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1) Bennie and Betterment 401(k) Partner to Improve Financial Wellness

Business Wire  |  4/14/2021

Because… Betterment officially launched its 401(k) platform in January 2016 and has since grown rapidly. A few factors likely contributed to Betterment’s success. First, small professional services firms have helped it breakthrough despite the retirement plan market being dominated by the largest players. Small businesses tend to be more cost-conscious and less bureaucratic, which makes it easier to switch to a service provider and start a relationship with a new partner. Meanwhile, a highly educated workforce at professional services firms is more likely to be adaptable to the latest technology advancement. Second, Betterment’s use of ETFs, low plan fees, streamlined process, and personalized advice for plan participants have resonated well with plan sponsors. Third, with computer algorithm-based asset allocation, third-party underlying funds, automated rebalancing, and unbiased advice, Betterment’s role as a fiduciary helps plan sponsors meet their fiduciary obligations. For plan sponsors concerned about conflicts of interest or breach of fiduciary duties, the robo-advisory platform could provide a feasible alternative.

2) New Principal Survey: Many Employers Are Concerned about Employees’ Retirement Readiness

Principal  |  4/15/2021

Because… We have seen various research studies point to the same conclusion: many investors will not be ready for retirement if their current spending and saving patterns do not change. Lots of investors do not have a sense of urgency to save for retirement. Some of them are hoping to delay the retirement age to help with retirement income. Given employers are concerned about employees’ retirement readiness, financial services firms should collaborate with plan sponsors to help their plan participants get financially prepared for retirement. One of the approaches to motivate people to save more is to make use of behavioral finance. Since an individual’s retirement savings behavior can be influenced by their peers, financial firms can mine plan-specific data and share investors’ success stories with plan participants. A benchmark tool that allows plan participants to choose different criteria and receive plan statistics based on those factors could help people gain a better understanding of how they fare among peers and drive them to take positive, immediate actions.

3) ESG and SMA Usage Primed to Increase as Financial Advisors Service Next-Generation Investor Demand, New Broadridge Study Finds

Broadridge  |  4/19/2021

Because… The Broadridge survey found a majority of advisors across channels use ESG products, citing direct interest from investors, with 61% of advisors using ESG products and 81% of advisors who use ESG products planning to increase their usage over the next two years. But the forthcoming FUSE Research’s Product Special Report: ESG – A 360° View paints a somewhat different picture. FUSE discovered that “advisors have not described ‘meaningful demand’ for ESG investment strategies exists among their clients.” Despite the global hype and excitement around ESG, U.S. advisors are projecting only a modest increase of less than 7% in their use of ESG funds for client portfolios over the next two years. Another interesting finding from the FUSE study is that an “ESG label” is helpful but is not an absolute requirement for advisors. Just 19% of advisors consider it “very important” that a strategy is labeled “ESG,” while half of advisors view it as “somewhat important” and admit that an ESG label does factor into their evaluation process. However, for asset managers targeting the retail market, having an ESG label can help unsophisticated individual investors easily single out ESG products.