Daunting record-keeping demands, regulation and client acquisition challenges have held back innovation in the retirement space.

But that is changing, as established plan providers are teaming up with startups to upgrade their tech capabilities.

The latest partnership is between John Hancock Retirement Plan Services and enterprise tech firm Next Capital, which will provide a platform for John Hancock to offer robo advice and digital service to its 401(k) and IRA rollover clients.

"The ability to provide high quality savings-type advice to a typically underserved population has come about," says Peter Gordon, chief executive of John Hancock Retirement Plan Services.

One aspect spurring the partnership is the ability to aggregate account information across the accounts of 2.7 million participants and $144 billion in assets, Gordon says.

It will lead to a better user experience and advice, says Next Capital co-founder Rob Foregger. "You know a tremendous amount about client, and that allows for a sophisticated level of financial planning," he says.

It also equips the provider to handle the demands of the Department of Labor’s fiduciary rule, Foregger adds, acknowledging its future may be in doubt under the Trump administration.

Gordon says the firm is already open architecture and doesn't limit itself to proprietary funds. No pricing has been set on the digital offering.

"Whether the rule survives or is altered, it doesn't really matter, the market has been moving in that direction for a long time," Gordon says.

Despite the moat around large retirement record keeping systems, the $6.7 trillion defined contribution space has seen the entry of digital-first competitors, notably Betterment, blooom and Dream Financial. Launched in 2014, blooom for instance advertises it has analyzed over 27,000 accounts and $1.4 billion in assets.

Gordon welcomes competitors. "They up the game of everybody," he says. "Those that weren’t getting advice will get the opportunity to receive high quality advice, and those that were, it will get even better."

Though John Hancock is part of Manulife Financial, a global asset management firm, Gordon says there is no plan to plug the retirement robo into a platform offering a direct-to-retail investment management solution like Vanguard, or an institutional investment offering as BlackRock does.

"We are focused on retirement," he says. "There is so much innovation to be done just that limited space."

There will come a point in the near future when a digital platform will encompass investment management, retirement, banking and insurance offerings, says Alois Pirker, research director for Aite Group's wealth management practice.

"The more you can consolidate across business lines, the more you will be able to provide the seamless, single-platform experience that clients will benefit from," Pirker says.

Pirker adds that the evolution of competition in the retirement space will be at a different pace than what exists in digital wealth management or even banking.

"While startups will not be eating John Hancock's lunch, they are driving a wedge into the industry with innovation, and pushing it in a healthy direction."

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