Empower’s TDF-to-Managed-Account Offering Clocks $21B in Assets

Empower, a division of Great-West Lifeco Inc., reported that its qualified default investment alternative offering that starts participants in a target-date fund and moves them into a personalized managed account has grown, less than seven years after its launch, to $21 billion in assets.

Empower Dynamic Retirement Manager, released in 2017, is now being used by 97,000 participants in 1,700 qualified retirement plans through September 30, the firm reported amid third-quarter earnings. The retirement manager is designed to increase personalization for participants “as they are accumulating assets early in their career and later rotates them to a managed account as their financial goals and asset picture emerge,” according to Empower.

On an earnings call Thursday, Empower President and CEO Ed Murphy noted that the firm will have more opportunity to grow its managed account and other participant offerings as retirement savers are transferred from its 2021 acquisition of Prudential Financial’s retirement business. In October, Empower migrated its largest wave of participants with 1.4 million, Murphy said, and another 2.2 million are slated to migrate over in the first quarter of 2024.

“One of the opportunities for us is to deepen relationships with those existing participants,” Murphy said on the call. “That comes in the form of other products and services that we offer within Empower that weren’t necessarily offered in the legacy Prudential business. … There are certainly revenue opportunities within the workplace services area—things like managed accounts and other services that participants will adopt over time.”

Small Plan Growth

On Monday, Empower also released data showing that its adviser-sold retirement plan business targeting plan sponsors with assets of up to $50 million has secured or booked sales of $10 billion through the year’s third quarter.

According to the recordkeeper, its smaller-plan program has onboarded 3,300 new plans with more than 250,000 participants. Of those plans, about 800 were startups.  

About 75% of those total sales have come from the firm’s Empower Select, a “packaged, off-the-shelf” offering advisers can offer clients. The recordkeeper works with more than 62,000 advisers on their retirement services offerings, according to the firm.

“We believe in the power of building alliances with advisers and third-party administrators who deliver such important value to the retirement ecosystem,” Rich Linton, president of workplace solutions for Empower, said in a statement. “We are thankful that so many partners recognize the value we bring and know that our highly skilled team shows up every day to offer a differentiated service experience and deep industry expertise.”

Focus on Adviser Services

Empower noted in the announcement Monday that it has made changes in its service model with retirement plan advisers and third-party administrators to enhance partnerships beyond product and administration.

“The new model makes dedicated support teams available to advisors and TPAs and opens lines of communication to allow for information to flow freely between new plan prospects, clients, their advisor, TPAs and Empower,” according to the statement.

The company also noted the launch of its Empower Proposal System, which offers advisers a way to request and manage retirement plan proposals through a dashboard. The recordkeeper specified it has been seeing more requests-for-proposal activity from plan sponsors in the last year than in “any previous year.”

More generally, Empower reported a 14% year-over-year increase in total assets under administration to $1.4 trillion, accounting for more than 18.3 million participants. Its consumer wealth and asset management division, built up in recent years, reported a 30% year-over-year AUA as driven by net inflows and higher markets. Asset capture from the defined contribution business was up 50% year-over-year, which Empower attributed to improved “sales effectiveness” and an enhanced dashboard for investor engagement.

Great-West President and CEO Paul Mahon also noted on the call that the sale of Putnam Investments to Franklin Templeton was on track to close at the end of this year. He noted that, as of now, Putnam is “classified as discontinued operations” for Great-West.