The Future of Recordkeeping With Incoming Principal CEO Deanna Strable

Principal Financial Group announced earlier this week that Deanna Strable, its current president and chief operating officer, will take over as CEO on January 7, 2025, replacing Dan Houston, who is stepping down after 10 years in the role.

Houston will continue to serve as executive chair of Principal’s board of directors, and Strable will join the board in January. Strable was the company’s CFO from 2017 to 2024 and was promoted to president and COO in August.

PLANSPONSOR spoke with Strable this week about current trends in the recordkeeping industry and what she plans to prioritize in her new role.

PLANSPONSOR: Can you tell us a little bit about your background?

STRABLE: I’ve been [with] the company for 35 years and [served as] the chief financial officer [for] the last seven years. A huge advantage of that role was allowing me to see our entire enterprise [and] all of our businesses. Prior to that, I ran our insurance businesses here in the U.S. Ultimately … I’m an actuary by background. But I think that the critical thing that is important is that I actually ran our strategy for a portion of my CFO role.

PLANSPONSOR: What are some of your main focuses stepping into the role of CEO?

STRABLE: [Houston] has said a number of times that we co-architected the enterprise growth strategy. I feel great about our strategy. … Obviously retirement is a key piece of that, but also our asset management business, our benefits business and our focus on the small-to-medium-sized businesses here in the U.S. are all tenants of how we think about our strategy going forward.

We have an investor day next Monday where Dan and I, as well as our entire management team, will be talking about some of our areas of focus, and the three main chapters of that is: our participation in the retirement ecosystem; … a focus on the small-to-medium-sized businesses; and how we use asset management to propel our businesses, but also provide growth opportunities around the globe.

With a great strategy in play, as well as a really strong team, my initial priority is to not lose momentum and make sure that we have a culture of excellence relative to executing on those opportunities without losing our foundational focus on the employees and ultimately creating an environment that attracts, retains and grows both our customer base and our employee base.

I do think it’s my background and participation up to this point that have given me kind of that full view of our capabilities and how we can bring them together to better meet the needs of our customers.

PLANSPONSOR: What are your thoughts on the trend of recordkeeper consolidation? Do you anticipate that will continue in the future?

STRABLE: I think there will be consolidation in the industry. I don’t think it’ll ever take us down to just a handful of providers. And to me, consolidation happens for a couple of reasons. It happens because [recordkeeping] becomes not a core product for a company, and they just want to make sure they’re focusing on other areas, or it becomes a need to drive [and] enhance capabilities and scale that allows you to effectively and efficiently carry out that retirement platform.

Recordkeeping is really a platform to be able to get privileged access to a broad base of retirement participants. I think more and more participants, employees [and] consumers are looking to their workplace to continue to provide access to those retirement plans. We hear this from both the employees and the employer: They don’t just want [a retirement plan] provided to them. They want help [using it] to improve their retirement outcomes.

Recordkeeping is your access point, but then it’s: How do you utilize that in partnering with both the adviser and the plan sponsor to ultimately meet the needs of that employer, but also the individuals within the plan?

PLANSPONSOR: What about the issue of a lack of standardization in recordkeeping processes? Does this become complicated as workers tend to hop from job to job and experience using different recordkeeper platforms?

STRABLE: I think the good news is that the 401(k), by its very nature, is a portable product. … Some people are totally comfortable having 401(k) accounts with multiple employers that they have. Others are wanting [them], from an ease perspective, all to be rolled over into one solution, and it’s important that we have the ability to do all of those.

I think it’s important [to note] that we have five generations of people in the workplace today, and how they think about mobility, how they think about savings, how they think about their retirement goals are different, but ultimately [they have] the same end objective. People want to be able to be comfortable in retirement, and ultimately it does require some level of personalization, [which is dependent on] how we design those solutions and products and how we deliver some of that education and advice.

I think the great news is technology allows you to do that in a way that is not cost-prohibitive.

PLANSPONSOR: You mentioned your focus on the small-to-midsize employers. What have you done, or do you plan to do, to help smaller businesses offer a retirement plan to their employees?

STRABLE: We’ve been in the retirement business for decades, and our foundation early on was really focused on that small-to-medium-sized business. Fast forward to today, we have small employer customers, medium, large, jumbo … but there is a uniqueness of that small-to-medium-sized business.

When I ran the benefits side, we also focused on the SMB customer. Our average case size was an employer with maybe 50 employees. And one of the things that’s really important to understand is: Many of those companies don’t have a [human resources] department. It may be the office manager that’s being asked to also do HR, so their ability to have deep expertise in the different options relative to retirement is very different than if you’re working with a company the size of Principal that has a dedicated benefits department. You have to make sure you’re understanding that when you approach that market and also recognize the importance of the adviser in that journey, as well. In some situations, it’s the adviser that’s stretching in and filling that role of the HR department.

Part of the benefits that came out of the SECURE 2.0 [Act of 2022] was offering incentives for those smaller employers to offer retirement plans. What we hear from them is: They don’t think they’re big enough to even have earned the right to offer a retirement plan. I do think that tax incentives and other incentives kind of open their mind that they could do it.

I think the other thing that’s important is: There are different plan vehicles that [businesses] can use as they grow. At the very small level, it’s more of a SEP and SIMPLE plan. Then you have more individual IRAs that are offered within that. Then you would work up to a 401(k) plan as you grow. You might add a nonqualified plan. … It’s [important] to have that expertise along that life cycle.

PLANSPONSOR: What sort of impact do you think the recent election will have on the retirement plan industry, if any?

STRABLE: I think it’s probably a little too early to tell. The one thing I would say is we have had a history of successfully operating in very different political environments.

I do think it’s really good news that retirement is a pretty bipartisan issue. The SECURE Act was actually passed during the Trump administration, but SECURE 2.0 was passed during the Biden administration. As we spend a lot of time in Washington talking to Congress, the specifics might differ a little, but ultimately, they understand there is a gap that we need to try to close, and they recognize there’s different ways that we need to tackle that.

I’m not worried as I sit here today. Even if you [look at] the House and Senate, there’s not an extreme majority, and I think that’s always what serves us well, … when we can have bipartisan discussion across the issues.