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Small(er) Market Opportunities to Increase with SECURE 2.0: NAPA 401(k) Summit

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The passage of the SECURE 2.0 means more opportunity in the small and micro-plan markets, something to excite advisors. Yet, suppose they fail to act to close the retirement plan coverage gap. In that case, the federal government might intervene, something advisors should fear and a recurring theme throughout this week’s NAPA 401(k) Summit in San Diego.


“The Big(ger) Opportunities in the Small(er) Market: What Providers Wish Advisors Knew” was one of several sessions focused on the issue, featuring Mike Griffin of UBS, Equitable’s Fred Makonnen, Ascensus CEO David Musto, and Vestwell CEO Aaron Schumm.


And while legislation is driving the focus, technology plays a significant role as well, scaling a once cost-inefficient small plan space for advisors.


“What we’re seeing is that advisors who were hesitant to engage in the small plan space are now basically just jumping in,” Schumm said in a post-session interview. “SECURE 2.0 has been the tipping point. I think the overall appetite has been, ‘Listen, if we don’t get in a small space, someone else is going to, so we have to.’”


While not necessarily worried about a possible government takeover of the private retirement plan market, a possibility American Retirement Association CEO Brian Graff raised in his opening keynote, it is something Schumm and Vestwell are watching.


“If something were to get rolled out at a federal level, I could see it functioning somewhat like on the state side,” he argued. “The states are saying, ‘Hey, you have to do something, and if you don’t have something, here’s a state program. I could see the federal construct coming to light in a similar capacity. The devil is in the details with what the fed would end up doing and when that would happen. I think the concern I have is if it were a mandated program where you’re going to use the fed structure, that would stagnate innovation.”


Vestwell, a digital disruptor in the retirement plan provider and recordkeeping industries, is on a tear of late, announcing major platform upgrades in late 2022 and securing significant funding in recent years.


“I feel like this pent-up momentum has finally been unleashed,” Schumm added. “It’s been incredible to watch. We just rolled out a couple of big partnerships. We’re growing 150-plus percent again this year, so it’s been fun. I feel like we made it to the top of the hill. Now it’s just about how fast we can run down it and have some fun along the way.”