The SECURE ACT is "the mostmeaningful step Congress has taken to address the savings accessgap," says Prudential Retirement's Harry Dalessio. (Photo: Diego M.Radzinschi/THE NATIONAL LAW JOURNAL)

In the 1990s, what then passed for a retirement industry was consumed with themarketing of mutual funds and building advisory and assetmanagement brands.

Moving into the first decade of the 2000s, the memeshifted to target-date funds and other qualified defaultinvestment alternatives made available to 401(k) sponsors throughthe Pension Protection Act of 2006.

Now, the stage is set for the next evolution in the retirement space, thinks Harry Dalessio, headof full service solutions at Prudential Retirement.

"It's already begun, but in the next five years we expect to seeaggressive growth, innovation, and expansion of the roll of theworkplace retirement plan," Dalessio said in an interview.

Financial wellness "morphing into something far bigger"

That growth will be driven by a deeper, strategic articulationand implementation of financial wellness, that well-intendedsounding yet opaque buzzword that's been peppered about for severalyears without much practical definition.

But after years of talk, grist is being added to the mill.

"The financial wellness conversation is expanding morehorizontally with employees, their plan sponsors, and the advisorsthat support them," said Dalessio.

"The defined contribution industry is the epicenter of thismorphing into something far bigger—we see a tectonic shift alreadyunder way," he added.

In the C suite, plan sponsors, particularly larger ones, arepaying more than just lip service to the holistic financialsecurity—beyond retirement—of workers.

"Traditionally, the chief financial officer has been focused ontheir 401(k) plan—that's where the liability was seen," saidDalessio.

That is changing. As recently as weeks ago, Dalessio, whoseresponsibilities include oversight of participant experience in thedefined contribution and pension plans Prudential supports, fieldedspecific questions from a large employer who wanted to know how lowsavings rates were impacting employee absenteeism and workerscompensation claims.

"They are paying more attention to this," explainedDalessio.

Prudential is "rapidly" investing in a new comprehensivewellness platform, said Dalessio. Other recordkeepers are aswell.

"It's early, and there's still much more to do, but we arebeginning to see it impact our sales momentum in the market," saidDalessio. "We're investing heavily in this and we're already seeingdividends."

Recordkeepers that fail to adopt financial wellness capabilitiesor even those that are simply slow to adopt will find it difficultto compete in the next five to 10 years. So too will plan advisors,thinks Dalessio.

Insecurity over the SECURE Act

Financial wellness, which folds emergency savings, budgeting,and debt management into the retirement savings equation, is bestaddressed through the workplace, argued Dalessio.

For all of its momentum, access to traditional 401(k) plansremains a linchpin of the wellness equation.

The Setting Every Community Up for Retirement Enhancement, orSECURE Act, is of course in a holding pattern in the Senate asCongress returns to the Capitol.

The bill's Open Multiple Employer Plan provision, which wouldallow financial service providers like Prudential to sponsorretirement plans that pool unrelated employers under one 401(k), is designed to incentivize plan accessto the nearly 55 million Americans that work for employers withouta retirement plan.

"It's the most meaningful step Congress has taken to address thesavings access gap," said Dalessio.

The SECURE Act's course to date is known to everyone in theretirement industry. A version of it passed unanimously out of theSenate Finance Committee in 2016, after a decade's worth ofconsideration by lawmakers.

This spring the SECURE Act sailed out of the House Ways andMeans Committee, and passed the House by a 417 to 3 vote—in thisCongress.

This summer, it hit a wall in the Senate, unexpectedly. Several"holds" on the bill prevented it from being voted on by unanimousconsent.

Those came from Republican lawmakers, and for esoteric reasons.Senate Cruz, R-TX, did not like that a provision expanding 529savings vehicles to secondary education and home schooling wasstripped in the House version.

Sen. Pat Toomey, R-PA, objected to a provision that addressestax relief for Gold Star Families—those that have lost a familymember in military service—in the SECURE Act. He would like thatbill to stand on its own.

Now, the assumption that SECURE would move through the Senatethis year is not so widely assumed. The bill could still beattached to must-pass spending legislation. But the upper chamberhas limited working days between now and the end of the year. Andsome speculate that Majority leader Sen. Mitch McConnell, R-KY, maynot be willing to burn limited floor time debating SECURE.

Who might not want the SECURE Act to pass?

Why would a retirement bill that enjoys such longstandingbipartisanship be stymied by relatively superfluous concerns?

And are those the real reasons inhibiting the SECURE Act? Arethere other interest groups that would prefer it not pass? If so,their intentions are well hidden.

"I can't speculate on what is standing in the way of gettingthis bill to the floor and voted on," said Dalessio. "We remainoptimistic. We've seen very little feedback from those that are notsupportive of it. It all comes down to politics and how the billfits into the bigger picture of the Washington machine remains anopen question. That's something we can't handicap."

Dalessio, and executives throughout industry whose firms wouldbe better positioned to compete to close the retirement access gap,could be forgiven for their frustration with the Senate.

He underscores that he remains hopeful. "We all have a societalobligation to support U.S. workers more generally. This is the bestopportunity to close the access gap. But what is outside of ourcontrol, we can't get frustrated by that."

What if the SECURE Act doesn't pass?

If the SECURE Act fails, a new Labor Department regulation onpooled plans that prohibits Open MEPs and retirement serviceproviders from sponsoring them goes into effect at the end ofSeptember.

Prudential and virtually all service providers have said Labor'sregulation will fail to meaningfully close the savings accessgap.

"From the SECURE Act perspective, it allows for a whole host ofnew groups to enter the access gap conversation in a much differentway," said Dalessio, referring to the bill's provision that wouldallow service providers to sponsor Open MEPs. "That type of newcompetition stretches the limit of what's possible goingforward."

What would the delta be between the SECURE Act's provision onOpen MEPs and Labor's rule on pooled plans if the former fails topass? "That would continue us on a similar (plan access) path tothe one we are on today," said Dalessio.

READ MORE:

Impact and opportunities in the SECUREAct

Getting millennial employees on board withfinancial wellness

SECURE Act not clear on whether plan providerscould sponsor Open MEPs