to expect in the unexpectedly triumphant final DOL fiduciary rule

Whether converted or just plain exhausted, the staunchest opponents are standing down to make way for the new rule that will go into effect in 2017

December 18, 2015 — 12:28 AM UTC by Guest Columnist Duane Thompson

Brooke’s Note: I admit it. I was agog to learn that DOL had, in effect, prevailed in creating a new fiduciary rule as of 2017 — one with teeth and one that will be difficult to dislodge. Maybe I was jaded by endless alternating bouts ...

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Michael Kreps: The DOL is allowing states to set up automatic enrollment for IRAs without triggering ERISA rules. This is setting up an unfair advantages.

401(k) industry howls as DOL lets state governments become DC providers with advantageous exemptions

Multiple employer plans' under states will have economies of scale, fewer rules, while ERISA bars private firms from banding together

December 10, 2015 — 7:00 PM UTC by Lisa Shidler

Brooke’s Note: The sources in this story are of two minds about state governments being allowed to compete with private providers in the 401(k) business. So am I. The good news is that states will bring more competition to a defined contribution industry ...

Matt Bayley: They needed to have kept proper records and explained themselves in those records.

Will the alternative assets Intel added to its 401(k) plan backfire legally as well as financially?

New lawsuit alleges that spicing the DC plans with $2.5 billion of bets on de facto dark pools of 'shudder'-worthy alternatives cost participants hundreds of millions of dollars

November 12, 2015 — 8:55 PM UTC by Lisa Shidler

Brooke’s Note: Active investing on the wane these days, a casualty of too many bad bets levied under cloak of darkness. By contrast, passive investing, delivered mostly in the form of ETFs, runs free across sunlit fields of closely mown grass. But hedge funds ...

Sallie Krawcheck: If not me and my team, then who?

'Bristling' at 'pink-it-and-shrink-it' pitfalls, Sallie Krawcheck files an ADV

Ex-Merrill Lynch chief's Ellevest will charge double the Betterment rate but with hopes of better investing for women

November 9, 2015 — 11:58 PM UTC by Lisa Shidler

Brooke’s Note: One of the best indicators of whether an entrepreneur will succeed is how much pride is on the line. Once the world is watching, that poor exposed soul has little choice but to succeed or to go down swinging. Business is tough ...

Bill Sharpe founded Financial Engines so 401(k) participants, with the 1996 ERISA bar set at zippo, got baseline algorithmic attention -- a level of service whose deficiencies were exposed this summer.

How Mutual Fund Store is the real engine now at Financial Engines

Unable to hold 9 million hands as market tanked, Larry Raffone jumped when Warburg Pincus put The Mutual Fund Store on the block

November 6, 2015 — 10:17 PM UTC by Brooke Southall

Brooke’s Note: Though we didn’t see this one coming we can see where it’s headed — much more after a candid interview with Financial Engines CEO Larry Raffone. See: Hitting a robo wall, Financial Engines buys The Mutual Fund Store for $560 million ...

Adam Bold: Putting money into a 401(k) isn't enough.

Hitting a robo wall, Financial Engines buys The Mutual Fund Store for $560 million to bust out of 401(k) confines

The Sunnyvale, Calif.-based robo colossus needed human advisors, and the radio RIA liked having a non-radio source of new clients

November 5, 2015 — 11:15 PM UTC by Brooke Southall

Brooke’s Note: No, we didn’t see this one coming. But as aggressively as human RIAs are trying to add a robo aspect to their businesses, the robos are just as hungry to add people who can explain goals-based investing and staying the course ...

Rick Meigs: We need Schwab in the marketplace and this is a very positive move for Schwab.

RIAs stay the course in holding Schwab to its promise of an RIA-in-charge 401(k) plan with a promising result

Only when RIAs proved they'd only take 'yes' for an answer on open architecture and themselves installed as fiduciaries did their San Francisco-based custodian yield with just a minor Morningstar contingency

November 3, 2015 — 8:07 PM UTC by Lisa Shidler

Brooke’s Note: Kudos to Schwab for getting to a good place — our spies say — with its 401(k)-for-RIA plan. But bigger congrats to the RIAs who used their time, energy and influence to stand their ground against Schwab as it moved the goalposts ...

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David Blanchett: You may need significantly less of an annuity.

Morningstar report suggests jiu-jitsu tactic for buying annuities: Game them right back by waiting

Seniors who pick their moment can save as much as 50% with patience as the key strategy

October 29, 2015 — 6:29 PM UTC by Lisa Shidler

Brooke’s Note: Buying an annuity has always reminded me of a ninth-grade algebra test involving two trains and when they will meet given limited information on rates of speed and distances apart. It’s hard to get your mind around. But it’s the ...

Fidelity seemed to divert from bottom-up growth ethic in putting Pyramis in a secluded, palatial habitat that looks more like PIMCO's.

Abigail Johnson takes Pyramis back to its Fidelity roots after her father tried to create exalted brand

Unknown and unloved, the 'just-a-no-load' unit that failed to capture 401(k) rollovers is reimagined to appeal more 'sophisticated' clients

October 26, 2015 — 5:26 PM UTC by Lisa Shidler

Brooke’s Note: Even after living with this story for a few days as Lisa wrote it and I edited, I did not come away with a sure sense of why Pyramis failed to succeed as a premium Fidelity brand. Jim Lowell comments that many ...