NextCapital gets managed-accounts deal with Prudential

Prudential Retirement plans to launch the service, Advice and Income Engines, sometime during the first quarter of 2021. It will provide retirement planning and personalized portfolio management to Prudential’s defined-contribution plan participants.

NextCapital inked a deal with Prudential, the companies announced today, marking the 10th retirement services company for which the fintech firm provides managed accounts.

Prudential Retirement plans to launch the service, Advice and Income Engines, sometime during the first quarter of 2021. It will provide retirement planning and personalized portfolio management to Prudential’s defined-contribution plan participants, the company stated in the announcement.

Chicago-based NextCapital also has managed-account business with Ascensus, Fisher Investments, Franklin Templeton, John Hancock, MassMutual, Newport Retirement Services, Russell Investments, State Street Global Advisors and Transamerica, according to the fintech.

Through its subsidiaries, NextCapital Software and NextCapital Advisers, the company provides different managed account services. The software is an open-architecture advice engine that lets clients use their own asset allocation methodologies, NextCapital co-founder Rob Foregger said. The company’s NextCapital Advisers subsidiary uses its own investment methodology, including a “consensus glide path” that averages allocations from the top 50 target-date series, Foregger said.

“The reason we’re winning all the large deals … is because we have the ability to work with folks that have their own propriety investment methodology,” he said.

Prudential will offer the forthcoming service through advisers, who can act as 3(38) fiduciaries and have full discretion over investment selection, Foregger said. Prudential will also offer its own investment methodology in the service, he said.

“Incorporating a managed advice solution that supports understanding of income needs in retirement is especially critical during times of market volatility,” said Harry Dalessio, Prudential Retirement’s head of institutional plan services, in the announcement. “Additionally, many Americans are unsure about investing and retirement decisions and prefer the convenience of getting professional financial advice through their trusted employer-sponsored defined contribution plan.”

The managed account services will be available to Prudential’s 3.2 million retirement plan savers, according to the announcement.

Since 2014, NextCapital has raised about $82 million in funding, including $30 million secured in Series D funding last September, according to figures from Crunchbase.

NextCapital reports having managed accounts relationships with retirement services companies that collectively administer about $1.5 trillion in assets. But the company does not provide any figures on the usage of its services, such as the number of plans, participants or assets invested in managed accounts. Foregger declined to specify the use of the firm’s managed account services beyond the number of company-level clients and their assets under administration.

In September, Franklin Templeton announced that its Goals Optimization Engine managed account service would be available through a discretionary managed advice service in partnership with NextCapital. The first retirement plan service is expected to go live that with that service in the third quarter, Foregger said.