Deals & People August 24, 2023

Future Capital and Wealth Advisory TLG Partner On 401(k) Investment Management

Deal to connect 401(k) accounts to wealth advisory signals further push in retirement and wealth management convergence, says Future Capital CEO.

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Future Capital, which integrates a financial advisers client portfolio with existing 401(k) assets, has penned a partnership to provide its offerings to registered investment advisory TLG Advisors, according to a Tuesday announcement.

TLG, which manages $1.6 billion in client assets, will have access to Future Capital’s customizable 401(k) managed account options to provide more personalized advice within defined contribution saving plans. It will also gain access to so-called held-away 401(k) assets that clients may otherwise be managing through their workplace plan, a service that Future Capital CEO Jay Jumper says is heightening as wealth managers look to manage clients’ full portfolio, including 401(k) plans.

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“The retirement and wealth convergence is real,” Jumper says in regard to the firm’s latest deal. “With partnerships like this, we are equipping advisers with the data, insights, and tools to create new growth opportunities.”

Future Capital’s services will be rolled out to TLG’s more than 260 advisers in the coming weeks, according to the announcement. Their managed account solution, has a monthly fee that ranges from $9 to $409 depending on the size of the account, according to the firm’s Form ADV regulatory filing.

“Our mission has always been to stand alongside our advisers, ensuring they have the resources, support, and freedom to serve their clients best,” Benjamin Tiller, director of advisory services at TLG Advisors, said in a statement. “Partnering with Future Capital means bringing another robust, tech-forward solution to our advisers, enhancing their ability to manage assets both in- and out-of-plan.”

Insurance and employee benefit aggregators have been acquiring RIAs for years as they seek to offer retirement plan solutions and personal wealth management services under one roof. More recently, predominantly wealth management firms have been acquiring retirement plan solutions and advisory services as well. Notable recent deals have included Carson Group’s acquisition of Northwest Capital Management, Savant Wealth Management adding Capital Direction, and Merit Financial Advisors acquiring Allegiance Retirement Solutions Inc.

The Future Capital relationship is set to help TLG’s advisers compete and win clients who are shifting to a retirement focus in their investing and planning, according to Jumper.

Currently, much of the retirement plan participant data and connections sit with retirement plan providers, according to Jumper, which limits the ability for financial advisers to manage retirement plan assets with other investments.

“Right now, the adviser doesn’t have the data,” Jumper says. “We are an extension of the adviser, and we want to be able to get as many data points as we can, and the only way you are going to get that is with engagement with the participant, or the investor.”

In a separate announcement earlier this week, Pontera, a financial technology firm that also syncs financial advisers with clients’ retirement savings accounts, made a deal with Summit Financial LLC, an RIA overseeing $9 billion in client assets. That announcement added to recent partnerships Pontera has signed with SageView Advisory Group and Founders Financial Securities LLC.

Future Capital, which is based in Chattanooga, Tennessee, rebranded from ProNvest Inc. earlier this year.

Data & Research August 24, 2023

Investors Nearing Retirement Seek Strong Support and Brand Familiarity, Cerulli Reports

Latest research found 45% of investors prefer an adviser affiliated with a national firm when they are nearing retirement.

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Investors who are within five years of retirement sought out advisers with robust support offerings and favored brands familiar to them, according to the latest research from Cerulli Associates focused on U.S. retail investors.

Generally, 27% of investors are adviser reliant. However, five years before retirement 46% of investors become adviser-reliant, which jumps even further when they are one year from retirement to 57%.

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And as their reliance on advisers increases, their preference for familiar brands grows as well. At the point of retirement, 45% of investors want an adviser connected with a national firm, compared to the baseline of 39%. Meanwhile just 20% have no preference about adviser type at retirement, a drop from the original 30%.

“This underscores the importance investors place on the reliability of their advisory relationships as they enter this stage of life,” Cerulli said in a statement with the research.  

The research underscores the importance of name recognition and scale when near-retirees turn to financial advisement and personalization. Insurance, retirement, and wealth management adviser aggregation has been strong this year despite a high interest rate environment, particularly when it comes to retirement-related deals, according to recent research from consultancy MarshBerry. Meanwhile, recordkeepers with workplace name recognition continue to lean into wealth management connection to participants, with Empower launching a marketing campaign for its personal wealth division, and Principal Financial Group rebranding its asset management arm.

Cerrulli’s research found that 39% of investors prefer dedicated home-office teams for portfolio management, followed by 29% of respondents who opted for individual advisers, Cerulli found.

The firm said investor preferences align with its best-practice recommendation of having client-facing advisers identifying key factors affecting portfolios, while implementation is managed by separate dedicated resources. 

To gain share in the retiree market, firms and practitioners should consistently emphasize their commitment to clients’ best interests and highlight their support resources, Cerulli recommended.

“While most investors have little familiarity with the term ‘fiduciary,’ this type of relationship is the core of client preference,” Scott Smith, director of advice relationships, said in a statement. “Communicating this commitment believably in terms that clients understand is vital to ongoing client acquisition, especially as prospects approach their anticipated retirement date.”

The heightened need for engagement by participants nearing retirement has also been a focus for defined contribution investment innovations. Empower was a pioneer in 2017, to introduce a dynamic qualified default investment alternative that automatically defaults a participant into a managed account option when near retirement. More recently, John Hancock Retirement and Principal Financial Group announced similar offerings in 2023, and Voya Financial has one under consideration.

According to separate Cerullia research, hybrid QDIAs have had some uptake in recent years. In a survey of target-date product managers, 11% of assets were held in dynamic QDIAs as of year-end 2021, up from 2% in 2019.

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