On Friday 31st President Trump presented an executive order on Retirement accounts. The directive says the government should look into rules allowing retirees being to withdrawal later than the current mandated 70 ½ year. WSJ notes:
As part of the initiative, the Treasury Department would review the rules on required minimum distributions from retirement plans to see if investors can keep more money for a longer time in 401(k)s, individual retirement accounts and other tax-sheltered savings plans. If successful, it could allow retirees to spread retirement savings over a longer period.
Furthermore, President Trump’s Executive order, would make it easier and cheaper for smaller companies to set-up 401(k) type of accounts for their employees, in which employers can team-up and pool resources, and hence lower administrative costs. Often this has been too expensive for SME companies. CNBC writes:
Research from The Pew Charitable Trusts shows that 37 percent of small-business owners say such plans are too expensive to set up, and 22 percent say their organization does not have the resources to administer a plan.
Already similar programs have been happening on state level – but has not as of yet been on a national basis.
This is positive news for various asset managers that manage 401(k) accounts and retirement accounts. Not only would they get more assets as SMEs can start offering plans, but also as retirees can delay before they are forced to remove accounts from their retirements accounts, allowing asset managers to manage them for longer time periods, hence generating more fees.
The main listed companies within this space are:
Blackrock (BLK US)
Franklin Resources (BEN US)
State Street (STT US)
T Rowe Price (TROW US)
Invesco (IVZ US)
Legg Mason (LM US)
Eaton Vance (EV US)
Affiliated Managers Group (AMG US)
Oaktree Capital Group (OAK US)
These are all good companies to monitor to see if President’s Executive comes to fruition.