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Empower wins Apple's $3.5-billion 401(k) account from Schwab

Bob Reynolds delivers quick response to the question of whether a branded company will swallow his new brand

Friday, November 14, 2014 – 8:08 PM by Lisa Shider
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Bob Reynolds got his first bite at the Apple.

Brooke’s Note: There’s a strong urban myth that anyone who went to Harvard University will bring that fact up within five minutes of you meeting them for the first time. My experience: it might actually be true. But I have also noticed that people who own Apple devices will bring up the fact within four minutes of embarking on any conversation involving business, brand, communication or technology. Interbrand places a value on Apple’s brand alone of $118 billion. There is a reason for all this love. Apple, with its market cap of $668 billion (the Russian stock market’s market cap is $550 billion) is that company that has — in unmatched fashion — connected two intuitively unconnectable things: culture and technology. So the reason we bring up our [figuratively speaking] Harvard legacies and Apple product ownership is a little complicated. We want to express our humanity and we also want to express that underneath all that karma is a Swiss watch, a smooth-functioning thing of hard value that deserves respect, maybe awe. So this Apple appreciation is warm-up to why winning the Apple account is a coup for Empower, which quite literally has no brand value at all considering only one in 10 million people interviewed by RIABiz has ever heard of it. Who wouldn’t want a brand connection to a company that has literally reinvented what a brand can be by connecting what the RIA business, too, wishes to connect — humanity and the digital?

Empower has won the recordkeeping portion of Apple Inc.'s 401(k) account.

The Denver, Colo.-based 401(k) recordkeeper wrestled the $3.5-billion account of the Silicon Valley maker of iPads from The Charles Schwab Corp.

The San Francisco giant of retail investments and relative upstart in has been the recordkeeper for that Cupertino, Calif.-based plan sponsor and its 70,000 participants since 2010.

Consultant Mercer Consulting remains the advisor to the plan, and the New York firm declined to respond to a request for comment. Schwab has been shedding big recordkeeping contracts when the economics don’t work well. See: Schwab shoos $25 billion of client assets out the door as it calls the bluff of employers with lopsided 401(k) contracts.

Though neither Empower nor Schwab would confirm that the transfer is in the works, multiple sources did confirm it. Industry sources say that Boston-based Fidelity Investments Inc. was a finalist for the Apple plan as well.

New leader

“Empower getting these two wins is a solid step for them towards solidifying their position as major competitive force in the market,” says Rick Meigs, president of the 401khelpcenter.com in Portland, Ore. “If they are able to continue to pick up such major, named accounts, then we’ll have a new No. 1 market leader. Long-term, Empower’s ability to execute and deliver a very high-quality product will be the key to their competitiveness.”

The win marks the second eyebrow-raising success for the 401(k) conglomerate that recently took the defined contribution businesses of Putnam Investments, J.P. Morgan and Great-West and put them under one brand name. See: The second-largest 401(k) provider drops 'Great-West’ for 'Empower’.

Clearly, the name change isn’t too off putting to big prospects. See: The second-largest 401(k) provider drops 'Great-West’ for 'Empower’.

Everyone loves a startup

Even though Empower is a roll-up of legacy players, it’s still able to make hay from the newness of the combination of, its leaders and branding, says Mike Alfred, co-founder of BrightScope Inc., the 401(k) plan tracker in La Jolla, Calif.

“In some ways, Empower is a startup and Silicon Valley firms love startups. There’s a big tech vision of Bob Reynolds and the team.” See: Wealthfront’s advice is now an employee benefit for Google employees’ non-401(k) savings.

But Empower is able to use the scale of Great-West, the hoity-toity air of J.P. Morgan and Putnam’s former participant website, which won numerous awards. Sources say firms like Apple appreciate the powerful participant experience.


Empower announced last week that it won Mountain View, Calif.-based Intuit and its $1.2 billion plan with 14,500 participants. Fidelity has kept records for this plan for nearly 18 years. See: Addepar means to be the only technology platform RIAs will ever need — and has MIT minds and PayPal money to back it up.

A spokesperson with Fidelity declined to comment about the Intuit 401(k) plan. Intuit did not respond to a query.

Empower’s president Ed Murphy declined to comment for this story. Empower has $430 billion in assets and 7,000,000 plan participants.

Apple declined to comment about its change in 401(k) plan recordkeepers. The company has not told its participants about the change in recordkeepers just yet and the changes will take place in early 2015, sources say.

High fairness percentile

Winning both of those plans is a major coup for Empower, and shows the company is gaining momentum especially in Silicon Valley. Empower is the second-largest recordkeeper in the nation but the addition of these kinds of giant plans will accelerate recognition and credibility for its brand name. Empower is on track to close on $45 billion in new 401(k) sales in 2015, up from $15 billion this year.

Fidelity is the nation’s largest recordkeeper with more than $1 trillion in assets.

Apple’s 401(k) plan is a defined contribution plan with a profit-sharing component and 401(k) feature, according to BrightScope. BrightScope ranks the plan among the top 15% of plans for fairness of total costs. See: 401(k) industry flummoxed over Yale professor’s 6,000 'threatening’ letters to plan sponsors.

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Ariel Germaine Cassone

Ariel Germaine Cassone

January 15, 2016 — 3:13 AM

This company has actively refused to pay me my funds being held with them. It has been one clerical error to another for weeks…and to my great detriment. They appear to be incompetent and have no regard for those who have entrusted their money to them, all be it involuntarily. This is indicative of Apple’s slow turn from its founding principles at the the very least, but highly indicative of greater financial institutions as a whole being permitted to abuse and disregard their customers.

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