Deals and People September 23, 2024

Empower Adds Equity Compensation With OptionTrax Acquisition

Recordkeeper and wealth manager adds equity compensation administration and management with latest acquisition.

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Empower, a retirement and wealth management services provider, has acquired Plan Management Corp., the developer of OptionTrax, a digital platform for workplace equity plan administration.

Based in West Conshohocken, Pennsylvania, PMC’s technology, proprietary products, services, intellectual property, licenses and contracts are now wholly owned by Empower under the terms of the agreement announced on Monday. The firms did not disclose terms of the deal.

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OptionTrax specializes in solutions for administering and managing equity compensation, including stock options and restricted stock units. OptionTrax also supports plan design, grant management, financial reporting, vesting schedules and tax calculations.

The firm services more than 300 employers and manages about $62 billion in equity compensation plans.

“There’s significant unmet demand for equity compensation services,” Jonathan Miller, PMC’s founder, said in a statement. “By leveraging Empower’s scale and distribution network, we’ll be able to extend OptionTrax’s innovative offerings to a broader range of employers.”

Along with the acquisition, Empower has launched Empower Stock Plan Services LLC, led by Dave Gray, its executive vice president for enterprise solutions. Gray noted that many 401(k) clients have expressed interest in equity compensation services, and this acquisition reflects Empower’s continued expansion of its workplace benefits and wealth management offerings.

“Empower believes advisers and consultants will welcome the chance to work with Empower’s OptionTrax platform,” says Gray. “Our focus on multiple markets—across both publicly held and private corporates of all sizes—is unlike some other providers who choose to focus on only some segments.”

Following the acquisition, OptionTrax will be rebranded as “OptionTrax by Empower.” The firm’s services will also be integrated into Empower’s digital platform, expanding users’ ability to manage and view their full financial situation including equity compensation programs.

“We believe that consultants serving larger corporate clients will welcome our integrated workplace and financial planning experience for participants,” says Gray. “In addition, the delivery of equity compensation solutions will be additive to conversations between advisers serving smaller corporate plans, Empower and our shared clients.”

Data and Research September 20, 2024

Total US Retirement Assets Climb to $40T

IRAs and defined contribution plans drove the growth in assets.

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Total U.S. retirement assets rose to $40 trillion as of June 30, marking a 1.3% increase from March and the highest since the Investment Company Institute started tracking the figure in 2000. Retirement assets represented 32% of all household financial assets in the U.S., reflecting a steady rise in the nation’s long-term savings, the firm noted.

Individual retirement accounts led the growth, gaining $14.5 trillion in assets in the second quarter, a 1.5% increase from the first quarter of 2024. Defined contribution plans followed closely, growing $11.3 trillion, up 1.9% from Q1.

Government defined benefit plans, which include federal, state and local government pensions, gained $8.5 trillion in Q2, representing a modest 0.5% uptick since March. Private sector DB plans reported $3.2 trillion in assets over the quarter, while annuity reserves outside retirement accounts totaled an additional $2.4 trillion.

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US Total Retirement Market Assets

Source: ICI

Of the $11.3 trillion gained in employer-based DC retirement plans, $8 trillion of that came from 401(k) plans. Among other DC plans, $625 billion was added in private sector funds, $1.3 trillion in 403(b) plans, $465 billion in 457 plans and $911 billion in the Federal Employees Retirement System’s Thrift Savings Plan.

Mutual funds continue to play a critical role in managing U.S. retirement savings in Q2, particularly in DC plans like 401(k)s, which had $5.2 trillion—65%—of their assets managed by mutual funds at the end of June, the ICI noted. Equity funds remained the dominant investment choice within those funds, holding $3.1 trillion, followed by $1.4 trillion in hybrid funds, which include target-date funds.

IRAs, similarly, saw a significant portion of their $14.5 trillion in assets allocated to mutual funds, with 43%—or $6.3 trillion—invested in these vehicles. Equity funds accounted for $3.7 trillion, while hybrid funds managed $1.1 trillion.

Overall, mutual funds made up nearly half—49%—of the combined assets in IRAs and DC plans, totaling $12.8 trillion. They also played a role in variable annuities, which offer similar tax advantages to retirement plans. In June 2024, variable annuity mutual fund assets outside retirement accounts reached $1.4 trillion.

Mutual funds have started to be overtaken in DC retirement plan investing by collective investment trusts, which face lighter regulation and can be offered with lower fees to employer-sponsored plans. According to recent Morningstar data, CIT target-date funds now have more assets than mutual fund TDFs.

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