Consolidating annuities

Posted by / 12-Feb-2021 05:41

Consolidating annuities

But what we do is expensive and is funded in part by our sponsors.So won't you show our sponsors a little love by whitelisting investmentnews.com? There are currently almost 40 national 401(k) record keepers, most of which service plans with less than 0 million in assets — the sweet spot for advisers. Record keepers are about to exit the second stage of a typical four-cycle consolidation curve: Stage 2 of the consolidation curve is highlighted by "…rapid consolidation, with survivors honing acquisition skills, protecting core culture as they absorb others, retaining the best employees from acquired companies and building scalable IT platforms." Randy Long, managing principal at Sage View Advisory Group, commented that "1 million participants used to be fine; the new measurement [to be viable] is 3 million." "If JPMorgan — which was a good record keeper, with great service and scale as well as good funds — couldn't make it work, it raises a lot of questions for others, especially banks," Mr. While the top 10 401(k) record keepers already enjoy a 75% market share, with the top six at 60%, the concentration should continue, according to many industry analysts.Ed Murphy, president of Empower Retirement, believes that 401(k) record-keeper consolidation is about to heat up, in part because of "increased costs caused by cybersecurity risk and new regulations, fee compression and well-heeled providers raising the bar." These sentiments are echoed by Charlie Nelson, CEO of retirement and employee benefits at Voya Financial, who suggested: "Key to successful acquirers is the organizational skills and knowledge to consolidate record-keeping platforms.It is widely reported that Newport Group, which is owned by private-equity firm Stone Point, is on the market, and there are also rumors about another, unnamed record keeper that oversees 2 million to 3 million participants being shopped.How do plan advisers stay ahead of the curve and avoid placing new business with exiting providers?Though there have been a few recent high-profile 401(k) record-keeper acquisitions — think Transamerica's purchase of Mercer's defined-contribution business and Blackstone's acquisition of Aon Hewitt's — there has been a lull in the consolidation.That's likely to change soon as a result of escalating costs, low interest rates and the natural maturation of the 401(k) record-keeping business.

But advisers are inherently conservative and may not have the ability to consolidate their roster of record keepers, in part because it may not be their choice and also because it takes time and money.Does retirement appear to be core to the overall entity?Asset-management skills can be a blessing and a curse.Some providers, such as Voya, Empower, Principal, Lincoln and Prudential, are publicly traded or make their financials available with their retirement-division metrics listed.Look to see if they are profitable and are growing faster than the market.

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