Q3 Reports Show Growth for Retirement Sector Providers

Several financial services firms with divisions operating in the retirement sector reported third-quarter earnings and business highlights this week, with results showing general market and participant saving resilience.

Fidelity Investments, which is not publicly listed, released business highlights on Thursday that included a 20% year-over-year increase in assets under administration to $11.5 trillion.

The country’s largest recordkeeper also noted a 6% increase in workplace investing plan participant accounts, with 610,000 new accounts bringing the total to 43 million participants.

That 6% growth was matched on the retail client account side as well, with 1.6 million new clients bringing the total to 38 million retail accounts.

Fidelity noted that 45% of those new accounts were opened by customers ranging from 18 to 35 years old. The financial services firm launched an app in September aimed to provide financial education and guidance to teenagers aged 13 to 17.

“Fidelity’s unique combination of businesses gives us the financial and operating stability to deliver resilient business results during both bull and bear markets,” Abigail Johnson, Fidelity’s chairman and CEO, said in a statement accompanying the report.

PRT Growth

Principal Financial Group, which is public, also released earnings on Thursday. The firm’s retirement and income solutions business reported a 30% sales increase in Q3 to $7.6 billion, including $600 million from pension risk transfer sales.

Operating earnings before taxes were also up quarter-on-quarter, by 48% to $304.7 million, according to the report. The firm’s asset management arm showed a less robust increase in pre-tax operating earnings of 7% to $222.4 million.

“Our diversified and increasingly integrated business model, as well as our industry-leading position in the small to mid-sized business segment, contributed to another strong quarter,” Dan Houston, Principal’s chairman, president and CEO, said in a statement. “We returned $356 million to shareholders during the quarter and remain confident in delivering our full year guidance.”

Aon, which also offers pension risk transfer services, noted a quarter-on-quarter increase in revenue from those services on Friday. The firm announced that its wealth solutions group saw “organic revenue growth of 4%” in retirement, in part from work related to pension de-risking, advisory demand and the impact of regulatory changes.

Managed Accounts Up

Morningstar Inc.’s Morningstar Retirement division, formerly named Workplace Solutions, added $2.7 million to the firm’s consolidated revenue growth for Q3, an increase of 10.8% quarter-on-quarter, according to the firm’s Wednesday earnings release.

Assets under management advisement grew 10.8% to $212.9 billion compared to the year prior, in part due to gains in the firm’s adviser-managed account offerings.

According to Morningstar, the firm is now offering managed retirement accounts to two of the 10 largest defined contribution retirement plans in the country with combined plan assets of almost $1 trillion, as of the end of 2022.

In a slide presentation accompanying earnings, the firm reported managed accounts as leading sales for the retirement division, followed by fiduciary services and then custom model collective investment trusts for retirement plan investment lineups.

On Friday, T. Rowe Price Group Inc. also reported its Q3 earnings. In the recordkeeper and investment firm’s quarterly filing, it showed target-date retirement products grew to $371.8 billion in the quarter, compared to $334.2 billion at the end of 2022.

“Our target-date products added another strong quarter, largely driven by our active security selection and differentiated portfolio construction,” Rob Sharps, T.Rowe Price’s CEO and president, said on a Friday earnings call. ”All vintages of the flagship retirement funds were in the top quartile versus peers, adding to their strong long-term track record.”

The firm’s recordkeeping division reported AUA of $234 billion, of which about $141 billion are assets the firm manages. That compares favorably with last quarter’s AUA of $206 billion, of which $125 billion was being managed by T. Rowe Price.