Employers, advisors and consultants embracing a first-of-its-kind QDIA option designed to meet evolving needs of workers

‘A new path forward for investors’

Empower Retirement and Great-West Investments today announced key milestones in the establishment of the next evolution of a retirement plan default option.

Empower, the nation’s second largest retirement services provider¹, reports that employers, advisors and consultants are increasingly making use of Empower Dynamic Retirement Manager^™ (DRM)², a first-of-its-kind option in retirement plans that seeks to set plan participants on a personalized path to retirement preparedness as their needs change over time.

DRM is designed to apply existing retirement investing regulations to automatically shift an individual’s retirement deferrals from a competitive investment option, such as a target date fund, into a managed account, which offers a more personalized investing experience.

Launched last year, more than 50 plan sponsors across the US with more than $1.7 billion in total plan assets are enhancing their plan’s default option with DRM, including large and small corporations, and public and not-for-profit employers.

A wide range of consultants and advisory firms have signaled support for the DRM model.

A new multiple-employer plan designed by Sageview Advisory Group and recordkept by Empower Retirement will feature Dynamic Retirement Manager.

“We believe target date funds and managed accounts are important tools that help prepare investors for a successful retirement,” said Todd Stewart, CFA, Managing Director for Investment Research at SageView. “We think services like DRM maximize the effectiveness of these solutions by using them at an optimal time.”

Stewart explained that younger participants with relatively homogenous financial profiles can benefit from low costs and investment diversification provided by target date funds, while older participants receive personalized portfolios and guidance on withdrawal strategies through managed accounts as their financial situations begin to change as they approach retirement.

Austin-based Leafhouse Financial is recommending DRM in plans, where suitable. Leafhouse is a third party fiduciary with $5 billion in assets under management³.

“Leafhouse was one of the first adopters of the thinking that has gone into the adaptable QDIA model,” said Todd Kading, Managing Director at Leafhouse Financial. “It’s great to see this solution gaining traction in the industry as we believe this represents the next important trend in helping retirement investors achieve the accumulated assets and the advice they will need.”

Created by Great-West Investments, DRM is offered to participants in Empower Retirement plans whose employers seek to upgrade the QDIA option available in their plan. The first clients began adopting DRM a year ago.

“We are impressed with the uptake by sponsors and the support by advisors and consultants who’ve agreed that the personalization inherent in this new solution will likely make for a better retirement planning experience,” said Edmund F. Murphy III, President of Empower Retirement. “There’s no question that this innovation was much-needed in the market.”

“Dynamic Retirement Manager represents a new path forward for investors that offers up the best of both worlds,” said Scott C. Sipple, President of Great-West Investments. “The blend of target date investing -- which we know can be highly effective – with professional advice is a very powerful combination.”

Dynamic Retirement Manager Explained

A first-of-its-kind solution, DRM makes use of existing QDIA safe harbor regulations which allow employers to direct retirement deferrals into a competitive investment option, such as a target date fund, in a worker’s early years.

After a pre-determined set of criteria has been met, for example age or years of service, a worker’s assets automatically shift into a managed account, which gives them the opportunity to receive a custom, personalized retirement income strategy.

As the participant nears the shift to a managed account, Empower increases communication through more frequent and direct points of contact.

At any time, the worker may opt out of Dynamic Retirement Manager and switch to other investments offered on the employer’s plan menu.

In 2016, Empower and Great-West Investments published a white paper, “In Search of a More Dynamic QDIA,” explaining the new default paradigm and making a broad argument for the benefit of new considerations in default investing.

In an effort to help plan fiduciaries understand the DRM approach, Groom Law Group⁴ has made available “Fiduciary Considerations of the Dynamic QDIA” which answers some common questions.

Great-West Investments and Empower Retirement operate as units of Great-West Financial.

About Empower Retirement

Headquartered in metro Denver, Empower Retirement administers over $534 billion in assets for 8.5 million participants. It is the nation’s second-largest retirement plan record keeper by total participants (Pensions & Investments, April 2018). Empower serves all segments of the employer-sponsored retirement plan market: government 457 plans, small, midsize, and large corporate 401(k) clients, non-profit 403(b) entities, private-label recordkeeping clients and Individual Retirement Account customers. For more information, please visit www.Empower-retirement.com.

As of March 31, 2018. Information refers to the retirement business of Great-West Life & Annuity Insurance Company and its subsidiaries, including Great-West Life & Annuity Insurance Company of New York. Of the total $534B assets under administration (AUA), $15.2B represents the AUA of GWL&A of NY. AUA do not reflect the financial stability or strength of a company. GWL&A assets total $62.5B and liabilities total $60B. GWL&A of NY assets total $2.0B and liabilities total $1.9B.

About Great-West Investments

From its headquarters in Greenwood Village, Colorado, Great-West Investments creates and delivers investment solutions for investors, advisors and the retirement market. Great-West Investments includes Great-West Funds, Inc., Great–West Capital Management, LLC, and Advised Assets Group, LLC, the latter two being registered investment advisers. Great West Investments has more than $100 billion under administration⁵ or supervision in mutual funds, managed accounts, capital preservation products, and retirement income solutions. For more information please visit GreatWest.com.

Media Contact:

Stephen Gawlik — 303-737-0899 (office), 617-417-4408 (cell)

Monica Mendoza — 303.737.2626 (office), 719-373-2460 (cell)