Hub launches 401(k) service for small businesses

Hub International wants to win retirement-plan business with the 600,000 corporate clients for which it already provides employee benefits and insurance services.

Currently, the firm has only about 10,000 retirement plans in its book of business. But it’s planning to change that with a new defined-contribution service it announced today, primarily for small businesses and startups.

The firm is working with five record keepers and one third-party administrator, said Adam Sokolic, Hub International’s chief operating officer.

Hub Retirement Select is not a one-size-fits-all,” Sokolic said. “We wanted to be able to offer different solutions based on the client’s needs.”

It’s subsidiary Global Retirement Partners will provide the 3(38) fiduciary service for the plans, meaning that GRP has full discretion to select and monitor investment options. That can help reduce some, but not all, of the fiduciary liability for plan sponsors. Hub purchased GRP in 2019, a year after it picked up Sheridan Road.

Plans can have different investment lineups based on the mutual funds and collective investment trusts that the record keepers make available. The service also includes a managed-accounts option, with Morningstar being a main provider. Hub did not disclose the list of record keepers and the TPA with which it is working.

Hub’s new plan service is targeted at small businesses and startups with less than $3 million in DC assets, though it available to larger plans as well, Sokolic said.

The company’s Retirement and Private Wealth unit advises on more than $93 billion through its RIAs, according to the firm.

SELLING POINT

In its announcement today, the company positioned the new service as an alternative to the automatic IRA programs in several states, including California, Oregon and Illinois.

Those programs, and other state initiates such as retirement plan marketplaces and multiple-employer plans, have “drawn more awareness and more of a need for the plan sponsors to deliver something” to their workers, Sokolic said. State-sponsored programs are valuable to the employers that opt for them, but Hub’s plan service is an alternative that could give them more options around managed accounts and financial wellness, he said.

“We have something that is a little more unique than just offering access to an IRA,” he said. “We think that far exceeds what the public sector can deliver.”

The new service also comes as many different firms are developing or launching pooled-employer plans, which similarly often target small businesses that do not sponsor retirement plans. Fidelity Investments, for example, recently added a PEP specifically for small clients.

The post Hub launches 401(k) service for small businesses appeared first on InvestmentNews.

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