The small plan market is having a very good year according to new data released today by Denver-based recordkeeper Empower.
Empower’s advisor-sold retirement plan business, which encompasses plans with up to $50 million in assets under administration (AUA), is seeing new organic growth and expansion to new areas of the market, according to insights released by the firm today.
For the calendar year 2023, Empower reports it has achieved funded and committed sales of more than $10 billion in new retirement plan sales, amounting to some 3,300 in new plans and covering the retirement needs of approximately 250,000 new participants. In addition to those figures, Empower said it has developed its presence in the market for new startup plans and created approximately 800 new plans in conjunction with advisors and employers who wish to offer retirement benefits to their employees.
New sales and startup plans now served by Empower include a wide range of corporate 401(k) plans, small government 457(b) plans and 403(b) plans. Empower partners with more than 62,000 advisors to deliver retirement services.
“We believe in the power of building alliances with advisors and third-party administrators (TPAs) who deliver such important value to the retirement ecosystem,” said Rich Linton, president of Workplace Solutions for Empower.
Empower said that three-quarters of new plan sales in the advisor-sold market stem from the rising popularity of Empower Select, a packaged, off-the-shelf platform offering that includes nearly 8,000 total investment options, including over 2,000 zero-revenue funds from some of the most recognized asset managers.
“As our business develops, it’s a constant challenge to deliver more innovation and services so that advisors, third party administrators, sponsors and ultimately plan participants have a retirement offering that’s easy to manage, brings simplicity to retirement investing for individuals and shows results in terms of retirement preparedness,” said Senior Vice President for Core Markets Joseph Smolen.
Along with product offerings, Smolen noted that the changes to its service model has positioned plan advisors at the center of its offer with resources dedicated to the advisor and TPA. The new model makes dedicated support teams available to advisors and TPAs and opens lines of communication to allow for information to flow freely between new plan prospects, clients, their advisor, TPAs and Empower.
“An effective strategy to being successful in the retirement services market is to be flexible and willing to change as customers’ needs change,” said Rick Wedge, Managing Director for Pensionmark Financial Group. “The retirement plans of just five years ago have evolved. With Empower, any advisor knows that you have a partner who is willing to invest and innovate so that we can both create a successful offering to ultimately see our clients succeed. Advisors can be successful in a model like this.”
Assets from Empower’s new advisor-sold clients helped increase the company’s total assets under administration to more than $1.4 trillion on behalf of 18.3 million individuals as of September 30, 2023.
“As a TPA, navigating the volume of information in our line of work can be daunting,” said Steve Finnegan, President/CEO of The Finway Group. “Empower’s innovative approach streamlines this process, while providing better tools to manage the mountains of data now needed to do our job. It has become a crucial solution for every busy TPA. Managing information efficiently is a game-changer, and Empower has certainly raised the bar in making our operations more seamless and effective.”
Empower said the organic growth is driven by several factors, including the increasing scale and scope of its business to accompany a much wider set of retirement plans. The company has partnered across the retirement landscape with advisors and other third parties to create multi-employer and pooled employer plans.
Across market segments, Empower reported seeing higher request-for-proposal activity in the last year than has been seen any previous year across plan types, including 401(k), 457(b) and 403(b) defined contribution plans of all sizes covering corporate, government and not-for-profit employers.
Assets from Empower’s new advisor-sold clients helped increase the company’s total assets under administration to more than $1.4 trillion on behalf of 18.3 million individuals as of September 30, 2023. In total, the company has added more than 525,000 participants in each of the past 5 years (2018-2022) and will include an additional 660,000 in 2023.
Focus on advice
Alongside new plan sales, Empower said it has seen significant growth within its advisor managed account (AMA) business, reaching approximately $3.9 billion in assets as of July 2023. Approximately 1,494 workplace plans, 18 advisory firms and more than 72,000 participants to date are invested within AMA products.
Empower AMA’s experience for participants, advisors and plan sponsors includes ongoing communications, non-fiduciary call center support and guidance. The advisor firm serves as a fiduciary creating and maintaining portfolios and pricing, while recommending appropriate investment lineups for retirement savers.
“Our comprehensive reporting tools are constructed so advisors can stay focused on individuals who need their help and guidance along the way,” said Ken Munro, national sales director at Empower. Munro added that personalized strategies can drive better results and managed account users are typically more engaged than traditional target date fund investors, “And we know that engagement can have a direct impact on participant savings.”
In addition, Empower has seen great uptake of Dynamic Retirement Manager, a qualified default investment option that starts participants in a target date fund as they are accumulating assets early in their career and later rotates them to a managed account as their financial goals and asset picture emerge. A product offered by Empower in 2017, the program has attracted some $21 billion in assets and more than 97,000 participants in 1,700 plans as of Sept. 30, 2023.
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