The Secure Act Changes Everything: The Money in Motion will be Trillions

Hasn’t the phrase Money in Motion always been the siren call to advisors signaling opportunity. In the defined contribution space, the Money in Motion that is about to happen may be the largest ever.

We have all know for decades that the retirement system in the U.S. is broken. It broke over time when the defined benefit plan began disappearing and the 401 (k) became the de facto replacement, something that was never supposed to happen.

So today we have 550,000 401 (k) plans with over 8 trillion in assets and 85% of those plans have under $50M in assets, i.e. “The Small Plan Market” A market that is dominated by brokerage, mutual fund and insurance companies who provide plans to small business that often result, because of the excessive fees and conflicts, in a better retirement for the vendors than the participants.

Knowing this the congress finally did something on a bi parison basis no less. Enter the Secure Act in late 2019. Regulatory changes are being made to improve retirement outlooks for employees of smaller organizations accomplished by revising or eliminating rules and regulations which impose unnecessary costs and burdens on small businesses, that hinder the formation and operation of workplace retirement plans.

Enter the Pooled Employer Plan, the PEP, which enables multiple organizations to band together into a single plan and streamlines the process of offering and maintaining a retirement plan because Employers no longer need to sponsor their own 401(k)s and absorb the risks and workload associated with that role. The result, through economies of scale a plan integrated services and almost full risk mitigation at a lower cost than a stand-alone plan.

The PEP is perhaps one of the most revolutionary changes in modern financial history – and small businesses are taking notice.

“A 2020 Cerulli Associates report found at least one quarter of 401(k) plan sponsors are at least somewhat interested in joining a PEP, but more than one-third (36%) of small 401(k) plan sponsors (with less than $5 million in plan assets) expressed 'no opinion' on the topic,” reports 401(k) Specialist.

Recent data from Financial Times Financial Advisor IQ indicates a staggering 17.5 million not-too-experienced fiduciaries are overseeing $26.6 trillion in retirement assets, indicating this segment is ripe for disruption by PEPs.

Some experts predict that as many as 50% of small business plans will find their way into a PEP within the next 5 years.

If any of this is right if means the Money in Motion will be $trillions and the opportunity huge.

Why wouldn’t ever advisor jump in? If it were only that simple, they would. But the having a 401(k) business line is complex, time consuming and expensive to implement and run. The barriers to entry are significant.

That’s why NS Capital created the PEP Partnership, to eliminate these barriers and allow a select group of RIAs to literally “BOLT ON” a 401(k) business line with little or no cost or work. All the opportunity with none of the hassle.

View the NS Capital webcast here.

Related: NS Capital Opening New Doors for Revenue and Leads in Pooled 401(k) Space