Deals and People January 9, 2023

Investment Service and Product Launches

RightCapital adds SECURE 2.0 update to financial adviser planning platform; NFP Starts Human Capital Solutions Practice; and more.

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RightCapital Adds SECURE 2.0 Updates to FA Planning Platform

RightCapital, a software planning company for financial advisers, released a software update incorporating key provisions responding to the SECURE 2.0 Act, the Shelton, Connecticut-based firm said in a release.

SECURE 2.0, which was signed into law on December 29, 2022, was intended to provide expanded retirement saving options for businesses and participants. In response, RightCapital said it has introduced updates to its financial planning software platform, including adjustments for:

  • Required minimum distribution — Adjusting the RMD age to 73 for individuals born between 1951 and 1959, and to 75 for those born in 1960 or later.
  • Roth 401(k) RMD — Beginning in 2024, adjusting so RMDs are no longer required from Roth 401(k) accounts.
  • Qualified charitable distribution — Beginning in 2024, adjusting for a maximum annual QCD of $100,000 being indexed for inflation.
  • 401(k)/Simple IRA catchup contributions — For 401(k) plans, the catch-up contribution limit for individuals whose age is between 60 and 63 in 2025 and later will be increased to $10,000. For Simple IRA plans, the catch-up contribution limit for individuals whose age ranges from 60 to 63 in 2025 and later will be increased to $5,000. RightCapital will make further adjustments to the catch-up contribution limits as more details become available.

RightCapital said it will be releasing additional SECURE 2.0-related changes in the coming weeks.

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NFP Starts Human Capital Solutions Practice

Insurance, retirement, wealth and benefits advisory NFP has announced the formation of a new human capital solutions practice, the company said in a press release. NFP said it formed the practice to expand its existing HR services and products in the U.S., North America, Europe and other regions.

In recent years, New York-based NFP has acquired six firms with various HR specialties and cultivated resources and partnerships to complement existing businesses, according to the release. 

“During the most challenging employment landscape our clients have ever faced, we realize the importance of providing comprehensive HR solutions to clients,” Kim Bell, executive vice president and head of health and benefits at NFP, said in the release.

NFP also announced that it promoted Maria Trapenasso to national practice leader for the human capital solutions division. Trapenasso has been with NFP for more than a decade and will lead efforts to combine NFP’s expertise, experience and capabilities in the human capital space to create a comprehensive offering to clients, according to the release.

Onramp Invest Launches Digital Assets SMA Solution

Cryptocurrency asset integration platform Onramp Invest launched a separately managed account solution to “benefit both advisers and asset managers,” the firm said in a blog post.

The San Diego-based firm said it was “quietly building a fully comprehensive SMA solution” for asset managers to simply and securely manage accounts for clients, advisers and firms. The firm said asset managers can also create, manage, assign and trade model strategies while also benefiting from integrated reporting, analytics and dashboards to best understand and monitor their clients’ performance.

For financial advisers, including those without knowledge of digital asset investing, the firm said its network of asset managers created a suite of models and indices. If advisers would like to partner with a leading asset manager to help manage clients’ funds directly, the new SMA solution offers that as well.

Onramps calls itself an all-in-one, compliant platform on which financial professionals can access digital asset investment opportunities their clients.

SMArtX Advisory Adds Eight Strategies to Unified Managed Accounts Platform

SMArtX Advisory Solutions, which offers a turnkey asset management platform called SMArtX, has added eight strategies offered by three leading asset management firms to its platform, the firm said in a press release.

All three firms are new to SMArtX, and the additions bring the total number of strategies to 1,114 from 283 of the world’s leading asset managers, the West Palm Beach, Florida-based company announced.

Diamond Hill Capital Management and Opal Capital Managemnt added strategies focused on equity market capitalization and dividend income. EQM Indexes broadened SMArtX’s catalogue of direct indexes with strategies aimed at select investment opportunities. The full list of new strategies includes:

  • Diamond Hill Capital Management
    • All Cap Select
    • Large Cap Equity
  • EQM Indexes
    • Battery Technology and EV Index
    • Blockchain and DeFi Index
    • Commodity Equity Dividend Income
    • Emerging Markets China Lite Index
    • Sun Energy Index
  • Opal Capital Management
    • Dividend Income

The Standard Brings Four Stable Value Funds to Market

Standard Insurance Company has brought to market the Apex Series, a stable value investment product that offers four fund options and guaranteed rates through June 2023, according to a press release.

The Apex Series expands The Standard’s existing stable value portfolio by offering returns that reflect the rising corporate and treasury rate environment, according to the Portland, Oregon-based firm. The Apex Series provides a conservative investment approach, along with a full guarantee of principal, interest and 100% liquidity for plan participants.

“Stable value funds will continue to play an important role in retirement savings portfolios, and we’re excited to add the innovative Apex Series to our existing stable value portfolio to meet the needs of the current market environment,” Ken Waineo, senior director of institutional products at The Standard, said in the release. The funds include:

  • The Apex Guaranteed Fixed Interest Fund (4.45% Net) 
  • The Apex Capital Preservation Income Fund (4.20% Net) 
  • The Apex Stable Asset Fund (3.90% Net) 
  • The Apex Guaranteed Rate Stable Value Fund (3.55% Net) 

The Apex Series launched January 1 and is available through defined contribution plans such as a 401(k), 403(b), defined benefit, cash balance and others, depending on the fund. The funds may not be available in all states, the company said.

Compliance January 6, 2023

CITs a No-Go for 403(b) Accounts

One of the original three bills of SECURE 2.0 did contain such a provision, but it was ultimately dropped.

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Disregard any coverage to the contrary: SECURE 2.0, as passed, does not permit 403(b) plans to invest in collective investment trusts.

This provision was widely anticipated and endorsed by the retirement industry. It was initially a provision in the House Resolution 2954, the Securing a Strong Retirement Act of 2021, one of the three bills later aggregated and reconciled into the SECURE 2.0 Act.

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According to Diana McDonald, senior policy advisor at the Groom Law Group, this provision passed the House Committee on Ways and Means, under Chairman Richard Neal, D-Massachusetts, and the bill’s lead sponsor. The provision would have amended the Internal Revenue Code and the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 to permit CITs in 403(b) plans.

However, the U.S. House Committee on Financial Services asserted jurisdiction over the securities changes, which were necessary to allow 403(b) plans to use CITs. House Financial Services, however, had “consumer protections” concerns. The required amendments to securities laws did not make it into the final SECURE 2.0 Act.

Mark Iwry, a non-resident senior fellow at the Brookings Institution and former senior adviser to the Secretary of the Treasury, confirmed that this was the subject of an “ongoing negotiation” between the committees of jurisdiction. “While some Congressional staff had earlier expressed optimism that it was largely a matter of respecting committee jurisdictions and would likely be favorably resolved, it evidently involved more substantive differences”, Iwry explains.

Michael Kreps, the co-chair of the retirement services and fiduciary Group at Groom Law Group, and a former counsel for the Senate HELP Committee, says that leaving the securities amendments out was “intentional.”

“Congress was not able to reach a bipartisan, bicameral agreement on the securities law changes. There were member concerns about unintentionally undercutting consumer protections, and unfortunately, they just ran out of time to reach a deal,” he explains.

A statement from Vanguard acknowledged that CITs are not permissible in 403(b) plans and explained Vanguard will continue to advocate for their use.

Brigen Winters, the chair of the policy practice at Groom Law Group, is not optimistic that this might come to fruition soon. He explains that technical corrections take time, and there likely will not be a vehicle for a corrections bill at least until the next consolidated appropriations bill.

 

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