A common misconception among plan advisors is that auto portability poses a threat to their business. In reality, the opposite is true. Auto portability strengthens advisors’ value by increasing plan assets and expanding opportunities for wealth management.
Why Auto Portability Benefits Advisors
Plans that adopt auto portability steadily accumulate additional assets over time. As new employees join a plan, their small balances from prior employers—if those employers also participate—are automatically rolled in. This creates a consistent inflow of assets that would otherwise be lost.
Driving Asset Growth and Retention
Auto portability directly enhances advisors’ long-term business models by growing assets under management (AUM):
- Reduced leakage: Assets that would typically exit the retirement system through small-balance cashouts are preserved. that adopting auto portability for balances under the mandatory distribution threshold could retain $1.6 trillion in retirement savings (in today’s dollars).
- Ongoing asset inflows: Advisors working with plan sponsors that adopt auto portability benefit from continuous, automatic transfers as new participants enroll.
- Stronger plans: Increased assets help improve plan performance, participation outcomes, and engagement—creating a more attractive foundation for future advisory services.
In effect, auto portability “recycles” small accounts, transforming them into meaningful long-term retirement savings—benefiting both participants and plan sponsors.
The Long-Term Value of Preserved Savings
The impact of preventing small-balance cashouts is significant:
- Individual impact: Alight Solutions (2021) found that just three cashouts under $5,000 during a participant’s 20s can reduce retirement savings by $295,000 by age 67 (assuming an 8% annual return).
- Plan-level impact: Over time, tools like the Auto Portability Plan Calculator demonstrate how preserving these balances can substantially increase total plan assets over a 40-year horizon.
You can illustrate the impact of auto portability to the plan for your client through The Auto Portability Plan Calculator.
Adoption Is Accelerating
Auto portability is rapidly gaining momentum across the 401(k) landscape:
- Delivered through the Portability Services Network (PSN), a consortium covering approximately 63% of defined contribution participants
- Plan sponsor adoption for PSN Auto Portability is rapidly expanding. You can track the increase each quarter here.
The system operates on a negative consent basis, meaning participants are automatically included but retain the option to opt out—enabling scalable, end-to-end automation for small-balance job changers.
Key Takeaways for Advisors
- Focused scope: Auto portability targets small-balance job changers and does not compete with advisors’ core client relationships.
- Growth opportunity: By increasing participant balances and total plan assets, it creates more opportunities for wealth management and advisory services.
- Proven momentum: Adoption is accelerating, and the system is already delivering results—both through utomated transfers and consent-based consolidation.
Bottom line: Auto portability is not a threat—it’s a growth engine for plan advisors, driving asset retention, increasing AUM, and expanding long-term client opportunities.
Advisor Resources & Downloads:
- Auto Portability Plan Calculator
- Participant Cash Out Calculator
- Auto Portability Adoption Tracker
- Assessing the Ongoing Impact of a Program of Retirement Savings Portability (Retirement Clearinghouse, 2021)
- Auto Portability Comprehensive Infographic (Portability Services Network, 2024)
- Auto Portability’s Benefits to Women (Retirement Clearinghouse, 2024)
- Revisiting the Auto Portability Simulation: The Impact of the Portability Services Network, SECURE 2.0 and Expanded Access (Retirement Clearinghouse, 2023)
Advisor-Focused Articles & Audio:
- What Financial Advisors Need to Know About Auto Portability
- RCH Consolidation Corner Channel Ep. 12 - Auto Portability's Importance to Financial Advisors
- A No-Brainer Benefit that Advisors can Bring to Plan-Sponsor Clients
Schedule an Orientation Session on PSN Auto Portability:
