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Empower Retirement Review: Fees, Pricing for Traditional, ROTH IRA Accounts. Is Empower Retirement safe?



Empower Retirement – Who Are They?


Empower Retirement is the second largest retirement financial services provider in the US, trailing behind international behemoth Fidelity Investments. Empower is a relatively recent name in the Retirement Services industry. It is a subsidy of the Canadian-based financial holding company Great-West Lifeco. In 2014, Great-West orchestrated a series of acquisitions and partnerships with other big names such as Putnam Investments and JP Morgan Retirement, catapulting their collective controlled assets above every other company save Fidelity. The resulting conglomerate was branded “Empower Retirement”. Since then Empower Retirement has continued to expand its business by taking on new corporate clients and increasing their access to additional investment funds.


Is Empower Safe and Legitimate Company or a Scam?


With all the information in this article and from the internet it is obvious that Empower Retirement is not a scam. It is safe and legitimate retirement plans provider.


The Details of Their Service


Empower Retirement is a vendor of many funds similar to the S&P described above. They exist for the purpose of helping customers grow their investments to a level that can support them in retirement. Empower offers their services both to the public and private sector. They provide retirement plans for companies of every size as well as various government agencies from the municipality level all the way up. The employees of their direct customers are ultimately the users of Empower’s service. They also offer the opportunity to set up individual IRA accounts apart from their corporate plans.

The company offers a very large package of high-quality resources to their customers. Individuals are able to create their own Empower user accounts to view and modify their investments at any time they wish. Some of their best features include:

- Detailed account statements with history of past performance by individual asset

- High degree of customer autonomy for controlling and managing their investments

- Retirement planning tools for forecasting future fund income

- Extensive customer support network with financial professionals available to help individuals plan for their particular retirement circumstances and goals


Empower review


Account Information & Management


Empower offers a very organized view of the customer’s investment account. They have a great “At-A-Glance” table which shows essential information such as present account value, rate of return, and current contribution amount. Users can delve into more detailed information as they wish. There are many funds to choose from with different specializations, such as US Markets, European Markets, Corporate Bonds, Emerging Markets, and much more.

This allows customers to diversify their holdings and change the weighting of their various investments as needed. For example, it is a typical practice to invest a greater percentage of their portfolio in bonds as one ages; which are less volatile but have lower overall returns. This protects the retiree from their portfolio depreciating as much as a pure stock portfolio during a market downturn when they actively need the income to live off of. Contribution percentages, investment percentages, automatic rebalancing and more are available for the customer to modify. The interface is easy to navigate and understand.


Customer Support & Retirement Planning


Empower also has a very good customer service branch. Whether a user wants to know more about how to navigate the account portal, get information on fund specifics, or wants to speak with a financial planner about their retirement goals, support from Empower is easily accessible. They can be reached through messages and they have dedicated phone numbers for customer service and financial planning available for calls every day. This customer has always received prompt and helpful support when contacting Empower for any needs. There are some built-in calculators to forecast future account values and income potential right on the site that can be used as well.

Getting Specific – An Analysis of Empower


So, should customers sign on with Empower Retirement for their long-term investing needs, or look elsewhere? Here are several critical facts and figures to consider. Since Empower offers their services primarily to corporations, the standard plan administration fees aren’t absorbed by the individual users. Instead they are negotiated and paid by the client corporation. There are a few fixed account fees that come with the creation of an individual IRA account, but these are so small they can almost be considered negligible.

Empower charges $0 for account setup; and an annual administration fee of $35 until the account balance exceeds $30,000. Competitor Vanguard charges an annual fee of $20 per fund. So a Vanguard user with a diversified account of three funds will be paying about the same as an Empower user. Larger Empower accounts will have a slight advantage when they exceed $30,000. But a difference of $100 per year pales in comparison to the potential difference in fund management fees.

The main source of costs to consider for any retirement services vendor is by far the annual fund management fees. This is a cost to the consumer based off a percentage value of their total holdings in a particular fund. And since the goal of most retirement accounts is to appreciate well into the six-figure range at least, even a 0.5% difference in fees can end up costing thousands of dollars extra per year. The expense percentages vary by individual fund, so even within Empower it is possible to shop around for lower fee funds. A direct comparison between competitors is difficult for this reason.

Besides the costs, account management interface, customer service, and fund performances are other key areas to consider. Here is a breakdown of the positives and negatives this customer has experienced with Empower:


Positives:

Very detailed account information. The user interface is easy to navigate and the customer has a lot of control with how they want to manage their investments. Lots of variety with fund selection.

Valuable retirement planning tools and access to professional financial advisors to help with retirement planning and account structure for the less educated.


Negatives:

Empower’s funds change a slight premium for no large edge in performance over other options. Whether the quality of their other services is worth this cost is a matter of opinion.


Empower IRA account review


Pro: Account Information & Management; Fund Selection


Empower offers a very organized view of the customer’s investment account. They have a great “At-A-Glance” table which shows essential information such as present account value, rate of return, and current contribution amount. Users can delve into more detailed information as they wish. There is a large variety of funds to choose from with different specializations, such as US Markets, European Markets, Corporate Bonds, Emerging Markets, and much more.

Customers will not run into difficulty with properly diversifying their portfolio as they desire. Empower allows customers to easily diversify their holdings and change the weighting of their various investments as needed. For example, it is a typical practice to invest a greater percentage of their portfolio in bonds as one ages; which are less volatile but have lower overall returns. This protects the retiree from their portfolio depreciating as much as a pure stock portfolio during a market downturn when they actively need the income to live off of. Contribution percentages, investment percentages, automatic rebalancing and more are available for the customer to modify. The interface is easy to navigate and understand.

Pro: Customer Support & Retirement Planning


Empower also has a very good customer service branch. Whether a user wants to know more about how to navigate the account portal, get information on fund specifics, or wants to speak with a financial planner about their retirement goals, support from Empower is easily accessible. They can be reached through messages and they have separate, dedicated phone numbers for customer service and financial planning available for calls every day. This customer has always received prompt and helpful support when contacting Empower for any needs. There are some built-in calculators to forecast future account values and income potential right on the site that can be used as well.


Con: Empower Fund Management Fees


In many ways over the past several decards, a sustained edge in performance of one fund over another has shrunk considerably. The recent rise of low maintenance, broad-based index funds has largely been a response to this phenomenon. Some financial theorists hypothesize that with the advent of such advanced AI and trading technology markets have become much more efficient than years past; essentially meaning that the current price tracks the actual value of a security much closer. At this point the majority of funds that have managers who actively buy and sell stocks incur higher costs than index funds yet are unable to generate significantly higher returns. Largely this makes the most completive holdings to be the ones that eat the least of one’s principal away via annual fees.

Empower offers a standard prospectus of over 100 of their most popular funds with historic performances and expense ratios. For the sake of an example, here are the two highest performing Large Cap Equity funds that a track record of at least 10 years:

JP Morgan Growth Advantage A - 9.79% Historic Returns; 1.35% Expense Ratio [8.44% Net]

Alger Capital Appreciation Instl I - 9.57% Historic Returns; 1.12% Expense Ratio [8.45% Net]

Competitor Vanguard is widely considered to be the pioneer of extremely low cost index funds created to rival the active management philosophy. Here are the top two funds from Vanguard picked with the same criteria:

PRIMECAP Admiral Shares - 10.27% Historic Returns; 0.33% Expense Ratio [9.94% Net]

Growth Index Admiral Shares - 9% Historic Returns; 0.08% Expense Ratio [8.92% Net]

As can be seen, there is no noticeable increase in historic performance for the higher costs of Empower’s funds. And these small margins of difference become increasingly significant as one’s account balance rises. A $1,000,000 account compounded for five years at 9.94% vs. 8.45% ends up netting an extra $105,927!

Now, there is a common mantra in the investing world, “Past results does not indicate future performance.” Advocates of actively managed funds insist that index funds only outperform active funds in friendly market conditions, and the US market has been in one of the longest bull markets in history since the after math of the real estate crash in 2008. So it is possible that active funds may gain back this performance deficit by losing less if and when markets become more turbulent again in future times.

However, the hard data points toward index funds being a superior investment vehicle for the past decade or two. Empower’s increased fees may very well create an exponential drag on customer portfolios if past trends continue. Whether a customer deems the extra costs worthwhile for the other services offered by Empower or their account balance is too small at this point to trifle over it is a decision each person will need to make for themselves.


Empower Retirement IRA Review Summary


In conclusion, Empower is a very high quality vendor of retirement services. They have an extensive network of funds, a rock-solid business model, comprehensive and user-friendly account management, along with a great network for customer support. There is a value of positivity and helpfulness in their business culture that can clearly be seen in all interactions. However, the main cause for concern to be analyzed is the slight deficit in historic performance compared to lower expense options such as those offered by Vanguard. The difference in fund style and past results is a situation with many complexities as mentioned, and really only gains great significance with high account balances. At the end of the day, Empower is a competent company you can confidently trust with your business. This customer certainly does!



Empower Retirement IRA Reviewed by Brokerage-Review.com on . Rating: 4



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