In Practice August 1, 2023

Carson Group Starts Beta Testing for New Financial Wellness Program

The wealth manager plans to join other big RIAs in serving participants with its own financial wellness program, according to its head of wealth solutions.

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Recent mergers and acquisitions have seen some traditional wealth management firms bring workplace retirement plan capabilities in-house. Now another of the country’s largest registered investment advisories is looking to add its own financial wellness program to serve retirement plan participants.

Jamie Hopkins

Carson Group Holdings LLC, which earlier this year took an equity stake in workplace and wealth adviser Northwest Capital Management Inc., is currently beta testing a financial wellness program to serve plan participants, according to Jamie Hopkins, Carson’s managing partner of wealth solutions. The service would add to the RIA’s push into retirement plan advisement capabilities that also includes a recent partnership with small 401(k) plan provider Vestwell.

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Through its recent dealmaking, Omaha, Nebraska-based Carson can now assist clients with all sizes of workplace retirement plans, Hopkins says, but as its network of advisers is consistently asking for additional holistic financial planning services, the firm is working on a more robust financial wellness program.

“Our next phase [of retirement plan focus] is participant experience,” Jamie Hopkins says. “We’re spending the next 18 months or so on that.”

Hopkins says the firm is currently working with clients on participant education and retirement readiness, but it is also focused on establishing a full-scale program available to its advisers.

“I think the area of participant education is key for the future,” Hopkins says. “How do we start delivering this base level of financial planning and retirement readiness to participants?”

The RIA will be joining other large wealth managers who have financial wellness offerings, including Edelman Financial Engines, which launched an in-house program last year, and retirement and wealth aggregator CAPTRUST Financial Advisors.

Meanwhile, numerous financial wellness vendors provide participant services for the adviser community. Last week, a female-founded firm called Pocketnest Inc. rolled out a financial wellness platform for independent financial advisers, and Financial Finesse Ventures recently announced an investment in OfColor Inc., a minority-owned financial wellness platform “unapologetically focused on the financial empowerment of employees of color.”

Having the ability to serve the needs of everyday retirement plan savers is key to the Carson Group’s overall financial planning mission, Hopkins says. The goal of the program is not, he says, to “pull through” retirement plan participants into the wealth management side of the business, but rather to have a program for participants who are not a good fit for individual advisement.

“Most of our business in wealth management from the Carson perspective comes from the business owner, and we help them set up a plan,” he says. “That’s really our core: delivering that service.”

Regardless of the wealth management link, Hopkins still sees the qualified plan space on its own as a good business.

“There is fee compression there, there is a lot of liability … but it’s still a good business,” he says. “We’re helping people save for retirement. We’re providing education and services. That just goes back to the core of who Carson is: We want to be the most trusted in financial advice.”

In addition to participant education, Hopkins says he sees room for advancement in the investment and technology side of retirement planning. He recently joined the board of Income Labs, a retirement income management firm with participant offerings such as a retirement stress test, a one-page interactive of a person’s financial life and tax-planning software.

Client Service August 1, 2023

Fidelity AUA Jumps 18% Year-Over-Year in Q2 to $11.7T

Recordkeeper Principal reports SMB retirement plan growth and volatility among large plan sponsors, and Prudential's institutional retirement unit had pension risk transfer growth.

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Fidelity Investments, the nation’s largest retirement plan recordkeeper, reported Tuesday assets under administration of $11.7 trillion for the second quarter, an 18% increase compared to the same period last year.

The recordkeeper and asset manager, which is not publicly listed, issued a Q2 business update that showed a boost in AUA amid stronger markets in 2023, as well as 7% growth in retirement plan participants to 42.5 million.

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The Boston-based firm also reported a 19% year-over-year jump in discretionary assets, which includes investment products such as mutual funds and managed accounts, to a total of $4.5 trillion through June 30.

“Fidelity delivered another quarter of strong operating results, spurred by our continued investments in the people and technology needed to deliver outstanding customer experiences,” Abigail Johnson, chairman and CEO of Fidelity, said in a statement.

Fidelity also reported growth in customer interaction and engagement, a key area for the firm that provides both financial wellness and wealth management services. The firm reported a 31% jump in customer planning interactions to 886,000 in the past year. It also noted customer appointments were up 20% to 1.2 million, digital engagements rose 7% to 23 million and social media interactions were up a whopping 530% to 481,000.

“The combination of easy-to-use digital tools and live channel support is a powerful hybrid model that sets Fidelity apart,” Johnson said in the statement. “We let our customers choose how to engage with us, and we meet them where they are—whether that’s in person, on social media, over the phone, or in a digital chat.”

One down area for Fidelity came in average daily trading by customers. That daily average investing fell 7% from Q2 2022 to 2.5 million in Q2 2023, according to the report.

Overall, however, the firm reported growth in retail client accounts, with an 8% jump to 38.4 million, 43% of which were aged 18 to 35. Fidelity also reported 6% growth in clearing and custody accounts, reaching 8.4 million clients.

In separate recordkeeper Q2 reporting, Principal Financial Group’s Retirement and Income solutions division announced a slight net revenue dip of 2% compared to the same quarter last year to $640 million. The decline was due to lower variable investment income, which was partially offset by gains from rising interest rates, the firm reported in its earnings release.

“Across U.S. retirement and benefits and protection, revenue is benefiting from a strong employment market, especially within the small-to-midsized business segment,” CEO Dan Houston said during a Q2 call on July 28. “Though we are seeing moderation in employment growth from record highs, wage growth has accelerated.” 

Retirement net cash flow, however, was “pressured” in the quarter due to “lapses” in the large plan retirement segment, according to the Des Moines, Iowa-based recordkeeper, asset manager and insurer.

“Large plan sales and lapses fluctuate quarter-to-quarter and can have a significant impact on net cash flow, but they generally have a lower overall impact on revenue for our retirement business,” Houston said on the call.

When looking at just the small and medium business retirement market, the CEO noted that net cash flow was a positive $265 million. He also forecast positive growth in the second half of 2023.

“We expect retirement sales to pick up in the second half of the year, with strong full year growth across the SMB and large plan segments,” Houston said. “We continue to expect to be within our net revenue growth and margin guidance for the full year.”

Principal is the country’s fifth largest recordkeeper by assets, according to the latest recordkeeper survey by PLANSPONSOR, a sister publication of PLANADVISER.

In further second-quarter reporting on Tuesday, Prudential Financial Inc. reported a slight decline in adjusted operating income for its institutional retirement business. The operating income of $428 million in the quarter compared to $432 million last year, a decrease that included a less favorable comparative impact from the New York-based financial firm’s  annual assumption update and other refinements of $8 million, according to the announcement. Excluding that item, second-quarter results
primarily reflected higher fee income from business growth.

Prudential reported account values of $259 billion , a record high, and an increase of 10% from a year ago, reflecting business growth driven by “significant pension risk transfer transactions.” 

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