The 401(k) industry is undergoing significant changes due to consolidation and convergence, driven by the increasing demand for plan sponsors to support employees and the need for providers and advisors to find new revenue sources as plan fees decline. At the P&I DC East Conference, panelists from firms like Empower, Captrust, and Hightower discussed the competitive dynamics and the need for partnerships to improve participant outcomes. Record keepers must scale to compete, with major players like MassMutual and Prudential selling their DC record-keeping businesses to consolidators.
The industry focus is shifting towards personalization and engaging all participants, particularly those with fewer assets, as plan sponsors seek more comprehensive support. Advisors face challenges around data availability and managing risk, especially when offering participant advice. The importance of plan sponsor engagement in driving wellness program success was highlighted, along with the need for non-specialist advisors to enter the 401(k) market, particularly for businesses with assets under $3 million. Despite these challenges, leveraging technology and partnerships remains key to addressing these shifts.
Fred Barstein dives deeper into these topics in his latest article, “How Consolidation and Convergence Are Reshaping the 401(k) Industry.”
