Like the Cleveland Cavaliers, the newly minted Empower-Retirement has put together a dream team combining three stars that, on paper, seem to mesh well.
But as the Cavaliers are finding out, combining the talents of three organizations with different cultures can be challenging. So what’s the future look like for Empower, their advisor partners and their competition? I sat down recently with CEO Bob Reynolds, who built the Fidelity retirement juggernaut, and Ed Murphy, head of Empower-Retirement, to ask those questions.
With Great-West’s operational excellence on the Fascore platform, Putnam’s reputation for innovation and user front ends, and JP Morgan’s expertise in data analytics and participant engagement — each serving a distinct market — the combination seems to fit well on paper. Together they serve almost 8 million participants in the corporate market (ranging from the smallest plans by Great-West to mid-market plans by Putnam focusing on elite advisors and aggregators), plus the mega market (mainly sold direct by JP Morgan). When you include the largest 457/government and 403(b) plans, the group seems to cover all market segments and all plan types — throwing down the gauntlet to would-be competitors.
Their vision for the future includes:
- migration of JP Morgan plans to the Fascore platform used by Putnam and Great-West by late 2016 or early 2017; and
- providing the same level of service and technology to all size and plan types with larger ones getting more customization.
With access to data on so many participants, Empower will try to help clients, which include advisors, plan sponsors and participants, get smarter and more personal. Leveraging their insurance division, they hope to imbed annuities within TDFs, a notion that the DOL seems to be favoring, to help ensure people don’t outlive their savings. Their vision for plan design is to try to make it simple to succeed and hard to fail, incorporating befi and auto-plan innovations.
Murphy suggested that we are in the 2nd inning of a 9-inning game, with more provider consolidation coming and more innovation to personalize products and engage more deeply with clients. Committed to the advisor market, both Reynolds and Murphy both suggested that to grow a sustainable business, advisors:
- need scale — heralding the growth of teams and aggregators;
- must demonstrate how they are making a tangible difference to more sophisticated clients; and
- must stay ahead of industry trends if they want their clients to view them as thought leaders.
Big teams and aggregators which have as many as 30 to 40 record keeper relationships are looking to winnow that down to five or less. They are looking for providers that serve multiple markets, can and will supply participant data, and enable advisors to differentiate themselves as their services come under extreme price pressures. Empower seems to have one of the seven to nine seats at the table for advisor sold record keepers, and is sitting in the upper tier. It now comes down to execution and people — not fantasy teams that look unbeatable on paper.
