The PLANADVISER Interview: David Musto, Chair and CEO, Ascensus

David Musto’s career has taken him across the retirement, investing and insurance sectors. His breadth of experience tracks with the wide range of services in which the firm he now heads, Ascensus, plans to continue finding growth across all types of tax-advantaged savings program.

Ascensus, which was acquired by private equity firm Stone Point Capital in 2021, has grown in size to $720 billion in assets under administration across workplace retirement plans, 529 education savings accounts, health savings accounts and state-facilitated retirement plan accounts.

Musto joined Ascensus in 2017 after roles as president of Great-West Investments and CEO of J.P. Morgan Retirement Plan Services, as well as senior roles with Prudential Financial, CIGNA and Kamoon, a startup financial software company. He took the head job at Ascensus in 2020.

In September, Musto will cede the title of president to Nick Good, who is joining Ascensus with a background in wealth and asset management, most recently as CEO of Pendal Group. The repositioning, Musto says, will open up more space for him to focus on the things a CEO should do: growing and developing key areas of the business, from people to technology to the service offerings available to plan advisers, plan sponsors and, ultimately, participants.

Musto spoke with PLANADVISER on the cusp of this refocusing about small business plan creation, the importance of the adviser community in pushing forward changes in retirement and advancements in participant engagement.

PLANADVISER: Ascensus was an early mover on state-facilitated retirement plans for employees, which research has shown are also leading to private small plan business. Even so, with all that small businesses contend with, how can progress be made for more businesses to offer workplace plans?

MUSTO: If I had a magic wand to improve saver outcomes, among the top of my list would be having more, primarily small, companies adopting workplace savings programs. We know that about 25% of workers don’t have any retirement savings whatsoever. About 40% feel that they are not on track to a secure retirement, and the major driving force of a lot of those statistics is that we still have over 57 million people in the country that don’t have access to a workplace plan.

We’re very encouraged by bipartisan support [for increasing startup plans] and by a lot of the industry innovation and creativity that’s driving more plan formation. We’re also seeing an increase year-over-year in both the formation of plans, as well as small and midsize businesses looking for more institutional, high-quality solutions to serve their participants.

One of the challenges of the past was that the choices were limited: a 401(k) plan, take it or leave it, or maybe a SEP [Simplified Employee Pension] or a SIMPLE [IRA Plan]. But I think we and others in the marketplace have been pretty innovative. We have found a variety of structures that really are working well for these organizations.

You’re also seeing change on the distribution end of things. The retirement specialist adviser firms and aggregators, as well as RIAs and independent broker/dealers, have really figured out how to create more scale within their business models. In the past, they may have been more reluctant to dedicate the resources and the time to smaller plan opportunities. Today, it’s very high on the priority list.

PLANADVISER: You mentioned the distribution channels for small-to-midsize plans expanding. That seems to be joined by a push toward financial wellness for the participants going into those plans. What is your view on really getting traction on participant engagement?

MUSTO: Employees have a high level of trust in the workplace to deliver not only health benefits, but broader financial benefits and support. We know that there’s a large cohort of the American working population that does not have ready access to sophisticated financial advice and guidance as a function of not having accumulated very high levels of personal wealth. Which means that there’s a big gap there, and a big opportunity to help American savers save more and be more successful.

Regardless of your income and accumulated assets, you should be able to stand on an even plane in terms of being able to access the guidance and advice that’s right for you and your family, at different stages of your life. That’s happening now.

But I think there’s a real recognition that the saver is confused. We’re offering all these different solutions: 401(k) plans, 529 plans, health savings accounts, stock plans, nonqualified programs. There are few organizations that have been effective in bringing the complete financial picture and set of opportunities and choices to the saver and helping them make well-informed decisions around where they save the next dollar.

Ascensus has been unique in this regard, and it has been our strategy: to be that leading enabler of tax-advantaged savings programs. There’s a reason that we cover the gamut of all defined contribution and nonqualified plan types in retirement, as well as education: 529 programs, IRAs and so many other tax- advantaged vehicles. We see a vision of being able to help advisers and plan sponsors, and ultimately savers, make more sense of those varieties of opportunities and really tailor them for any given individual or family at a specific stage of their life.

PLANADVISER: How do you see the adviser’s role—whether a retirement plan adviser or an individual adviser—in this ecosystem of tax-advantaged savings?

MUSTO: Advisers have recognized and seen this opportunity; they see the workplace as being a trusted environment for individuals to be able to access advice and guidance with premier, institutional-quality programs. If you look at it from a choice perspective, an investment diversification perspective and a cost perspective, there’s a really good deal to be had in the workplace.

Advisers are also definitely looking to see how they can extend their defined contribution, retirement and other workplace relationships into wealth management relationships.

In this consolidating market with fewer administrators, advisory firms of scale and asset managers, Ascensus is finding success in really deepening relationships and interactions with a smaller number of the right partners and firms. That enables us to create more bespoke and tailored solutions so those firms can really enhance their value proposition and deliver a capability set that positions them well and also creates a lot of efficiency in the way that they deliver their services.

PLANADVISER: Let’s end on the saver. The tech is there, the products are either there or evolving rapidly, and the advice is there. But how are you really going to move the needle on the savings gap?

MUSTO: We are extremely focused on the participant. And our focus has always been helping more savers save more. That’s both getting them into programs and then helping to move them toward higher levels of successful savings. We think of it from the perspective of ease and enablement.

When you think about ease, we’re really focused in three areas. The first is creating fast lanes to saving: getting more participants into a program more rapidly and more seamlessly. We’ve been able to use our digital and analytic skills and experiences, data and design, plus our knowledge with behavioral finance, to create some very unique solutions that are driving more of those fast lanes.

The second piece under ease is really creating more of an integrated and unified view of the saver experience: Asking, ‘How can I look across the various tax-advantaged savings programs that I might be contributing to both inside and outside the workplace to be able to get a comprehensive financial picture?’

And then, finally, really focusing on simple, supported and seamless experiences. When people need to, because of a life event, think about changing their investments or look at a loan or need a distribution, all those processes need to be simple.

On the enablement front, it’s continuing to focus on how we provide participants with better visibility into how they are saving today and how that is going to translate into accumulated assets and, ultimately, an income in retirement. So that’s a big area.

We’re also using our expertise in analytics and digital experience to create more proactive calls and nudges. And sometimes that means getting people not to do certain things. For example, when someone accesses the Ascensus app to lower their contribution rate, we’ll immediately share with them a forecast of what that dollar decrease in contributions will translate to in terms of a reduction in retirement income. We find that almost 30% of individuals actually don’t take or postpone that action as a result.

The last part on enablement is that democratization-of-advice idea. Using financial wellness, managed accounts, other personalized solutions, in partnership with the adviser community, to ensure that the broadest group of participants and savers possible have access to high quality guidance. It’s the right and fair thing to do.