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.

Two prominent firms recently struck partnerships with tech providers, in part to prepare for the Department of Labor's fiduciary rule.

Janney Montgomery Scott on Tuesday anounced a partnership with Milwaukee-based Advicent, which will provide software and a digital platform to manage Janney's digital experience across all of its business units.

Separately, John Hancock Retirement Plan Services paired up with Chicago-based Next Capital, announcing it will receive a platform to offer robo advice and digital service to its 401(k) and IRA rollover clients.

Both asset management firms said that the impending DoL rule - despite doubts about its viability under the new Trump administration - and changes in the market due to digital innovation and customer demand played an equal role in spurring their deals.

"The ability to remain transparent with clients and prospects is key to any financial services business, especially given the future changes expected from the DoL," said Martin Schamis, vice president and head of wealth planning at Janney.

Peter Gordon, chief executive of John Hancock Retirement Plan Services, acknowledged the possibility that the DoL rule could be delayed or stopped by the new administration.

But increasing digital service capabilities is a development all firms must embrace, he adds.

"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, adding the firm is already open architecture and doesn't limit itself to proprietary funds. No pricing has been set on its digital offerings.


Janney will be implementing Advicent's software across its financial service units, says Advicent CEO Phil Cunningham. Among the benefits for Janney advisers, the firm says, will be access to account aggregation, comprehensive goal-based assessments, detailed cash-flow analysis programs, and scenario simulation calculations.

"I think it applies to a lot of other firms in the same position," Cunningham says. "They all need a seamless experience for advisers and clients that can be taken from the mass affluent all the way up to the high-net-worth client."

The ability to aggregate account information across John Hancock's accounts of 2.7 million participants and $144 billion in assets is another reason why it joined forces with Next Capital, 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.


Though fund providers have invested into robo advice platforms with the hope that they act as another distribution channel, Janney's Schamis says he doesn't see advisers using them to push products.

Asset managers should concentrate on efforts to have open architecture, he says, so that it's easier to pair up financial plans with fund selection.

"The platforms are not necessarily driving clients to specific investments, but rather as they go through the financial process, it's a seamless outcome.

"If everybody builds funds of the same quality and fair price, it takes price off the table and allows you to compare Fund A and Fund B on equal footing."


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.

Though John Hancock is part of Manulife Financial, Gordon says there is no plan to plug the retirement robo into a platform offering B2C management

"There is so much innovation to be done just in [retirement]."

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