NextCapital announced today a partnership with John Hancock Retirement Plan Services to provide digital advice services to Hancock's 2.7 million 401(k) and IRA rollover participants.
Rob Foregger, enterprise robo-advisor NextCapital’s co-founder and executive vice president, called the partnership “an exciting milestone” for NextCapital, moving beyond its “DNA in the 401(k) managed account space” into the IRA rollover space, while also providing “institutional-grade advice” through Hancock’s advisors.
He said the IRA rollover solution will be rolled out in the first quarter of 2017, while the 401(k) version will be launched late in Q2 or early in Q3.
The partnership, Foregger said, also reflected the industry trend of moving away from retirement “product manufacturing” to scalable, personable “advice manufacturing,” and said Hancock is “excited” to be able to provide “noconflicted, personalized advice” to its plan participants. Those participants can access NextCapital’s robo-advice either through a simple, user-friendly self-service model or can choose an advisor-assisted model, Foregger said.
Noting that Hancock Retirement’s Canadian parent, ManuLife Financial, has $750 billion in assets under management, he said “we’re enabling them to use their institutional-grade methodology and plug that into our digital advice platform, to build not just products but advice solutions.”
Foregger said in response to a question on the Department of Labor fiduciary rule that he’s “proud to see how the industry has responded” to the rule despite its earlier lobbying efforts against it. While there has been speculation that the rule would be repealed — and a bill was introduced Jan. 6 to delay it (see Congressman Introduces Bill to Delay DOL Fiduciary Rule)— Foregger agreed that the movement toward a nonconflicted, fiduciary advice model “is here to stay” and is part of a broader secular trend, regardless of how regulators and legislators act going forward.
“It’s not going backward irrespective of whether it gets repealed,” he argued. “It’s the Hippocratic oath for the retirement industry. You expect a fiduciary level of care at a hospital emergency room; it’s hard to argue against expecting that same level of care in retirement advice.”
As for those who position digital advice as an either-or conflict, a “robo versus advisor, it’s absolutely false,” Foregger said. He believes that “all advisors of the future will use a fully integrated digital advice platform,” because doing so is “all about scaling for the advisor, and reaching ‘too small’ clients.”
He also argued that there’s been an “asymmetrical focus” among industry watchers on digital advice's potential negative effect on advisors. Instead, Foregger believes there will be more of a “shakeup in the asset management business than the advisory business,” leading to “decreasing margins for the asset management industry.”
He also warned that digital advice, or robos, are far from finished in evolving. ”We’ve barely started; we’re in the first or second inning” of digital advice’s development. Over the next five years, he expects that the growing “sophistication of personalized advice” will be astonishing.
--- Check out Investors Increasingly Willing to Pay for Financial Advice: Cerulli on ThinkAdvisor.