Deals & People June 10, 2020

CAPTRUST Continues M&A Push With Lakeside Wealth Acquisition

The addition of the $1.6 billion firm underscores the convergence of retirement plan advising and wealth management practices.

Reported by

CAPTRUST Financial Advisors has announced that Lakeside Wealth Management, based in Chesterton, Indiana, has joined the firm.

The Lakeside team brings to CAPTRUST $1.6 billion in assets under advisement (AUA) and 27 employees, increasing CAPTRUST’s nationwide headcount to more than 700.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

This is CAPTRUST’s 41st transaction since 2006. Speaking last year with PLANADVISER about CAPTRUST’s planned merger and acquisition (M&A) activity, the firm’s leadership emphasized the importance of bringing together personal wealth management and retirement plan services business for future growth and profitability. The CAPTRUST leaders said the firm is eagerly building business models that can support advisers working with both private wealth management and institutional clients—adding that serving retirement plans and private individuals simultaneously does not mean its advisers will be aggressively soliciting rollovers or engaging in other potentially problematic cross-selling behaviors barred by the Employee Retirement Income Security Act (ERISA).

Instead, they said, building a firm that does both private wealth and institutional retirement plan business is about creating a holistic service ecosystem that clients want and need, especially as the defined contribution (DC) plan system matures and becomes a key component of individuals’ retirement income.

For its part, Lakeside provides retirement plan design, investment management and participant education for institutions. It also provides financial planning, retirement goal setting and legacy planning for wealth management clients. The firm was founded in 2002 by CEO Mark Chamberlain and is also led by President Tim Rice and senior leaders Chip Mang and Timothy VerSchure, who will all be joining CAPTRUST as principals.

“Lakeside Wealth Management is an ideal fit for CAPTRUST not only because of the alignment across their three lines of business, but also because they are a firm that prioritizes giving back to their community,” says Rick Shoff, a managing director in CAPTRUST’s Advisor Group. “Despite these unprecedented times, we are continuing on our trajectory of strong organic and inorganic growth.”

Shoff notes the firm has volunteered more than 20,000 hours and received many accolades for its efforts, including being named to the 2019 Invest in Others Charitable Champions List. Lakeside team members will now be able to work with the CAPTRUST Community Foundation, CAPTRUST’s employee-run nonprofit that seeks to enrich the lives of children in the communities the firm serves.

Data & Research June 10, 2020

Retirement Plans Start to Think About How to Produce Retirement Income

Vanguard says that meeting these income needs, along with encouraging strong savings rates and diversification, are the primary drivers in creating successful retirement outcomes.

Reported by

Vanguard has released its “How America Saves 2020” report.

In the updated analysis, Vanguard says that while the emphasis among retirement plan sponsors has been on automatic enrollment, sponsors are beginning to explore ways to produce retirement income. Along with strong savings rates and diversification, such solutions can produce successful retirements for participants, Vanguard says.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

The use of automatic enrollment has more than tripled since year-end 2007. As of the end of last year, 50% of Vanguard plans were using automatic enrollment, and among plans with 1,000 participants or more, 71% were. In 2019, 63% of participants were in plans using automatic enrollment.

Two-thirds of automatic enrollment plans have paired that feature with automatic escalation. Fifty-five percent of plans automatically enroll participants at a deferral rate of 4% or higher, up from 28% in 2010.

Ninety-nine percent of plans with automatic enrollment default participants into a balanced investment strategy—with 98% using a target-date fund (TDF). At the end of 2019, 62% of all Vanguard participants were solely invested in an automatic investment program—up from just 7% at the end of 2004 and 25% at the end of 2009.

Fifty-four percent of all participants were invested in a single TDF, 3% held one other balanced fund and 5% used a managed account program. Among those entering the plan for the first time last year, nearly nine in 10 were solely invested in a professionally managed allocation. Vanguard estimates that by 2024, eight in 10 participants will be solely invested in an automatic investment program.

Ninety-four percent of sponsors offered TDFs at the end of 2019, up from 79% of plans in 2010. Ninety-eight percent of Vanguard participants are in plans offering TDFs, and 78% of participants use TDFs. Two-thirds of participants owning TDFs have their entire account in a single TDF.

Forty percent of TDF investors chose the funds on their own, not through default.

The estimated plan-weighted participation rate in 2019 was 83%, up from 76% in 2010. The participant-weighted participation rate was 76%, up slightly from 72% in 2010. Plans with automatic enrollment have a 92% participation rate, compared with just 61% of plans with voluntary enrollment. The average deferral rate in 2019 was 7%, unchanged from 2010. The median deferral rate was 6% last year, also unchanged.

Adding in employer matches, the average total contribution rate in 2019 was 10.7%, and the median was 10%. Vanguard says these figures have remained steady for the past 15 years. Employees under a voluntary enrollment design save an average of 6.6%.

At year-end 2019, 74% of Vanguard plans offered a Roth 401(k), and 12% of participants elected the option.

In 2019, the average account balance was $106,478 and the median balance was $25,775. Both the average and median balances were up 16% from the year before.

Last year, 76% of participants were in a balanced strategy, up from 37% in 2004. Three percent of participants held no equities, and 4% had more than 20% of their balances allocated toward company stock. This is down from 13% and 19%, respectively, in 2004.

In 2019, only 7% of defined contribution (DC) participants made a trade in their accounts. On a net basis there was a shift of 1.3% of assets to fixed income. Vanguard says trading in accounts has declined in the past decade, primarily because of the use of TDFs. Only 2% of participants holding a single TDF made a trade in 2019.

Since 2006, fewer participants have held company stock. Thirty-one percent of participants had 20% or more of their balance in company stock in 2010, but this fell to 15% in 2019. While 11% of plans offered company stock in 2010, only 8% did so last year.

Thirteen percent of participants had an outstanding loan in 2019, down from 17% in 2014. The average loan balance was $9,900. In 2019, 3% of participants took a hardship withdrawal, up from 2% in 2018.

Eighty percent of participants who had separated from service still held their assets in the plan or had rolled it over to an individual retirement account (IRA) or new employer plan.

Vanguard says sponsors are looking for ways to help retirees within the plan, with 62% allowing them to withdraw assets in installments and 32% permitting partial withdrawals.

«