TRANSCRIPT:

Tom Hawkins: Welcome to another edition of the RCH Consolidation Corner Channel, where we provide you with audio content that explores key issues in the preservation and consolidation of retirement savings. Today, we’ll be examining the accelerating adoption of auto portability. We hope you’ll find the audio enjoyable and informative.

NARRATOR: In today's retirement landscape, auto portability has emerged as a game-changing solution to combat cashout leakage - the practice of employees withdrawing retirement savings when changing jobs instead of transferring them to their new employer's plan. As more defined contribution recordkeepers and plan sponsors recognize auto portability's advantages, adoption is accelerating rapidly. Market adoption theory helps explain why this feature is poised to become standard in retirement plans.

Auto portability technology automatically transfers retirement savings between employer plans when workers change jobs. This seamless process prevents cashout leakage, which costs Americans approximately $92 billion annually in lost retirement savings according to the Employee Benefit Research Institute. Beyond preserving savings, it simplifies administration for both employees and plan sponsors.

Looking at adoption through the lens of the Technology Adoption Lifecycle framework, we can see auto portability's progression through key market segments. The innovation has firmly established itself with innovators and early adopters, evidenced by the Portability Services Network's December 2024 announcement that over 15,000 plans representing approximately 5 million participants have already implemented the feature. And by March 2025, the plan sponsor figure had swelled to over 18,000, a three-month increase of 22%.

These forward-thinking plan sponsors recognize that auto portability improves participant outcomes while reducing administrative costs associated with small, inactive accounts. The successful operational phase led by major DC recordkeepers is demonstrating its effectiveness at scale, while regulatory support has minimized perceived fiduciary risks.

Auto portability is now transitioning to the early majority phase, often referred to as "crossing the chasm." This critical stage will bring broader acceptance and mainstream adoption, driven by proven benefits from early adopters, expanded industry collaboration, and strong participant demand - with surveys showing 9 out of 10 participants want this feature.

Market forces are accelerating adoption through competitive pressure, network effects, and ongoing innovation. As more recordkeepers and plan sponsors implement auto portability, others may feel compelled to follow suit to remain competitive. The value increases as the network grows, creating a positive feedback loop. Additionally, new applications for auto portability are likely to emerge over time, including potential integration with other retirement technologies.

The combination of demonstrated benefits, regulatory support, industry collaboration, and market momentum is creating ideal conditions for rapid adoption. As auto portability becomes mainstream, it will play a vital role in preserving retirement savings and improving financial outcomes for millions of Americans.

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