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Pair of acquisitions shows increased demand for retirement planning technology

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Two new M&A deals involving retirement technology suggest vendors see rising demand from advisors for tools that help clients in the decumulation phase of their financial life.

The acquisitions also come as millions more Americans enter retirement; all of the nation’s 73 million baby boomers will be age 65 or older by 2030, according to the Census Bureau.

Dream Forward is selling its 401(k) business, which includes technology designed to simplify the administration process for plan sponsors, to Expand Financial, a Denver-based retirement industry consultant. Dream Forward will continue as an independent business licensing its retirement-focused chatbot to wealth management firms.

The acquisition came a day after Tegra118, formerly the financial services unit of Fiserv, acquired retirement planning technology RetireUp. Tegra118 plans to use its first acquisition to improve its existing financial planning tool with RetireUp’s capabilities.

Advisors focusing more on retirement income is one of the biggest trends in financial planning, says Tegra118 CEO Cheryl Nash. And in light of the coronavirus-damaged economy, baby boomers entering retirement are more worried than ever if they have saved enough, she says.

“People are living paycheck to paycheck and unemployment is rising. It’s so important for people to save and have goals,” Nash says.

Financial planning for clients still accumulating wealth is becoming more commoditized because of the ubiquity of planning technology, says RetireUp President Michael Roth, echoing sentiment found in Financial Planning’s latest Tech Survey.

The decumulation side remains an area where advisors can offer differentiated value, he says.

“There is a lot of nuance [in retirement planning],” Roth says. “It’s not just investing and parking your money in a portfolio.”

Meanwhile, new legislation like the SECURE Act and CARES Act are changing the rules on retirement planning and putting pressure on margins, says Dream Forward CTO Ryan Kahn. Firms must offer higher quality products and services at a lower cost, which is where artificial intelligence can help.

By focusing solely on the technology, Dream Forward can improve its white-labeled AI’s abilities to handle all of the nuances of retirement planning, Kahn says.

“Our chatbot helps people understand what’s going on in their retirement plan… I want to invest in that and keep building that out,” Kahn says.

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