In Practice November 7, 2024

Empower’s Q3 Earnings Surge 35% Year-Over-Year to Record Highs

The company saw growth across both its retirement plan and recently revamped wealth management divisions.

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Empower reported a rise in its third-quarter earnings, achieving record financial results as of September 30, the country’s second-largest recordkeeper announced Thursday.

Driven by strong business growth, favorable market returns and continued sales momentum, the financial services firm—including its recently revamped wealth management division—saw after-tax base earnings increase to $264 million.

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This latest result marked a 35% increase from the same period last year, a 12% increase from Q2 and brought Empower’s year-to-date base earnings to $711 million.

The Greenwood Village, Colorado-based company reported its assets under administration hit a new high of $1.8 trillion, representing a 26% year-over-year increase, while the number of retirement plan participants and clients climbed to 19 million, up 4% year-over-year.

Empower’s Workplace Solutions unit recorded a 32% year-over-year rise in base earnings, driven by increased fees from retirement plan sales, which reached $11.9 billion in the third quarter and $46 billion year-to-date, a 40% increase from the previous year.

Empower Personal Wealth, launched in January 2023 (though built off its earlier acquisition of Personal Capital), reported a 16% year-over-year earnings boost and 13% sequential growth from the second quarter, reflecting higher fee income and margins. EPW’s net new assets grew to $2.4 billion, up 26% year-over-year and 46% from the second quarter, while total assets under administration increased to $85 billion, a 32% rise year-over-year. EPW now serves about 711,000 clients, a 16% increase year-over-year.

Empower President and CEO Edmund F. Murphy III credited the company’s success to strategic investments in customer-focused initiatives, which have broadened Empower’s appeal.

“Empower is extending its appeal to a wider range of investors and employers who are making use of our expanded capabilities, insights, and offerings,” Murphy said in a statement. “We’ve made significant investments in new services, technology, and infrastructure, and it’s clear that our new and existing customers are noticing the value we bring to them.”

In September, Empower acquired Plan Management Corp., the creator of the OptionTrax platform for equity compensation. The acquisition allows Empower to integrate OptionTrax’s services with its own retirement and wealth management offerings. OptionTrax currently serves more than 300 employers with about $62 billion in plan value.

Empower’s parent company, Winnipeg, Manitoba-based Great-West Lifeco Inc., released the results as part of its broader Q3 earnings announcement.

Fidelity, the country’s largest recordkeeper, reported $15 trillion in AUA in an October 31 announcement; the firm is privately held.

Products November 7, 2024

Product & Service Launches – 11/7/24

Pontera offers access to Envestnet’s BillFin solution; Axos Clearing, Envestnet partner to deliver managed account solutions; Jackson increases access to RILA product through distribution partnership with JPMorganChase; and more.

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Pontera Offers Access to Envestnet’s BillFin Solution

Pontera Solutions Inc., the fintech company helping retirement savers receive 401(k) account management from their financial adviser, has announced the availability of Envestnet’s BillFin solution to make 401(k) account billing more efficient and seamless for financial advisers.

BillFin improves how advisers and planners bill their clients, enabling them to calculate fees, create invoices and calculate payouts for fee-splitting. The platform offers flexible billing setup, standardized billing templates and an intuitive user experience, according to the announcement.

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“By adding BillFin capabilities, we’re empowering financial advisers to deliver even greater value and a more comprehensive wealth management service to their clients,” David Goldman, Pontera’s chief business officer, said in a statement. “Pontera’s growing technology partner community enables us to meet advisers where they live by linking our secure 401(k) management platform with the technology tools they’re already using, helping them deliver the best possible client experience.”

Axos Clearing, Envestnet Partner to Deliver Managed Account Solutions

Axos Clearing, a subsidiary of Axos Financial Inc., announced a strategic partnership with Envestnet Financial Technologies Inc., a provider of integrated technology, data intelligence and wealth solutions.

The partnership will integrate Envestnet’s managed account solutions into Axos Clearing’s Axos Complete portal, allowing hybrid broker/dealers and registered investment advisers to enhance client service and streamline operations.

“Partnering with Envestnet to integrate their managed account technology into our professional workstation allows us to provide our clients with the tools and technology they need to thrive in a fee-based advisory model,” David Crow, executive vice president and head of Axos Clearing, said in a statement. “This is a key step as we continue developing Axos Complete, our comprehensive platform for advisory and operational solutions.”

Jackson Increases Access to RILA Product Through Distribution Partnership With JPMorganChase

Jackson National Life Insurance Co., the main operating subsidiary of Jackson Financial Inc., announced it is partnering with JPMorganChase to offer its registered index-linked annuity, Jackson Market Link Pro II, to the approximately 5,000 financial professionals at J.P. Morgan Wealth Management.

Greg Masucci, a senior vice president for strategic relationships at Jackson National Life Distributors LLC, says the firm continues to see increased adoption of RILAs, also referred to as buffered annuities, within portfolios, as more clients seek protection opportunities while potentially growing their assets.

“We’re excited J.P. Morgan Wealth Management financial professionals and their clients now have increased access to Jackson’s solutions-oriented team that is focused on delivering exceptional client service,” Masucci said in a statement.

Schwab to Launch Mortgage-Backed Securities ETF

Schwab Asset Management, the asset management arm of the Charles Schwab Corp., announced the launch of the Schwab Mortgage-Backed Securities Exchange-Traded Fund. The first day of trading is expected to be on or about November 19.

With an expense ratio of 0.03%, the Schwab Mortgage-Backed Securities ETF is priced in line with the lowest-priced peer ETFs, based on the U.S. Mortgage Lipper category. The ETF will provide simple access to investment-grade mortgage-backed securities issued or guaranteed by U.S. government agencies. It is designed to serve as part of a diversified portfolio.

“It’s been a notable period for the fixed-income market, and at Schwab Asset Management, we’re deeply committed to helping clients with their fixed-income investing needs,” Nicohl Bogan, Schwab Asset Management’s head of passive product management and innovation, said in a statement. “We’re excited to introduce the Schwab Mortgage-Backed Securities ETF as the latest example of that effort.”

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