Products December 5, 2024

Product & Service Launches

Fiduciary In A Box and Homa Health launch AI-powered ERISA contract review tool; Wespath debuts fossil-fuel-free funds for institutional investors; Payroll Integrations automates SECURE 2.0 compliance; and more.

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Fiduciary In A Box and Homa Health Launch AI-Powered ERISA Contract Review Tool

Fiduciary In A Box, the software-as-a-service platform for Employee Retirement Income Security Act health and retirement plan compliance, has announced a partnership with Homa Health, an artificial intelligence company.

The collaboration brings artificial intelligence to plan sponsors and fiduciaries, enabling automated contract reviews to ensure compliance with ERISA regulations and the Consolidated Appropriations Act of 2021.

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Through this partnership, FIAB users can have their uploaded plan contracts reviewed by Homa’s advanced AI system. The resulting report provides an evaluation of compliance with federal requirements, including the prohibition of gag clauses under the CAA.

“With Homa Health’s cutting-edge technology, our users can identify and address non-compliance issues quickly and confidently, well in advance of their next Gag Clause Prohibition Compliance Attestation, due December 31,” Jamie Greenleaf, co-founder of Fiduciary In A Box, said in a statement.

Wespath Debuts Fossil-Fuel-Free Funds for Institutional Investors

Wespath Institutional Investments LLC announced the launch of two investment funds designed for institutional investors that want to exclude fossil fuel companies and certain securities associated with conflict-affected areas from their portfolios.

The new funds, the Social Values Choice Equity Fund – I Series and the Social Values Choice Bond Fund – I Series, are intended to provide faith-based and values-aligned nonprofit organizations—such as foundations, senior living communities and higher education institutions—with global equity and fixed-income investment exposure in ways that align with their values.

“We know investors have diverse perspectives on how to respond to complex challenges like climate change and areas of human conflict, and we want to provide investment options that resonate with their values,” Wespath Benefits and Investments CEO Andy Hendren said in a statement.

SVCEF-I is a passively managed equity fund investing in broad-market companies in the U.S. and other developed countries. SVCBF-I is an actively managed fixed-income fund with allocations to U.S. and international bond markets. Wespath engaged external asset management firms Xponance and PIMCO to serve as subadvisors for SVCEF-I and SVCBF-I, respectively.

Payroll Integrations Automates SECURE 2.0 Compliance

Payroll Integrations Inc., a technology company offering benefit automation, announced its work with U.S. employers to expedite their compliance with the SECURE 2.0 Act of 2022. Payroll Integrations has pre-built integrations with ADP, Quickbooks Online, Paychex, Empower and Transamerica.

The company’s platform prepares companies for compliance with the new 2025 requirements under SECURE 2.0, including automatic enrollment in new retirement plans. Through Payroll Integrations, employers can connect their retirement offerings with their payroll platform to automate retirement enrollment, eligibility checks and contributions for employees in minutes.

Some of the biggest changes in SECURE 2.0 that employers must comply with will go into effect on January 1, 2025. This includes the automatic enrollment of employees into new retirement plans at a minimum of 3% of their salary, higher catch-up contribution limits, the ability to offer student loan payment matching and updates to long-term, part-time worker retirement eligibility.

“We’re making it easy for employers to comply with SECURE 2.0 requirements and do so quickly as we head into 2025, so they can direct their time and focus on employees’ financial wellness,” Doug Sabella, CEO and co-founder of Payroll Integrations, said in a statement.

Voya Financial, Orion Announce Technology Platform for Financial Professionals

Voya Financial Inc. announced that it is collaborating with Orion, a provider of wealth technology solutions for financial professionals, to launch an enhanced technology platform for its Voya Financial Advisors business.

Voya WealthPath will provide VFA’s financial professionals in-plan and retail and advisory solutions, including financial planning and client relationship management tools. The new platform offers a more efficient experience for the firm’s network of financial professionals to better manage their business.

Enhancements include new retail brokerage and advisory account opening processes, integration of data, and improved tracking of client interaction.

“Over the past several years, Voya has delivered on our mission and vision of serving our clients, and the financial professionals we work with while continuing to meet the evolving health, wealth and investment needs of our customers and their participants,” Jonathan Reilly, president of Voya Financial Advisors, said in a statement.

BNY, Conduent to Deliver End-to-End Pension Risk Transfer Solution

The Bank of New York Mellon Corp., a global financial services company, and Conduent Inc., a global technology-led business solutions and services company, announced a partnership to connect insurers and pension acquirers with end-to-end pension risk transfer services in one place.

“Companies and their insurers or pension acquirers can reduce liabilities, risks and administration costs while Conduent and BNY provide stellar support to plan participants,” John Larson, vice president of total benefits at Conduent, said in a statement. 

The solution combines BNY’s global payments and cash management capabilities with Conduent’s records maintenance for pension accounts, managing transaction data and ability to provide customer service for pension members.

“By drawing on BNY’s platform infrastructure for payments and cash management services, and Conduent’s integrated administration expertise, we are able to deliver a unified, end-to-end package that supports clients through every stage of the pension risk transfer lifecycle,” Carl Slabicki, BNY Treasury Services’ co-head of global payments, said in a statement.

Data and Research December 5, 2024

Cryptocurrency Assets Make Up Small Part of 401(k) Market, GAO Finds

The government watchdog warned that crypto assets have uniquely high volatility and their returns can come with ‘considerable risk.’

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Amid growing concerns from the Employee Benefits Security Administration and other industry experts about the risks associated with investing in cryptocurrency assets, the Government Accountability Office recently investigated the prevalence of crypto assets in the 401(k) market.

The GAO found that crypto only encompasses a small part of the 401(k) market, as of mid-2023, but the limited amount of data provided by the Department of Labor poses a barrier to fully measuring the scope of its prevalence in 401(k) plans. The report was commissioned by Representative Richard Neal, D-Massachusetts, the ranking member of the House Committee on Ways and Means.

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In its report, the GAO identified 69 crypto asset investment options available to 401(k) participants either through their core investment options or self-directed brokerage windows. EBSA officials told the GAO that no matter how crypto asset investment options are marketed, fiduciaries are responsible for determining whether such options should be included in their plan’s core investment lineup or should be offered through a separate arrangement.

Recordkeepers surveyed by the GAO between July and September 2023 reported that none of the plans they served offered crypto investment options in their core lineups and reported minimal participant investment in crypto investments through self-directed brokerage windows. The investment amounted to substantially less than 1% of the 401(k) market, whether measured by plans, participants or assets.

In its analysis of investment returns, the GAO found that crypto assets have uniquely high volatility and that their returns can come with “considerable risk.” The GAO’s simulation found that a high allocation—20%—to bitcoin, the crypto asset with the longest price history, can lead to higher volatility than smaller allocations.

Cryptocurrency’s Encouraging Future

On Thursday, bitcoin traded higher than $100,000 for the first time, fueled by investors predicting that President-elect Donald Trump will cement the place of cryptocurrencies in financial markets. This milestone also coincided with Trump’s nomination of crypto advocate Paul Atkins to run the Securities and Exchange Commission on Wednesday. Current SEC Chair Gary Gensler has been a critic of the crypto industry.

The total value of the crypto market has almost doubled over the year so far to hit a record of more than $3.8 trillion, according to data provider CoinGecko.

DOL guidance currently states that the fiduciary responsibility to be prudent in selecting and monitoring 401(k) plans’ core investment options does not change when crypto assets are offered. DOL officials told the GAO they generally have not required fiduciaries to select and monitor all options offered outside the core menu, such as through self-directed brokerage windows, in accordance with Employee Retirement Income Security Act standards.

As a result, participants who invest outside the core menu have to take primary responsibility for selecting and monitoring crypto asset investment options.

Data Collection Can Be Improved

Industry data from a 2021 report on self-directed brokerage windows indicated that between 15% and 20% of defined contribution plans restrict self-directed brokerage window offerings to mutual funds, but the GAO argued that this does not fully restrict access to crypto investments, as three of the 69 crypto investment options identified by the GAO were mutual funds.

Overall, the GAO found that the DOL does not collect comprehensive data to identify 401(k) plans that give participants access to crypto assets. For example, the Form 5500s that plan fiduciaries file do not identify crypto asset investment options in plans with fewer than 100 participants. In 2022, 88% of 401(k) plans had fewer than 100 participants.

In addition, plans with at least 100 participants aggregate self-directed brokerage window investments, making it more difficult for the DOL to isolate investments in crypto assets.

In prior work, the GAO recommended that the DOL should consider revisions to the Form 5500 series that would provide more transparency and detail into plan investments, among other things. The DOL has taken some steps to improve Form 5500 reporting, but according to the GAO, its recommendation has not been fully implemented.

The GAO also recommended that Congress should consider legislation to fill gaps in federal regulatory oversight of crypto assets. For example, one bill introduced seeks to address issues such as the comingling of customer funds with institutional funds by crypto-asset trading platforms. However, none of these bills have become law.

The GAO provided a draft of its report to the DOL, the SEC and the Commodity Futures Trading Commission for review and comment.

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