Capital Group Partners With Financial Finesse to Reach Large Plan Sponsor Market

Financial Finesse’s financial wellness coaching will now be available to prospective Capital Group clients in the large plan sponsor market, as the firms plan to expand an earlier product partnership.

Capital Group, which owns American Funds, revealed the partnership on Tuesday following an announcement that its institutional retirement group will seek to drive business growth through “offering solutions and services that complement its investment products.” Part of those solutions included wellness and engagement programs for employers “with a focus on helping employees to smoothly transition into retirement.”

The Los Angeles-based financial firm will now offer Financial Finesse’s wellness program to clients in the large plan sponsor market at no additional cost for plan sponsors or their participants, according to the announcement. Plan participants will receive unlimited access to a digital financial wellness hub, a virtual financial coach and interactive guide called Aimee, live webcasts and a team of certified financial professional coaches available via phone and live chat.

Using Financial Finesse during an initial trial run, Capital Group increased the score of participant engagement by 8.2%, according to Brendan Mahoney, senior vice president and head of institutional retirement strategic growth at Capital Group.

In the initial program, Financial Finesse’s coaching was accessible to Capital Group DCIO clients in the midsize plan sponsor market and PlanPremier full-service recordkeeping clients in the large plan sponsor market, Mahoney says. The program was Capital Group’s first venture into the financial wellness space.

“We launched this effort back in the fall of [20]21, because of the noise we were hearing from our clients,” Mahoney says. “The advisers involved in the pilot feel like we are helping them scale their business. That’s a big deal.”

“Within 15 months of the initial program’s launch, plan sponsors saw participant engagement of over 38%—well above industry benchmarks,” Liz Davidson, founder and CEO of Financial Finesse, said in a statement. “The program also proved that integrating financial coaching can drive a significant increase in assets under management for retirement plan advisors.”

Mahoney says institutional retirement at Capital Group is about 50% of the firm’s sales and about 40% of their assets in 2023. Initiatives, like with Financial Finesse, are meant to help the firm focus on institutional retirement, as well as grow its wealth management business.

“Capital Group is really working to wrap as much value, Financial Finesse being an example, around our investments story,” Mahoney says. “It is a critical piece of what we’re really looking to do going forward in our institutional retirement business.”

Capital Group’s American Funds ranks among the largest target-date fund providers by assets, along with the Vanguard Group and Fidelity Investments, according to the latest data from ISS Market Intelligence Simfund, which, like PLANADVISER, is owned by Institutional Shareholder Services Inc.

In Capital Group’s institutional retirement announcement this week, it noted continued focus on the expansion of collective investment trusts for defined contribution retirement investing. Capital Group also called out continuing to focus on its qualified default investment alternatives, retirement income options (both in and out-of-plan) and wealth management areas, including model portfolios, 529 education savings and high-net-worth management offerings.