Data & Research June 15, 2023

Auto Enrollment Drives Record Plan Participation, Vanguard Reports

After adoption of automatic enrollment increased consistently over 15 years, plan participation reached a record high in 2022.

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Automatic enrollment and automatic annual increases have driven participation rates in 401(k) plans recordkept by the Vanguard Group to an all-time high, according to the firm’s annual “How America Saves” report.  

Since the passage of the Pension Protection Act in 2006, adoption of automatic enrollment has more than tripled, according to the Valley Forge, Pennsylvania-based asset manager. The study indicated that at year-end 2022, nearly 58% of plans and 76% of plans with at least 1,000 participants have adopted the design. Accordingly, last year saw record plan participation of 83%. 

The news from Vanguard comes as the SECURE 2.0 Act of 2022’s first provision, Section 101, requires auto-enrollment and auto-escalation for new plans.  

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“To date, many of our plan sponsors and consultants have taken tangible steps to improve plan design with features such as automatic enrollment and automatic escalation,” John James, managing director of the institutional investor group at Vanguard, said in a statement. “Many are starting to make their plan a destination by introducing financial wellness features to their benefits packages.” 

Vanguard also found that participants kept saving in 2022 despite market volatility. The average deferral rate was 7.4%, a record high, and nearly 98% of plan sponsors also offered some type of employer contribution, helping the total average contribution rate reach 11.3%.  

Meanwhile, participant trading in retirement plans was muted in 2022. Only 6% of defined contribution plan participants traded within their accounts. On a net basis, there was a shift of 1% of assets to fixed income during the year, with most traders making small changes to their portfolios. 

Participant trading has declined significantly over the last 15 years, and Vanguard’s report attributed the decline to the increased adoption of target-date funds and retirement savers valuing buy-and-hold strategies.  

“Building on the proven benefits of smart plan design, employers are increasingly exploring more comprehensive efforts to help their employees reach their long-term financial goals,” James said in a statement. “In addition to advice, forward-thinking plan sponsors are offering financial wellness tools such as student debt paydown and supplemental savings accounts like HSAs.” 

Vanguard data included in “How America Saves 2023” report was drawn from several sources, including the firm’s defined contribution clients and recordkeeping clients.  

Deals & People June 15, 2023

SageView to Acquire Retirement Benefits Group’s Founding Team

The advisory aggregator will acquire retirement plan consulting firm leads with $5.2 billion in assets under administration.

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SageView Advisory Group will acquire the founding team of Retirement Benefits Group, bringing on its retirement plan consulting capabilities and wealth management.

RBG co-founders Tony Franchimone and Larry Deatherage will become managing directors at SageView, bringing on $5.2 billion in assets under administration and $63 million in assets under management, according to an announcement from Newport Beach, California-based SageView. Franchimone and Deatherage, who started RBG in 2010, will be joined by retirement plan consultant Cory McCarthy, wealth adviser Winston Ventura and client services associate Rachel Hall. 

SageView CEO Randy Long says the fact that RBG was operating in both retirement plans and wealth management made them a strong fit and that Franchimone and Deatherage are particularly knowledgeable about managed accounts. 

“We’ve been competing with Tony and Larry for 20 years, and we’re glad that we’ll now be working together with them,” Long says.

The head of SageView says the RBG founding team was also a good regional fit, while he believes SageView’s size and capabilities will help the RBG team grow its wealth management practice.

“It just shows that you need really need scale to compete in this business,” he says.

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SageView did not disclose terms of the deal. The transaction is expected to close on June 30.

The acquisition is SageView’s ninth since July 2021, when private equity firm Aquiline Capital Partners took a majority stake in the firm with the stated goal of bringing together retirement services and wealth management, as well as expanding financial wellness offerings. Earlier this year, the firm launched its own financial wellness and education platform for participants.

SageView currently advises on more than 1,900 defined contribution, defined benefit and deferred compensation plans, in addition to providing wealth management services. The firm continues to identify new advisers who are a “strong cultural and growth fit” through acquisitions and recruiting, according to the announcement.

San Diego-based RBG provides retirement plan consulting solutions, executive benefits and retirement management services.

“SageView’s centralized support teams in practice management, advisory services, marketing and business development provide the support we need to continue our growth and success serving retirement plan sponsors,” Franchimone said in a statement. “We will also be able to evolve our wealth management technology and operations with SageView.”

Long of SageView noted that the firm will continue to look for advisory teams that are a good match.

“There are benefits of scale that we can provide that small providers are really looking for,” he says.

RBG had more than a dozen other team members located in 13 offices around the U.S., according to the firm’s website. The firm became an affiliate of OneDigital in 2020 when the retirement consulting and wealth aggregator acquired Resources Investment Advisors LLC, bringing on 13 retirement plan and wealth management firms, including RBG.

George Fraser, formerly a managing director with RBG, says he and the other RBG advisers will continue to operate as they have been: running independent practices in affiliation with aggregators OneDigital, in his case, and for some other advisers, Hub International. 

“It has been a great run for the team at RBG,” Fraser says. “We wish Larry and Tony the best of luck.”

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