will be able to help small employees save money under the new forretirement advisory services at no significant cost increase, President and CEODaniel Houston said April 29.
Thecompany expects some extra costs for transition and compliance as theregulations take effect in 2017 and 2018, but no significant increase in run rateexpenses, Houston said during a conference call to discuss first-quarterearnings.
Principalexpects to benefit from distribution companies limiting the number of providersthey work with to those who can help them manage and comply with the revisedrules, he said.
"We'llalso gain market share as we accelerate growth of our defined contributioninvestment only business and experience higher retention rates ofretirees," Houston said.
TheCEO said he agrees with the Department of Labor's goals of increasedtransparency and making sure retirement advice is in the best interest ofinvestors. He said the U.S. has amassed about $22 trillion in retirementsavings, making it arguably the most successful in the world, and fears thechanges might limit choices for savers — either in products or the number ofadvisers.
Othercompanies that do not have the scale to absorb the higher costs of complianceor for whom retirement advice is not a core business could just exit thebusiness, Houston said. Company executives said they expect consolidation inthe industry.
Houstoncautioned against the notion that the solution for small-account advisoryservice is the robo-advice platform.
"That'sjust not the case, and so we have some more work to do there," he said.