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.


Jason Roberts: What caught me off guard is that Fidelity says it is going to give advice to plans and participants.

Why exactly Fidelity chose 2018 to levy visible .05% 401(k) surcharge on Vanguard funds

After an abrupt business model shift from recordkeeper to advisor, the Boston-based 401(k) king may be a leader in fee 'levelization' that encourages other fund firms to act

February 9, 2018 — 6:10 PM UTC by By Lisa Shidler

Brooke's Note: My advice: When the stock market drops 500 points, don't read much into it. When Fidelity's 401(k) division raises a price five one-hundredths-of-a-percent on a limited subset of new plan sponsors, read too much into it. So much has ...

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Roger Lee (r. w/Paul Sawaya): Rather than just sit on top of Fidelity, we took on a challenge that was a little bit bigger.

Unknown San Francisco 401(k) robo with famous backers gets $11 million more in VC funding -- and an interesting brand

With Y Combinator start, Human Interest, formerly Captain401, is only in its third year but 10,000 customers convinced Adam Nash, Joe Montana and Sequoia-, Accel-derived VC

February 8, 2018 — 12:10 AM UTC by Brooke Southall

Brooke's Note: Doing a robo-advisor startup in 2015 seems late so you'd better get the branding right. This little robo, Captain401, is checking every branding box. The first challenge is to find a founder who went to Harvard. Check. Next is for the fledgling startup ...

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David Root: It's a Pittsburgh story. It was a once-in-a-lifetime opportunity to try to take full advantage of our position.

How a $500-million Commonwealth rep became a $5-billion-plus RIA in two years and where Dynasty's M&A war on roll-ups comes in

After forming his own RIA, moving assets to Schwab and partnering with Shirl Penney's firm, David Root just kept M&A-rolling into 401(k) clover

January 19, 2018 — 8:19 PM UTC by Oisin Breen

Brooke's Note: Roll-ups are often their own worst enemies. Their ability to write checks to buy revenues is an awesome power but comes with the danger of getting drunk with that power and failing to maintain those assets profitably long-term. Now, roll-ups have a ...

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Rob Foregger: John Hancock is the first to do it.

NextCapital does $30-million VC round with a staggering objective that's taking shape first with John Hancock

Nearing 100 employees, the Chicago-based robo-advisor blurs 401(k) and retail asset distinctions by making advice factories out of investment product manufacturers

January 16, 2018 — 8:06 PM UTC by Lisa Shidler

Brooke's Note: When I caught up with Rob Foregger during the editing stage of Lisa's article he exuded an unhurried urgency when talking about cofounding his second robo-advisor from his Vermont home. See: Personal Capital gets $75 million investment and an ex-Schwab retail chief in ...

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Fielding Miller: We had it narrowed it down to Tamarac and Black Diamond.

CAPTRUST dumps Advent and Microsoft, flirts with Tamarac and Salesforce, then hires Black Diamond and Microsoft

As CAPTRUST switches gears from its $240-billion 401(k) business to its $6-billion wealth manager, it is forced to make mammoth and wrenching software moves

January 4, 2018 — 10:56 PM UTC by Lisa Shidler

Brooke's Note: J. Fielding Miller is one of the top CEOs in the RIA business, by assets, growth and organization. So when we found out he had to strip out his software last year from his $250 billion RIA and replace it, we wanted to ...

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Louis Harvey: One of the big things that RIAs had from day one was they could say they always put clients' interests first and now that argument is pretty much shot to hell.

How Merrill Lynch 'shot to hell' the RIA fiduciary citadel by casting its $7.5 billion fiduciary 401(k) unit as smaller, purer and more future-minded on paper

Despite FAS having fewer 401(k) assets than, for example, a single North Carolina-based RIA, CAPTRUST, the Charlotte-based Bank of America's brokerage unit has created a new competitive threat

December 16, 2017 — 12:20 AM UTC by Lisa Shider

Brooke's Note: If the decline of the wirehouse over the past two decades could be summed up in a phrase it would be "innovator's dilemma" -- the condition by which a giant, mature cash cow fails to reinvent itself -- even in the face of eventual ...

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Larry Raffone: At the very biggest Fidelity plans, they very much value the things that we offer.

Fidelity Investments (explicitly) enters 401(k) advice game -- then Financial Engines' shares plummet despite its 'Mutual Fund Store' RIA winning Boeing and Ford accounts

The Boston giant now offers non-discretionary advice to non-recordkeeping customers and Financial Engines cuts its prices, bleeding out Wall Street's belief in the firm

December 6, 2017 — 6:16 PM UTC by Lisa Shidler

Brooke's Note: We talk about Fidelity Investments having a "full stack" when it comes to the 401(k) business. But the Boston Big Boy has never stacked up to Silicon Valley micro-player Financial Engines when it comes to selling, arguably, the most value-added layer in ...

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Mike Alfred: Maybe going through the legal process caused them to make the change.

How Vanguard lost a $19.4-billion 401(k) account to Fidelity and why it's the exception to the rule -- and isn't

Chevron boots the hyper-fiduciary Malvern, Pa.-based indexing giant in favor of Fidelity after two dismissed lawsuits

November 21, 2017 — 12:53 AM UTC by By Lisa Shidler

Brooke's Note: Man bites dog. Well, not exactly. Fidelity Investments isn't the 401(k) king for nothing. But here is a case where various parties, on record, use the word "rare." 

A plan sponsor with a $19.4-billion retirement plan fired The Vanguard Group ...

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Aaron Schumm: This is the most fun the business has ever been.

As Aaron Schumm's 401(k) startup gets $8 million the FolioDynamix founder loves Vestwell's odd juxtaposition to Fidelity

Vestwell attracts second big FMR seed capital tranche by co-opting advisors to go where the Boston 401(k) king is most challenged -- very small plan sponsors

October 13, 2017 — 5:12 PM UTC by Brooke Southall

Brooke's Note: Fidelity Investments is making noises about buying a software company to keep eMoney in the lonely corporate shell in which it is housed. The Boston giant could do worse than to make a deal for Vestwell because the price will be right. F-Prime ...

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Fielding Miller: If we're not the fastest growing RIA out there, then I don't know who is.

Granddaddy $220-billion RIA 401(k) roll-up books new $20-billion deal but may have bought its way out of a growth plan

CAPTRUST did 26 deals in 10 years and finally the firm's old 'friend-enemy' partner, CapTrust was one of the few needle-movers left to make its last 10% inorganic AUM leap

September 11, 2017 — 9:45 PM UTC by By Lisa Shidler

Brooke's Note: What Fielding Miller has accomplished with (all-caps) CAPTRUST is nothing short of remarkable -- a $220 billion RIA roll-up in an industry where $50 billion is generally considered the high end of the scale. He even completed this act of inorganic growth organically. No ...

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The DOL told Judge Nelson to pause her findings on Thrivent because BICE may get mooted.

Why brokers can't exactly relax even after DOL promises, in effect, to drop BICE from its rule, then delays it 18 months

Attorneys caution DOL-weary execs that Department of Labor can't huff, puff and ramrod through a big change, and even a rule delay is fraught for brokers that treat it as a pure reprieve

August 29, 2017 — 9:12 PM UTC by Brooke Southall

Brooke's Note: The DOL has a long way to go and a short time to get there -- and it is short-staffed at the highest levels. The regulator is still living life without a head, namely it never got around to finding a replacement for ...

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Fred Reish: It may be that the broker-dealers will limit the advisors who can work with large plans.

To the surprise of some, Dept. of Labor grants get-out-of-DOL-rule-jail card to 225,000 firms that dabble in the 401(k) business

Without recent guidance, 401(k) specialists were set to devour one-off accounts held by brokers but new DOL rule guidance offers well-lit path to build toward a far larger 401(k) practice

August 15, 2017 — 12:54 AM UTC by Lisa Shidler

Brooke's Note: Until now, DOL rule mania centered almost exclusively around IRAs. Advisors and broker-dealers were rightly flustered because the trillions of dollars of lightly regulated retail assets in individual retirement accounts were dragged under heavy ERISA oversight written by the Dept. of Labor. But ...

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Jim O'Shaughnessy: LPL will allow us to give recommendations but you've got to make sure you're fully working in the RIA with compliance, supervision and that product recommendations are all under that umbrella.

LPL Financial's DOL-rule memo to reps implies deeper message: Become an RIA or stand down on giving rollover advice

The 'deep-pocketed' broker-dealer puts its Series-7 brokers on notice to forget about suggesting a rollover even as it gives its hybrid RIAs a strict protocol to stay out of trouble

July 5, 2017 — 8:02 PM UTC by Lisa Shidler

Brooke's Note: What LPL Financial does as the biggest IBD with a whole staff of compliance experts and an even bigger bench of outside attorneys and other consultants must not be considered casual in its intent. We took it seriously. Clamping down is always ...

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Bill Hamm: From what I’ve seen it can only bring positive changes.

LPL Financial lets go of David Reich to pull its crucial $135-billion 401(k) division into a central service and branding sphere

The head of the unit exits amid advisor chatter that the hyper-channelization of LPL sometimes makes six phone calls necessary when one would do

June 26, 2017 — 9:34 PM UTC by By Lisa Shidler

Brooke's Note: Every once in a while I pick up a phone call that was intended for my partner, Frank Noto, and it takes some presence of mind not to say: You'll have to call our advertising department; you've reached editorial. In the ...

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Larry Raffone: They can’t plan for retirement because today is getting in the way of tomorrow.

Power Player: Larry Raffone is racing to 'lock up' the 401(k) market by taking its robo head start and combining it with a semi-national RIA

One analyst calls Financial Engines' Personal Advisor a 'massive long-term opportunity' but the rollout is slow and details are scant

June 26, 2017 — 6:56 PM UTC by Mia Diamond

Brooke's Note: As we unveil the first in our "Power Players" in the RIA business series, we remind readers of the purpose of this exercise. True, it's a way to commend these individuals for positioning themselves and their firms favorably for a crack at leading ...

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