“We’re working on a number of initiatives, ESG in particular,” National Association of Plan Advisors (NAPA) President Alex Assaley said when asked about the organization’s focus. “The Biden administration has released some proposed regulations. NAPA has been working closely with the administration on that to, hopefully, create a regulation that allows for an appropriate process for analyzing [ESG] investments within a retirement plan’s investment menu.”
In an interview at Wealth@wor(k) 2021 in Nashville, he noted that ERISA requires a consistent, objective, and frequently applied process to how 401k advisors select and monitor investments. It’s something that cannot be minimized in analyzing a fund or an investment vehicle that also has environmental, social or governance criteria.
“You still must follow that process, but there’s no question good governance and a focus on sustainability around the future of these businesses helps add value,” Assaley, Managing Principal for Retirement Plans at AFS Retirement Services argued. “I don’t think plan sponsors or fiduciary advisors are going to be selecting investments purely based on ESG criteria. It’s just another metric in a body of analysis that we need to do to think about how to ensure investors have opportunities to invest in the right types of vehicles for their financial future.”
He then turned to the “sweeping effort” with the reconciliation bill that includes several retirement policy provisions, some that are favorable to expanding retirement plan coverage for more of America’s workers, including tax credits and other opportunities.
“There are also policy changes that NAPA is not so favorable about. They change the current rules and regulations that govern retirement plans, but all of this is an effort to work with Congress in a way that helps improve the private retirement system. So that’s a significant effort throughout the fall for NAPA, the [American Retirement Association] and its staff.
“Not so favorable provisions” include rule changes around Roth conversions, and specifically backdoor Roths, and Assaley said ARA/NAPA CEO Brian Graff jokes that the highly utilized strategy could not have a worse name.
“It ties to the work we do in our firm around helping employees and helping individuals improve their financial lives.”
“It’s a strategy that we’ve seen as really advantageous for a lot of our clients and the employees in companies across the spectrum of income levels,” Assaly explained. “But by and large, higher-income individuals are taking advantage of that, so it’s not surprising to see it’s something that might get cut out.”
The cap on the total amount of assets an individual can accumulate in qualified plans is also a concern, and one proposal would cap the combined aggregate total of a 401k, 403b, and IRA account. While not necessarily a favorable outcome, he noted that the actuarial team at ASPPA—an ARA sibling entity—performed the math, and the current cap is probably appropriate. Still, it’s something to watch going forward.
Noting the Bush and Obama Doctrines, Assaley was asked about his own as current NAPA president, what he hopes to accomplish, and the legacy he’ll leave.
“It ties to the work we do in our firm, AFS 401k, around helping employees and individuals improve their financial lives,” he diplomatically answered. “We do a significant amount of financial coaching, financial advice, financial wellness—whatever you want to call it. It’s sitting down with employees at companies and organizations we serve and helping them understand and develop greater financial know-how and literacy to make the right decisions to improve their financial picture across the spectrum. That’s the number one priority for the vast majority of America’s workers.”
He concluded that in his role as NAPA president, “furthering the ability, resources, and collective mission of our industry peers across the country to deliver that efficiently and in a way that’s independent and in the best interest of employees is my doctrine and what I strive to achieve.”