Welcome to this week's edition of 401(k) Real Talk, where Fred Barstein, a seasoned industry expert, takes the reins as a contributing editor for Wealth Management's RPA channel and CEO of TRAU, TPSU, and 401kTV. In this episode, Barstein delves into the week's top stories, offering a unique perspective that you won't find anywhere else. Get ready for an insightful journey through the world of retirement planning and industry trends.
Job Growth and the Uncertain Economy
Barstein kicks things off with a discussion on the recent job growth numbers, which took a step back in June. With just 57,000 positions created and April and May numbers revised downward by 74,000, the picture is far from rosy. The culprit? Soaring inflation, driven by higher gas prices and tariffs, and a shrinking workforce due to strict immigration policies. The Supreme Court's decision to strike down Temporary Protection Status is expected to make things even tighter. Barstein highlights the uncertainty surrounding the impact of AI on job creation, leaving the future of hiring and interest rates in a state of flux.
Hub International's IPO and the Private Equity Landscape
Moving on, Barstein turns his attention to Hub International's highly anticipated initial public offering (IPO). The company, valued at $29 billion in its latest round with T Rowe Price, has a fascinating history. In 2013, Hellman & Friedman took Hub private at a $4.4 billion valuation, and in 2023, Leonard Green invested at a $23 billion valuation. With current revenue at $5.2 billion and EBITDA between $1.3 and $1.6 billion, Hub's Retirement and Private Wealth division, which brought in $300 million in revenue, has been on an acquisition spree, focusing on wealth firms. Barstein notes that companies preparing for an IPO often undergo cost-cutting measures, layoffs, and operational streamlining, while also investing in infrastructure and compliance.
The Rise of Record Keeper Technology
In a thought-provoking segment, Barstein explores the evolving relationship between advisors and record keeper technology. NMG Consulting partner Josh Dietch's column reveals that advisors are prioritizing record keeper technology over cost, a trend that Barstein calls the 'silent differentiator.' The focus is on removing friction and making business seamless for hybrid advisors, who want to offer wealth services while maintaining a robust defined contribution (DC) practice. RPAs, or retirement plan advisors, seek technology integration, fiduciary analytics, and participant engagement. Specialists, on the other hand, are looking for tech partners to create a shared digital experience for clients. Barstein predicts that this shift will accelerate RK consolidation, as tech and wholesaling costs become the largest expenses, potentially leading to further fee declines.
Empower's Acquisition of Milliman's Retirement and Benefits Administration
The final story in this episode is a significant one: Empower's acquisition of Milliman's retirement and benefits administration. With approximately 750,000 participants in both defined contribution (DC) and defined benefit (DB) plans, and $50 billion in DC assets, the deal is a strategic move. Barstein suggests that the crown jewel of this acquisition is the benefits administration, as Empower aims to integrate wealth, retirement, and benefits at the workplace. He also draws parallels between this development and the healthcare industry's fee and fiduciary scrutiny, which mirrors the challenges faced by DC plans two decades ago.
Wrapping Up
As the episode concludes, Barstein leaves readers with a list of additional stories worth exploring, including the DOL rule's potential impact on retirement income, record keepers' preparation for increased demand, the unique advisor support needs of small business owners, Principal's introduction of a new retirement income option, and the nomination of a new Labor Secretary by President Trump. He invites readers to engage with the topic and share their thoughts, looking forward to continuing the conversation next week on 401(k) Real Talk.
This episode of 401(k) Real Talk offers a comprehensive and insightful look at the week's most significant industry developments, providing a unique perspective that only a seasoned expert like Fred Barstein can deliver.
