Envestnet, Empower Launch 401(k) Plan Solution for Financial Advisers

Envestnet and Empower have launched a 401(k) offering for financial advisers aimed at capturing growing demand from wealth managers for a cost-effective retirement plan option with fiduciary and investment support.

Envestnet’s Retire Complete overlays the firm’s 3(38) fiduciary service and investment selection methodology with Empower’s participant platform for use by advisers either offering, or interested in offering, qualified retirement plans to clients.

“There’s 600,000 plans today, but there’s millions of businesses … without an employee retirement plan,” says Sean Murray, Envestnet’s head of retirement. “We wanted to create an easy button for wealth advisers to create a plan or move a plan into an appropriately priced model.”

Empower’s vice president of national accounts, Chris Doucet, called the relationship a “big win” for the recordkeeper in terms of the firm’s investment technology and adviser network.

“Advisers are always looking for ways to streamline working with Empower,” Doucet says. “We look at this as another way that we can engage with more advisers and connect with them and their clients from an opportunity standpoint.”

Retire Complete includes:

• Fiduciary support and investment selection and monitoring from Envestnet;
• Empower’s digital participant experience that can integrate a participant’s financial picture according to provided inputs;
• Empower’s plan sponsor communication tools for employers to send tailored messages to participants;
• A suite of investment options from Envestnet’s pre-set core menu, including active and passive investment strategies; and
• Four target-date providers as the qualified default investment alternative, to be selected by the adviser from providers American Century, Prudential Financial, Putnam Investments (owned by Franklin Templeton) and T. Rowe Price.

That TDF option for advisers is crucial for the adviser community, Murray says, to provide them “familiar names” to consider when building the plan. “If we had not given that choice, we would have alienated a huge portion of our adviser community,” he says.

Envestnet and Empower are banking on wealth manager demand for the solution in part due to increased plan need stemming from SECURE 2.0 Act of 2022 incentives, along with state mandates for businesses to offer a plan.

Meanwhile, Murray notes, retirement plan advisories are continuing to build out their wealth management divisions to support both plan and financial advisement. With that backdrop, passing off a retirement plan request—which may have been a fine strategy in the past—may be a business risk.

“[Financial] advisers can’t ignore this business anymore,” Murray says. If they do, another advisory is “going to take that account.”

In an initial call with advisers, Envestnet and Empower saw interest from advisers both for startup plans and for those already managing retirement plans of at least $30 million in client assets, according to Murray.

Retire Complete is available to advisers via a request for log-in on Envestnet’s website.