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.


Microsoft CEO Satya Nadella's 2018 pledge to 'reimagine retirement planning' sparked hopes of transcending incumbent systems and products.

The BlackRock-Microsoft 'reimagining' of the 401(k) market, arrives looking more like a remix of existing third-party products

The New York-Seattle cross-breeding combines annuities and BlackRock target-date funds but the superpowers expended little imagination, RIA annuity executives say.

July 27, 2020 — 9:43 PM by Oisin Breen

Brooke's Note: Increasingly, the advisor vendor business fits into two categories -- the best-of-breed crowd and the best-of-bundle companies. Neither is perfect, and both parties seem to need each other. But when Microsoft and BlackRock CEOs had a vaunted summit that had the leaders promising a "reimagined" retirement system ...

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Jason Roberts: The penalties are set in stone.

With the DOL's new rule 95% likely to get finalized, RIAs need to be wary -- it targets them with new letter-of-the-law ERISA red tape

Right now, most RIAs recommend IRA rollovers without having to jump through a lot of hoops, but DOL's 'exemption' makes a federal case out of suggesting the move away from the protection of the employer’s plan

July 14, 2020 — 7:21 PM by Jason Roberts, Guest Columnist

Brooke's Note: After we published Lisa Shidler's article last week about the new DOL rule, I got a call from one of its sources, Jason Roberts. See: New DOL fiduciary 'rule' unshackles broker-dealers to pursue commissions, declaring brokers ERISA fiduciaries by making simple disclosures ...

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Fred Reish: Broker dealers have tried everything in their power to be fiduciaries – while still having commissions. They’re the big winner here.

New DOL fiduciary 'rule' unshackles broker-dealers to pursue commissions, declaring brokers ERISA fiduciaries by making simple disclosures

The new rule lets advisors 'exemption shop' and DOL promises brokers it'll take only about $35 worth of their time to mix commissions with advice.

July 10, 2020 — 2:21 AM by Lisa Shidler

Brooke's Note: I looked up synonyms for "deregulate" on Dictionary.com and listed first was "decontrol." The Department of Labor (DOL) is calling its 123-page fiduciary rule edict a "deregulatory action." In other words, the DOL is abdicating control, giving the Trump administration what it wants, which ...

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Betsy Moszeter: It's not obvious why the DOL is proposing a rule specifically for ESG.

A big wince as Trump's DOL presses efforts to erase Obama-era ESG guidance, with tough new rule to curb do-good funds in ERISA accounts; critics cry 'politics'

Lawyers see crackdown as 'a solution in search of a problem' in regard to Labor Dept. pleas in proposed rule of danger that meeting environmental and social justice goals could harm returns, hence retiree security.

July 1, 2020 — 8:18 PM by By Lisa Shidler

Brooke's Note: You might have thought that the ESG horse left the barn long ago, now that it's at about $12 trillion and companies like BlackRock claim to be all-in. See: Chafing under $4 trillion of passive assets, BlackRock CEO warns Fortune 500 CEOs he may ...

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Marcia Wagner: The new rules may appear more lax, but the Obama Administration rules may have been overkill.

New 'anti-regulatory' DOL Fiduciary Rule figures to keep $10-trillion IRA market under the IRS, allow some conflicted advice; does Rule's revival from dead presage Joe Biden presidency?

The rush to enact rewritten DOL Fiduciary Rule is a 'mystery' given Wall Street's presumed preference for defaulting to status quo; has presidential polling adverse to Donald Trump restored a sense of urgency?

June 4, 2020 — 2:28 AM by By Lisa Shidler

Brooke's Note: The famous and unkillable DOL fiduciary rule died in 2018 and stayed dead. Now suddenly the Dept. of Labor is sending a new version to OMB for a final look. What sparked its Lazarus-like reappearance is a mystery. There's less mystery about what the document ...

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Aaron Schumm: The participant is no longer three steps removed from their actual money.

Four years into startup, Vestwell makes its big move -- nixing FIS's recordkeeping for the 401(k) super-bot it built with Goldman Sachs' VC money

The Aaron Schum start-up will start again as a turnkey pension program that allows RIAs to better unify 401(k) and non-401(k) practices and be searchable as database

April 9, 2020 — 2:11 AM by Lisa Shidler

Brooke's Note: It is amazing what the 401(k) business got away with for so long soaking the American investors who could afford it least in ingeniously devious ways. Those investors were typically none the wiser. But the late-blooming DC pension system has also gotten away ...

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Joseph Martel: We think they can afford to take more equity risk.

T. Rowe Price takes on the risk of its target date fund retirees outliving their savings -- by jacking up equity exposure even on the glide path

The Baltimore patriarch is using both actuarial and behavioral science as the basis for the contrarian move whose downside is accentuated as coronavirus gives the approach a rough start

March 2, 2020 — 6:13 PM by By Lisa Shidler

Brooke's Note: If you were to make a short list of what succeeded best in the past 20 years of financial advice, you'd be hard-pressed not to select RIAs and ETFs. But then target date funds are next. The weirdo mutual fund, robo-advisor, annuity-lite product contraptions that are ...

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Fidelity's David Gray: Some of the conventional thinking that 401(k) plan was cheaper than brokerage accounts continues to evolve.

Fidelity Investments rewrites the 401(k) rollover script by allowing plan participants -- with a small catch -- to skip the IRA and have the plan sponsor hold the account post-employment

The $1.8 trillion AUA recordkeeping king eschews its own defined contribution scripture to reflect reality of inertia, better technology and the fact that IRAs are no longer yield so much milk and honey in a zero-fee, zero-commission world

February 25, 2020 — 2:46 AM by By Lisa Shidler

Brooke's Note: You can't fight City Hall. You can't fight The Tape (especially when pandemic fears take hold). And you sure as hell can't fight a plan participant who wants to leave a 401(k) account in place when no law makes them move it. After decades ...

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Morningstar's Jim Smith: RIAs are layering a reasonable fee. My theory is you’re seeing the market at its best.

Morningstar may be upending the 401(k) industry by putting RIAs in charge and making participants pay fees -- but some critics see prohibitive conflicts of interest

The Chicago firm boasts a tsunami of signings of 401(k) mega-players including CAPTRUST, Empower and Schwab; Morningstar even had a chat with Fidelity

February 5, 2020 — 7:34 PM by By Lisa Shidler

Brooke's Note: Again, we are seeing it. All roads keep leading back to accountable human RIAs. Now Morningstar is giving RIAs a fighting chance to rule in the 401(k) business. It's happening with lightning speed and force. We can thank 'robo' technology. How Fidelity reacts will ...

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David Blanchett: Fidelity is the clear market leader in terms of recordkeeping and Vanguard is the market leader in terms of asset management.

Fidelity wrests high-profile Amazon 401(k) business from Vanguard, forcing a judicious unbundling of services between the king of assets and king of recordkeeping

The Boston 401(k) king's capture of Amazon's recordkeeping account from rival Vanguard may be proof of concept of 'client experience' at a budget price.

January 8, 2020 — 11:46 PM by Oisin Breen

Brooke's Note: Amazon.com is hiring nearly 500 employees a day and plans to do that into the foreseeable future. Those employees include some of the best, brightest and best paid, in addition to Whole Foods checkout people and warehouse managers. Fidelity now has the existing ...

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Ed Mercier: Purchasing the broker-dealer from Edelman helps ensure that we can continue to work with our RIA partners without subscriptions or contracts.

How Edelman Financial Engines spin-off deal became a RetireOne engine that's heating up the RIA annuity game again

The fee-based annuities marketplace of Aria Retirement Solutions adds Edelman's broker-dealer, 6,000 clients, 'hundreds of millions' in client assets and an old hand

November 20, 2019 — 10:19 PM by Oisin Breen

Brooke's Note: Nobody can dispute the beauty of guaranteed income. But in financial advice, such a thing takes the form of an annuity and often turns out to be too good to be true. Or at least the product often is way too expensive, too unwieldy and ...

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Rob Foregger: Moving beyond the target date fund ... that’s the vision ... they're now antiquated.

New class of robos lay siege to 'antiquated' target-date-funds (TDF) market; even defender of the 401(k) citadel, Vanguard, sees handwriting on the wall

Fidelity, Ascensus, and Morningstar are all making 401(k) moves that could see automated advice replace the Vanguard-dominated TDF market but maybe Vanguard just woke up in time to cannibalize the market itself.

October 8, 2019 — 3:02 AM by Oisin Breen

Brooke's Note: Nobody, it seems, can rival Vanguard Group in the target date fund (TDF) category. It owns the $2 trillion market. But the introduction -- by Vanguard itself -- of a robo-advisor that could do more than the set-and-forget funds for less money spent in fees ...

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Peter Mallouk: 'They have better onboarding software, communication software and reporting.'

Jilted once, Creative Planning gets Personal Capital's former 401(k) company, simplifies its ADV and cuts a remaining Tony Robbins thread in the bargain

CEO Peter Mallouk now has the onboarding software he coveted and the chance to make his $43-billion RIA hum in the micro-plan market

September 27, 2019 — 1:17 AM by Brooke Southall

Brooke's Note: RIAs have stayed away in droves from the 401(k) market and particularly from trafficking in small plans for good reason. But the worm has turned, in part, because more big players can play the scale game in a low margin business. But that wouldn't be ...

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Rana Yared made the initial house call to Vestwell that led to a deepening relationship.

How Aaron Schumm got Goldman Sachs' brightest young star aboard; he jammed in a meeting for a friend and accepted an offer he couldn't refuse--$30 million

The Vestwell CEO gets Rana Yared, the 35 year-old Goldman partner, on his board as part of the $30-million round she made happen

July 2, 2019 — 11:20 PM by Brooke Southall

Brooke's Note: Information, knowledge and vision are the three chief currencies of commerce in 2019. Though computers and AI are coming on strong, the principal fount of intelligence remains tucked inside people's heads. Sometimes you can buy brains. More often the deciding factor is having some intellectual capital of your ...

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Tim Hockey: It was a bit of a bolt-on.

Brooke's Bits: TD Ameritrade fake-punts 401(k) business to Broadridge • Vanguard shows it doesn't need lowest fees to dominate • Despite USAA investor grumbling, Victory Capital publishes a closing date for the fund franchise purchase and its shares keep soaring

The Omaha, Neb.-based custodian swears it still has RIA backs on 401(k)s; Vanguard takes half of inflows Q1; USAA's orphaning of its investors is still on track to giant shareholder returns for the buyers

May 2, 2019 — 4:36 PM by Brooke Southall

TD Ameritrade punted its 401(k) machinery over to Broadridge but not all of its 401(k) business got the boot.

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