Good afternoon. How's everybody doing? Great. So, welcome to Principal Financial Group's 2024 Investor Day. We appreciate your interest in our company. My name is Humphrey Lee, Head of Investor Relations. This is the first in-person investor event that we are having since 2018. So, it is great to be here today in New York, seeing everybody face to face. Before we kick it off, just some housekeeping items. We'll be making forward-looking statements and using Non-GAAP financial measures. Instead of spending the next 10 minutes to go through the cautionary statements and going through the reconciliation, you can find that in our material. All right, let's get started. We have an exciting agenda for all of you today. We're going to tell you why we are confident of the growth opportunities ahead for Principal, but more importantly, how we're going to achieve that.
First, CEO Dan Houston and CEO-Elect Deanna Strable will kick it off with our growth strategies, highlighting the compelling opportunities in front of us. We'll follow that up with three panel discussions: Small and Mid-Sized Business, Retirement Ecosystem, and Global Asset Management. Our three business unit presidents, Amy Friedrich, Chris Littlefield, and Kamal Bhatia, will be joined by our Chief Marketing Officer, Beth Wood, Chief Growth Officer, Vivek Agrawal, and Deanna, to do a deep dive, telling you how we're going to capture these opportunities.
After that, Interim CFO Joel Pitz will close it out with a look at our financial performance and key metrics before we move to our Q&A session. During today's presentation, our customers, distribution partners, and investment professionals will share with you their perspective and bring the strategy to life for all of you. Thank you again for being here today. Let's begin with our essence of Principal.
So, here's the plan. Around the time medicine invents the light bulb, you decide to start a life insurance company in the U.S. because you understand the need for long-term security, and you see a way to help people. You learn early on that life and business are full of surprises, and through wars and depressions, you become known for keeping your promises. So, when employers start looking for ways to keep great employees, they naturally turn to you. You get into the retirement and long-term savings business. You get really good at it. You become a leader in asset management, and the world starts noticing the depth and breadth of your investment expertise. I mean the whole world: governments and institutions, as well as businesses and individuals. So, you set up shop in major financial markets across Asia, Australia, Europe, Latin America, and North America.
You gather new ideas and insights that help you adapt, grow, lead, and inspire more than 68 million customers in 80+ countries, and you become big, as in $750 billion in assets under management big. You're recognized for ethics and innovation and for being a great place to work. Then you realize that while the accolades are nice, they aren't why you're here, because millions of people around the world are looking for expertise, someone who could help them gain access to financial security. We haven't lost sight of why we began this journey so many years ago. We see a way to help people wherever they are in life, one person at a time, because that's who we are. We are Principal.
The essence video. And whenever I see a video like this, I think about it in the context of investors like yourselves, because you can look at that and say, "It's a little bit soft. What are you really trying to cover here?" At the end of the day, aren't you here to talk about your return on equity? Aren't you here to talk about what you anticipate in terms of your operating earnings, growth, and what's going to be your free cash flow? And as I look at this middle section, I know that's exactly what you're thinking. But the reality is, this is who we serve. These are our customers. Forty years ago, I started out in West Texas, including Fort Worth and Odessa. One of our clients at the time was O.B. Macaroni. It was a new 401(k) client. They started in 1886.
They're still in business today, and they're still a customer of the Principal Financial Group. The video intentionally looks at individuals from all walks of life. That's what we do. We support small, medium, and large businesses, not just the business owner and the key executives, but every one of these people who labor every single day. Their group benefits, their retirement benefits, they're counting on us in this industry to carry the weight to ensure that what they end up with 35, 40 years down the road isn't just a cake and a gold watch. It's lifetime income in retirement, and that's what we're going to talk to you about here today, to try to synthesize for you how Principal is differentiated in the marketplace and how that works relative to producing appropriate return profiles for investors.
It's been three years ago since we devised our strategy, and Deanna Strable and I co-architected that strategy to ensure, from a CFO and CEO's perspective, that as we looked into the future, the next three, five, 10 years, understanding what that portfolio of businesses needed to look like. Frankly, we couldn't be more proud of the progress that we've made since three years ago undertaking that strategic review for the organization. But just know this: the North Star for us is all about making sure that these individuals that were represented in this video are taken care of from a financial security perspective. I also want to take just a few minutes and talk about who we are. Core values, and I'll talk about those in just a few minutes, they matter. In the crazy world that we live in today, you better be anchored against something.
Our North Star is to make sure that we can take care of our customers and that we do things in an ethical and honest manner. We also want to make sure we're operating in the right markets, where there's certainly a leading opportunity for Principal to be differentiated out there in established leadership positions. I was part of the team that stood up two important businesses at the Principal. I was part of the work group that decided we could take the investment department out of an insurance company and stand it up as a global asset manager. The second work group that I was part of was standing up an international operation, and you heard some of the statistics relative to the size of what Principal has become.
The only reason I cite that, many of the insurance analysts and investors in this room have seen more than one insurance company try to establish themselves as a global asset manager, and they've tried to take their domestic capabilities around the world. In many instances, they failed miserably. We've managed to do it quite successfully, diversifying our exposure around the world to different markets, operating in 80 different countries around the world with record assets under management just in our last reported period. Again, from our perspective, the markets that we play in are where we can leverage all these great capabilities we have here at Principal. We also understand the importance of differentiated capabilities. Every one of our businesses is changing, and we're going to talk about those today.
The asset management business is changing, the insurance business is changing, how small and medium-sized businesses want to interact with companies like Principal, it's all changing. But we do know one thing's for sure: if you don't have an integrated enterprise strategy, the chances of that being successful long-term are fairly low. We have a lot of time, energy spent and devoted towards leveraging technology, leveraging our existing relationships with large distribution partners, and ensuring that if we have capabilities, we're going to spread those around the world where it makes the most sense. Again, as I think about us and covering this over the course between Deanna and I in this first session, we'll get into that. We do start with the customers. If I haven't made that perfectly clear, that is our North Star. We also want to do what's right.
Losing the confidence of your customers today, whether it's a plan sponsor, an institutional investor, you don't want to get put onto that list. And Principal is recognized as being one of the most ethical companies, 13 years in a row being recognized as one of the most ethical companies in the world. We wear that with a great deal of honor, and it doesn't come casually. It's something that we have to work on constantly. And then owning what's next. The good old days of sort of laying down pipe, thinking that's going to work for the next three, five, or seven years, that's long gone. We're revisiting strategy on an ongoing basis to make sure, as we think about our strategy, is it durable, as we think about the markets that we're facing at the current time. And we like the strategy we've set forward today.
And we also need to make sure, from our perspective, that we're investing in the future. Again, when we're having these earnings calls and we're talking quarter- to- quarter, and you hear us talk about making expense cuts, and why isn't that going to the bottom line? One good reason: we have to continue to invest in the businesses that we're in and making sure that we continue to have number-one positions in the areas in which we continue to compete. And the other one I'm just pointing out here from a talent perspective, we've always had a very diversified team. We have a diversified board, we have a diversified management, we have a strong commitment to diversity and inclusion, and couldn't be more proud of the current positioning of the Principal Financial Group.
And then maybe take just a few minutes talking about the portfolio change that I know many of you are certainly aware of, keenly aware of the fact that we divested of certain businesses we just didn't feel had long-term value creation for our investors, and we undertook that within the last three years. It is a more capital-efficient model. It's one that's focused on delivering solutions to our customers and making sure that we are using our capital in the most efficient way possible for our long-term investors. What's the result? It did increase free cash flow significantly. It's also allowed us to maintain our 40% common stock dividend and allowed us to push a lot of capital into our businesses, but also back to our shareholders. So what's happened over that same period of time?
We went back and did the math for you relative to Principal delivering shareholder value. You can see we're PFG over 50% over that three-year period of time relative to the S&P, the peers, and the S&P 500. I think you could look at this and say, they came out, we had a heavy, we had a very significant conversation with investors and analysts about the portfolio, where we were going to take the organization, and I think you can see from this the shareholders have been appropriately rewarded for the repositioning of the portfolio. This is the one that is a bit of a brag sheet, which we'll take credit for that, but I want to start right over here as it relates to distribution. Principal has always maintained a very strong distribution.
We have our own Principal Financial Network, over 1,200 professionals that are keenly focused on the markets in which we focus on every day. And what do I mean by that? Small to medium-sized business owners, business executives, key executives for those organizations. We tailor our products and services to meet the needs of our proprietary as well as our non-proprietary distribution partners. On the distribution side, whether it's an insurance broker, a retirement-focused advisor, whether it's banks, whether it's wirehouse firms, again, Principal has dedicated resources to each one of these distribution outlets to ensure that we're making the proper connections. And then lastly, this role of global investor relations.
Principal's put a lot of time and energy, and again, we'll talk about it throughout the course today, the meaningful, deep relationships with some of the most meaningful distributors of products, whether it's retirement or asset management, through these wirehouses, through the brokerage firms, through proprietary distribution for other organizations. Distribution is truly an area where Principal continues to generate great results for our investors and joint venture partners, and again, I'd like to say thank you for our partners from CCB who are here today, China Construction Bank, great partners of ours. We have had a lot of success across retirement, across asset management, and most recently in the commercial real estate and data areas, and we appreciate your being here, so thank you for doing that.
We're also fortunate to have another one of our partners in the room, Nippon Life, one of Principal's original investors going back to 2001. In addition to that, we manage assets for Nippon, and we are very grateful for the relationship, Okamoto-san, that we enjoy. So thank you for being here today, and of course, CIMB Group out of Malaysia has continued to be a strong partner of ours for Thailand and Malaysia, and then lastly, Banco do Brasil. Banco is one of our really strong success stories in addition to CCB and CIMB Group. This is a well-established organization with distribution throughout all of Brazil, and again, just a wonderful partner for us to work with. What's the yield of all of this? You can see the number-one positioning, two and three positionings here across our businesses, whether it's Benefits and Protection, whether it's U.S. retirement and asset management.
This is where we play, this is where we've differentiated in the marketplace, and we want to continue to own those spaces appropriately. So I'm going to invite Deanna Strable to the stage, but as I do that, I just want to tell you how pleased that I am. We worked very closely with the board over the last couple of years to identify what was the best succession for the Principal Financial Group.
We wanted to find a person that was incredibly smart, someone who really has a passion for our customers, someone who understands the financials of our business, someone who's previously ran a business very, very successfully, having run our group benefits and our life insurance business, someone who was a co-architect of our go-forward strategy, and someone who is truly admired and respected by our employees. So with that, please welcome Deanna Strable to the stage. She's even got her own clicker, Deanna.
And I made it up here. That was the first big task we had to do today. So thank you, Dan. It's a pleasure to be here with all of you today. I've had a lot of opportunity over the last decade to interact with our key investors, our key analysts, our key customers, and it's such a great pleasure to be here with you today. I also want to thank Dan. He's been an incredible leader for this organization. I can't fill his shoes, but together we've created a path that is going to take this company forward, and it's a tremendous honor, a tremendous pleasure to be the next CEO of this company. We have a great story to tell today, a compelling strategy and measurable results that is going to drive growth, not just today, but consistently over the long term.
One of the things that, if you look at us, and Dan mentioned it, we have evolved our business over time, and we've done that from the founding in 1879 through our IPO in 2001 to today, and that mindset allowed us to drive growth, it allowed us to drive value creation to all of our stakeholders. We have been a pioneer in the workplace, both from a retirement perspective and a benefits perspective, and Deanna mentioned two of the work groups that she was on, but we have proven success of transforming aspirational businesses into significant contributors to our performance, and today we're building upon that.
We are an integrated provider of retirement, asset management, and benefits, but one of the things that we have done collectively as a team is looked forward, and we've identified three very significant opportunities that we feel align with the market potential, but also with our competitive advantages when you look across our portfolio. Those three are small and mid-sized business, retirement ecosystem, and the global asset management arena. Each of these individually we'll show you is a significant market opportunity in and of itself, but we're positioned to take advantage of all three of them. Dan and I are going to briefly touch on them, and then as Humphrey mentioned earlier, we are going to go much deeper into those three through the panel discussions later today. So we're going to start with SMB.
This is the one that I have touched personally for most of my time at Principal. We've long been a leader to this segment of the market, which we define as employers with less than 1,000 employees. These businesses are big when it comes to job creation, job growth, and contribution to the U.S. economy, not to mention incredibly resilient. For each of these opportunities, we've estimated the annual profit pool for these, and this one is $90 billion, taking into consideration the total profit opportunity every year for insurance and retirement across SMBs and their employees. In addition to the market rankings that Dan talked about earlier, this slide also shows the outperformance that we have had with this marketplace.
So specific to group benefits, we have averaged 7% annual premium and fee growth, which, as you can see on this slide, is over 200 basis points higher than the industry. And if we look at our SMB asset growth within retirement, we have averaged nearly 13% annual growth, which, as you can see, is over 800 basis points higher than our peers. You're going to hear a lot more details about this from Chris, Amy, and Beth, and ultimately what strategies we're focused on to continue to drive this growth.
So with that, let me take just a few minutes and talk about the retirement business, and a lot of people want to shortcut this conversation and talk about it being a record-keeping business. At one point in time, it's true, it was a record-keeping business, but in our lens, the way we view this market, it's more than that. It's not only record-keeping, but it's also asset management, wealth management, in addition to lifetime income and retirement. When you look at those four components and ask yourself a simple question, what's the value of that from a profit pool perspective? Not revenues, profits, $110 billion.
That's notable. It's worth going after, especially if you can be capital efficient in how you're approaching this particular market, and especially if you look at the number-one positions that I was describing earlier, we're in a very favorable position. There's a couple of other sort of broader demographic issues for us to contemplate as we're debating this topic.
The first one starts with, we are in the year, we are just finishing 2024, where there'll be more people age 65 this year than any other year, and the demographics just continue to follow that. What are they going to be looking for? More certainty in retirement, more guaranteed products, guaranteed and non-guaranteed income in retirement. We also know that from all of our surveys, and you've seen this out there, people trust their employer. The workplace is a very favorable position, is in a favorable position that it's trusted, it's admired. People appreciate the fact they're getting institutional product for small, medium, and large-sized businesses. It's true for disability, it's true for group benefits as well.
Again, when I talked about the privileged access, the privileged access is we've already got over in excess of 10 million 401(k) record-keeping participants that we're able to tap into to make sure that we're able to service their needs. We've had Principal Connection. Principal Connection is Principal's internal advisory capabilities that allow us to retain assets at benefit event. It's a well-oiled machine. What's changed within the last couple of years is the DOL fiduciary reg has changed, so has the Best Interest Contract standard, so we're in a more favorable position to understand what that environment looks like in the future for us to retain those assets. So again, we're very enthusiastic when we think about all the dimensions of retirement and Principal having proprietary solutions to satisfy those. Deanna?
The last one we're going to touch upon is really around global asset management. It's interesting because that builds on what Dan just talked about, which is our retirement perspective and how we can utilize that platform to drive asset management, but you'll also hear how we can use that to drive asset management beyond just our own record-keeping clients.
My exposure to our asset management business has been reinforced through my over two-decade involvement in our weekly General Account investment committee that both Dan and I and many of the members of our executive team sit on, as well as more recently in-depth exposure to our investment teams around the globe. This one we've estimated as a $180 billion annual profit pool, but what we really want to talk to you about is where we want to focus to ultimately continue to drive above-market growth. You'll hear us talk about U.S. retirement, as Dan just discussed.
You'll hear us talk about institutional and how we are going after that client base around the globe. You'll hear us talk about privates. Ultimately, we have very market-leading real estate capabilities, but are working to build capabilities beyond that that can take advantage of that attractive marketplace, and then also the access to high-growth international markets. Dan mentioned three of our primary joint ventures around the globe. That gives us a lot to build on to be able to access the higher growth opportunities that we see outside of the U.S. This is a really busy slide, but in addition to these three growth priorities, I've had many conversations with many of you about how we have always leaned into technology. Technology is not leaned into for the sake of technology.
It is how can we use that to drive growth, and how can we use that to drive effectiveness and efficiency across our organization. You'll see a number of places here on the slide where we're investing: customer experience, modernizing our technology stack, global delivery, and ultimately more emerging technologies such as generative AI. There are a number of places here on the screen where we are utilizing today AI and generative AI to drive enhancements in our business, and I'm going to highlight a few of those with a little bit more detail, and I know our panelists will go into additional detail as well. The first one is around code generation. That is really to augment our software engineers and accelerate software development.
We have deployed this across our IT community and are seeing almost every engineer spend less time on the time it takes to them to develop code. The second one I'll mention here is within engagement centers. Obviously, a huge part of what we need to do is engage with our customers, engage with our dental providers, and if we can do that more effectively and efficiently, that's a win-win for everyone. And so we have stepped up our ability to interact with our customers and providers via text, and we're also leveraging analytics to automate customer call documentation, ultimately increasing productivity and improving customer satisfaction. I'll move over to our asset management business where we are automating the research, also automating portfolio modeling and trading capabilities, and have seen an increase in efficiency of 10%-30% across our various investment teams where we've deployed that.
And finally, and I know we have talked about this a number of times, and Amy has leaned into this as well, we're leveraging partners across both dental and disability claims to increase efficiency and deliver better claim outcomes. That specific example, we are seeing 3x-5x on every dollar that we're investing. So we'll continue to lean into this, ultimately to drive growth, enhance efficiency, and as Dan mentioned earlier, free up expense dollars to allow us to invest in other areas without us hindering our attractive margins. At a broad level, the industries that we operate in are mature, and if you look across each of these industries, you can see that in total, they deliver low single-digit revenue growth rates.
When we focus on the growth platforms that we just discussed, SMB, retirement, and global asset management, it allows us to focus in areas within each of these industry sectors that have higher growth prospects within those industries. By focusing on both growth within those businesses, but also taking advantage of opportunities that exist across those platforms, it allows us to take advantage of much stronger revenue growth potential. If you weighted average the industry growth numbers that are at the bottom of the screen, they're really in that 1%-4% range. But if you look at the weighted average across the platforms where we're playing, it puts that more in the mid-single, 4%-7% range. So ultimately, our focus, both within and across the business, gives us enhanced confidence in our right to win and ultimately to drive market-leading growth.
When you invest in Principal, you are investing in three of the largest U.S. and global profit pools in terms of growth and in terms of earnings power. We expect that over two-thirds of our EPS growth will be supported by underlying revenue and earnings growth, similar to what we're producing this year. This is in contrast to many of our peers who rely more on share buybacks to drive their EPS growth. The other thing I would say is three years ago, we laid out these targets that we have here on the screen, but what will you hear today is, one, we're delivering on these now, and two, we are increasingly confident in our ability to continue to grow and deliver on these financial objectives, EPS growth of 9%-12%, 14%-16% ROE, and free capital flow of $7.5-$8.5 billion.
So there you have it from your former CEO and the future CEO, and I just want to maybe summarize some of the key takeaways from this segment. The first of which is we've identified for you and pointed out painfully clearly that we're operating in the right marketplaces, both geographically as well as the products and services that we have. We're operating from an incredibly strong competitive positioning. Every one of our businesses certainly will be challenged. They all are. It's never been easy, but the positioning that we start from is from a position of strength that we want to continue to leverage that.
And we also want to make sure that we're delivering consistent and sustained operating earnings to our shareholders and recognizing that our business, whether it's generating free cash flow, whether it's churning a reasonable return on equity, again, we're so close to the 15% relative to the peers. Again, we think that we've got the right set of businesses at the right time to take full advantage of that. So with that, we're going to bring this session to a close, and I'm going to invite the SMB team to the stage for the next part of our sit-down conversation. So they'll make some changes up here, and I'll invite Beth Wood. While you're doing that, I just want to make some obvious observations during this transition, the first of which starts with the fact that we eat our own cooking, right?
We're trying to make sure that we've got key person insurance with Deanna with a bad wheel here. Amy is working her way up to the stage. This is short-term disability. She has been on it. She's been good at it. And again, Principal Financial Group stood with her every step of the way. I'm going to retire. I think it's going to work out. I've saved in my 401(k) plan, and I'm going to prove I'm right here, guys. Income and retirement, it's all possible. Come on up here, Amy. We don't have all day. Yep. Bring it up.
I gave Amy the option, and so did Deanna, to say, "Do you want to come to New York and play hurt, or do you want to stay back and have one of your lieutenants do it?" And Amy said, "Over my dead body. I'll be there," and she is here, so with that, I'm going to turn it over to our very capable Executive Vice President and Chief Marketing Officer, Beth Wood, to lead it from here. Beth?
Thank you, Dan. Good afternoon. Okay, let's try that again. Good afternoon. I'd like to get us started by hearing from some of our important distributors. These are firms that play a critical role in providing Principal access to the small and mid-sized business market, so let's take a listen.
Small and mid-sized businesses are a vast market opportunity. They deliver significant economic impact, and our commitment to SMBs sets us apart. Our above-industry growth has established Principal as a recognized market leader. The small to mid-sized business market is fundamental to who we are.
Through our work with independent brokers and financial professionals, we maintain a strong local sales and service presence in communities nationwide. For instance, The Cason Group offers insurance solutions to the workplace across 43 states. It's really helpful for us as a distributor when a carrier comes to us and doesn't just give us a product download, but they help us think a little more strategically. They learn our business. They ask questions about the direction we're going, and they offer insight and strategy on ways that they've seen the market adapt or maybe new things that we got to capture. Principal takes a very long-term approach to how they price every one of their products. It's very impactful for us as a distributor to know that we've got a company that's not making decisions just for the short term.
These distribution relationships create value through consultative sales models and specialized market knowledge. Signature Estate & Investment Advisors works with Principal to provide 401(k) and non-qualified deferred compensation solutions to customers. Principal helps us solve complex problems for our clients, and whenever companies are growing, they need a platform that's going to continue to grow with them, and that's what Principal really has to offer. With all the help and support that I receive from Principal, it gives me more time to go out and sell and close new business. I think Principal really understands the small business community and delivers on creative plan designs that meet the unique needs of a business owner.
Our team has been able to partner with the 401(k) and the non-qualified sales team at Principal to really deliver customized, unique solutions for our clients that the rest of the industry is not able to match. Our depth of solutions and distribution show how we've always seen the opportunity in the SMB market. What differentiates Principal in the SMB marketplace is the laser focus on it. Most of your competitors are willing to, maybe even want to, take that market segment, but it is what you do. And it shows in the way that you bring people to it, resources to it, a business model to it, and it makes y'all the best in that space. We will continue to harness SMB growth to create value for customers and shareholders alike.
So once again, good afternoon. I'm joined today by Amy Friedrich, President of our Benefits and Protection Division, and Chris Littlefield, President of Retirement and Income Solutions. You guys can say hi.
Good to be here.
We're a little far apart, so this isn't normally how we work, but we're going to work through it today. They're here to share their insight and specifics regarding how our retirement and benefits businesses are working independently and together to continue accelerating our leadership position and unlocking value within this important market segment. My name is Beth Wood. I am Principal's Chief Marketing Officer. I have been in the financial services industry for 17 years, working for two other financial services companies, both focused on the workplace, and prior to coming to financial services, I was a small business owner for 12 years, leading a multi-million dollar privately held company with over 500 employees.
In fact, I was a Principal 401(k) customer. So when Dan talks about we eat our own cooking, she's exactly right. As we unpack the strategy, I'd encourage you to listen for three key takeaways. First, this market, the small and mid-sized business market, is massive and offers a multi-tiered opportunity. Second, Principal has a track record of growth and margin performance, and we're going to spend a little time talking about that. And finally, we're going to talk about how we are uniquely positioned to serve this market. SMBs are the heart of the American economy, and as I said, the market is vast and offers significant opportunity for growth. SMBs represent approximately 50% of all jobs in the United States and drove 65% of new job growth between 2000 and 2019. We expect this trend to continue, as does the SBA.
Their output amounts to 44% of the $27 trillion U.S. GDP. Our total addressable market is made up of 6.3 million businesses, each with up to 1,000 employees. The addressable market also represents an employee population of 60 million Americans. These businesses will continue to evolve. As the economy and customer needs evolved, they will continue to drive innovation, wealth creation, and prosperity in the U.S. There are expansive opportunities within the SMB market, and we talked a little bit earlier about the profit pool opportunity within SMBs. The SMB market today in insurance and retirement represents a $90 billion profit opportunity, and there are three subsegments within this market: the employees, the business owner themselves, and the business. Each of these has their own challenges, and I'm excited about the incredible breadth of products, services, and capabilities that Principal brings to each of the segments within this market.
So, let's hear from the experts. We're going to dive in a little bit and talk about the market. And after that table setting, Amy, I'd love to hear you talk a little bit about the sustainability and persistence of the SMB market, especially within Principal.
Yeah, thanks, Beth. I get the opportunity to talk about that question quite a bit. There's a lot of the things that you see kind of at a headline level about small businesses. And so one of the things, as Chris and I were prepping for this session, that we did probably with more intentionality than we've done before, is we pulled up our shared blocks of businesses, and we looked at them, and we want to basically go through a few things that are relevant about that.
One of them is that when we look at the businesses that we provide either retirement or some sort of group benefits or insurance product for, those businesses themselves have been in business, on average, in our portfolio, 30 or more years. So these are not businesses that are at month three or year three or year 13. These are businesses that are often at year 30 or year 40 or year 50. Now, some of them have had some of our products before, and they're simply adding more, but they are well-established businesses. It means that the economic cycles that you see come and go and that we all watch the headlines for tend to be ones they've weathered before. In fact, they've probably weathered two or three of them. When I look at our block too, it's long tenured.
Our own block, in terms of how they've been affiliated with us, in terms of doing business with Principal, we are averaging 10 years that they've been with us. When they decide to come to Principal, again, part of our strategies, part of the discipline, part of the growth that we want to see is we want to see that relationship grow over time. That relationship tends to be measured in decades as opposed to months or years. And the last point that I'm not sure we've shared and talked a lot about is that those customers tend to have more than one product from us. When we look across our portfolio, 80% of those customers have at least two products with Principal. I'll give you one kind of deep dive fact.
When I looked at the group benefits business, and this was a test kind of to go back and say, "Okay, are we driving things in the direction we want to drive things?" When I looked at the group benefits business 10 years ago, 10 years ago, 42% of our group benefits customers had only one product. Today, that number is less than 20%. There has been intentionality behind that. We've aligned our distribution to it. You heard one of our key relationship advisors talk about what we bring to that marketplace. What we bring to that marketplace also leads to us having multiple product sales in that marketplace. So when I think about how resilient it is, when I think about our block, those are the things I think about.
Tha t's great. Thank you, Amy. Yep. Chris, similar question for you on the retirement business.
Yeah, thanks, Beth. Thanks to all of you for being here this afternoon. You know what I would say, and certainly as we've looked at our businesses, when you look at the Benefits and Protection business, that does have a primary SMB focus. In retirement, we're focused on all plan segment sizes: small, mid, and large. And large plays a very critical role, and we'll talk about that when we get to the retirement ecosystem. But what is differentiated about our business is the long history and the institutional strength we have with small and mid-sized businesses, or SMBs. We've served them for a long time. We have tremendous expertise. And the interesting thing, as we've mentioned in the past, is they generally don't have large HR departments or may not have HR departments at all. And so they work closely with their advisors.
They work closely with third-party administrators, and they work closely with Principal. They're looking for an easy-to-use solution that's integrated, competitive. When they find that answer, they want to do more business with us. That's why you see that amazing stat: about 80% of them have more than one product with us. Some of that is investment management. Some of it is benefits. Some of it is non-qual. There's multiple ways that we serve the different needs that those small business customers have. The other thing I'd say is it's long tenured. Amy's talked about the resilience over multiple cycles. 30 is an average, right? That's a significant amount of longevity that those businesses have had. When we think about the tenure of the relationship on the retirement side, we're usually above 12 years or so on average life.
We get strong retention with those customers as we earn their business, all of which leads to an engine that fuels about 40% of Principal's PTOE. So just strong institutional strength and expertise that we bring, leading to a track record of performance that Deanna touched on in the early session. We've seen significant industry outperformance in both asset growth and participant growth in the small to mid-sized business market. This is an area of strength for us: more than two and a half times industry and assets, nearly 10 times the growth, industry growth in participants. That participant growth is important and will continue to be important. The other thing is we generally see positive net cash flows from SMBs. We see recurring deposit growth that's about double that of large.
When it's all taken together, small to mid-sized businesses account for about 70% of WSRS's net revenue and about 65% of the total participants. It is a significant engine for growth as we go forward.
That's great. Thank you, Chris. That was really helpful. You've mentioned how Principal is well-positioned to serve SMBs compared to others in the industry. Amy, how about for Specialty Benefits?
Yep. I'm glad Chris had a chance to kind of go through some of those stats because I feel like you saw one of these in Deanna's comments earlier around premium and fee growth. One of the things I've had the opportunity to talk about before is that top-tier margin that we continue to drive. But the piece that I want to make sure to keep bringing up there is that we really are intentionally building the capability to sustain or even slightly grow that top-tier margin.
So I look at our latest entrant into that worksite portfolio, hospital indemnity, really rounds out that accident, critical illness, and hospital indemnity portfolio that we have. Historically, we haven't been a key player. We haven't hinged a bunch of our future growth on those worksite products. What we find is that our customers are saying, "We like doing business with you, and we wish we could extend that product set." So customer demand, distributor demand is really what helped us extend that product set to make it a bit broader. It is one that has nice future growth potential and good margins that help with that.
I would also argue I can't have this discussion without talking about disciplined underwriting. We know competition is present in this marketplace. What I also know is a disciplined approach that continues to use the appropriate levers we have to reprice those businesses on a small but constant basis is something that's very attractive to both our distributors and the customers who have our products. Cash flow. Beth, you were a small business owner. You know what cash flow means. It's a critical component.
And so having an excellent acquisition rate and then changing that rate dramatically two years down the road tends to be a non-starter both for the employer as well as the distributor who did the initial recommendation of that product. So what I would say is our margins have experienced that disciplined underwriting in the past, and we will continue to do that disciplined underwriting that leads towards those long-term margins.
That's great. Thank you very much. Let's keep going. At the outset, we shared that Principal is uniquely built to serve this market. We also established the three subsegments within SMBs: the employees, which we're all very familiar with, but then we also have the owner themselves and the business. So Chris, share with us how the broad set of solutions that Principal offers helps to serve the needs of each of these segments.
Yeah. You know, I think the slide does a nice job because it really gives you a sense of the differing needs by segment that each of the customer segments within SMB that we serve, whether it's the employee, the business owner, or the business itself. And then it also gives you a sense of the different solutions that we can bring to bear to solve their needs and would help lead to that 80% having more than one product with Principal. Probably won't lean into the employee section because I think that's fairly straightforward, but maybe I'd highlight in the business owner piece a capability that we have across the enterprise in helping these businesses prepare for succession and succession planning.
If we think about the number one position that we have in the employee stock ownership plan market or the ESOP market, that is a very significant opportunity for us to continue to help those businesses in a tax-efficient manner plan for a succession. We know that as a number of businesses in that small to mid-sized business market are going to be going through a transition, and those transitions will accelerate over the next decade, and we're really well-positioned to serve them from an ESOP perspective if that's one method of which they want to pursue to transition their business. I think Amy has some tools on her side as well on the benefits protection side.
Absolutely. We have had for decades, and they're a team that has historically probably served more of the life insurance business. And so when we were a bigger retail life insurance company, that Advanced Solutions team, think of it as CPAs, attorneys, we've had them in place. We still have them in place. But today, we've taken their focus less from tax treatment to estate planning for using retail life insurance products, and we've redeployed them towards business market products.
So it's the same core team of capabilities. They get excited when they get called in to do that ESOP consultation as well. They love when we hit a point where we're saying, "Okay, we have the ability to do an informal business valuation," because when we slip down into that third category, these products are not just helpful for the business owner to think about how they succession plan or exit plan or transition a business. They're also helpful in helping them understand how they grow the ongoing business.
The business itself needs protection for things like buy-sell agreements. So when you think of a partnership structure, one of the top things I will hear when I go talk to business owners is they're not actually bringing up some of the employee things first. They're actually bringing up, "I have three partners. I worry if something happens to one of the three of us. Is it going to go to my spouse? My spouse doesn't know anything about the business. How will the other partners respond?" So when I look at things like buy-sell agreements, when I look at the foundational work that we do to do informal business valuations, what I know is those needs end up being opportunities.
So, since the last time we did an Investor Day, really about three years ago, we did a virtual one, we've built through that life insurance segment, we've built through those consulting capabilities about 3,000 business owner relationships. Sometimes those have turned into ESOP opportunities. Sometimes those have turned into life insurance or group benefits or retirement opportunities. So that's the engine behind the Principal solutions that help that business.
And I think as Amy and I, when we looked at the Ascensus ESOP business earlier this year that we acquired, it was really thought about what is the strategy. The strategy is ESOP has a strong presence in SMB. We're able to add 800 new small to medium-sized business customers, cement our number one leading position in the ESOP marketplace, serve 165,000 new participants.
It was very aligned strategically about the capabilities that we can bring to bear, and then bring opportunities, whether it's to serve their benefits needs or their K needs or what are the different needs that we have. It was really that was the thought and the discussion that we had in thinking through that, and ESOP is just another, you know, when you look at the industry data, you know, in addition to just being a great way to transition a business, it's a significant generator of wealth for employees, and so you're seeing much more momentum around spreading that equity ownership, getting more employee ownership into these businesses because the average ESOP account balance is about two and a half times the average 401(k) balance nationwide, so it is a very nice business and something that we aligned on pretty quickly when this opportunity came up.
That's great, so continuing on the point that Principal is uniquely built to serve this market and capture a stream of opportunities, let's go a little bit deeper into the capabilities that we have and the things that we're investing in to help continue to position us well for the SMB market. Chris, let's start with you.
Yeah. I mean, I think what we talk about when we think about the solutions is go back to that slide on the needs and the solutions that we bring. I think when you look at what we bring to the table, we have the most comprehensive set in the industry of solutions that serve the needs of the small to mid-sized business. It's just, we have multiple ways to serve them. We have broad expertise. We have broad consulting capabilities, and it's in areas that have significant momentum.
If you think about SECURE and the passage of SECURE 2.0, SECURE created new vehicles for small to mid-sized businesses to utilize a pooled employer plan or PEPs or multi-employer plan, MEPs. In that PEP space, that is a way for them to have very easy access, not have some of the fiduciary liability that they have, but yet be able to provide that kind of a benefit to their employees. Over that period of time in the PEP space, according to last year's Form 5500s, we have got three of the top five PEPs in the United States. We are bringing that capability to bear. If I think about SECURE 2.0 and the tax incentives, they are bringing significant incentives to encourage plan formation, and it is working. It is expected that over 40% more plans will be adopted between now and 2030.
And that is also being fueled by the state auto IRA mandates. There's 20 states right now that have state auto IRA mandates. And so when that happens, they're looking for a private solution, not just government solution. So there's tremendous growth momentum in this area of the market around the solutions that we bring.
Yeah. Let me slip over into kind of distribution technology. The first thing I want to talk about is how those can definitely work together. So one of the things that distributors, the people, the key partners that we work with will tell us again and again is, "I'm going to recommend you. I love your product. You've got competitive pricing.
I know you're going to pay claims to be there," but the administrative things, particularly for a small to mid-sized business who either has zero HR department or a very, very small, probably payroll-focused HR department, it's got to work seamlessly from admin. So if I've recommended you and I need that to come over and get onboarded, I literally cannot wait 20+ days to get that onboarded. When you're using high utilization products like dental, dental, you could sell it, it could have an effective date, and you could have someone in the chair the next day. So for high utilization products, you've got to have that onboarding time done well. So one of the things we've fairly quietly invested in is that onboarding for group benefits.
So that's an example of we're doing it in part because we know it gives distributors even more confidence to say, "I can recommend you, and it's going to be in place." The industry averages we hear and see operationally at peak periods tend to be 20 + days to get that installed. The last peak period, our installation time was two to three days, about 2.5 days. So when you need that installed, our averages are sitting down in the lowest of the single digits, not in double digits for that. So that's an example of where we've leaned into technology investments to do that, but we've done that because we know the employer benefits from it, the employees benefit from it, and the brokers and advisors gain confidence and gain that ability to say, "This is what Principal does.
Principal knows this marketplace." The other example I would give is a little bit more pure technology, but the experience has been a great one on this. Seven years ago, if you had looked at our block of business of people called to verify benefits, it's usually the provider office, the dental provider office, who before someone sits in their chair, they're calling in, and they're calling in to the tune of literally 12 million of these calls a year for a company like Principal. So they're wanting to verify benefits. They're wanting to do that in an effective way. Seven years ago, those calls, 50% of them had to be touched by a human, someone at Principal, a human at Principal had to do something at some point in the process to touch that. Today, that 50% is down to 7%.
93% of those 12 million inquiries, we have to intervene with a human touch on that. That's usually something that's extraordinary, something that's happened that's out of the process, but we haven't done that using one technology or one partner. We've used that using third parties. We've used that using our own technology. Some of it is we've enhanced IVR. Some of it we've enhanced just our digital web capabilities, and some of it we've enhanced standalone chat functions that learn, that have natural language processing behind it and actually are learning each time they do a chat.
So we've invested fairly quietly in all of these different ways, and it's led towards an amazing increase in efficiency, but probably more importantly for us, the experience is just simply better. And so we love that fine space where you can get the efficiency gains. They help us sustain or drive out better margins, but it does a great experience at the same time.
That's great. Chris, talk to us about the customer centricity and take us home.
Yeah, I will. Just one more point I wanted to add on the distribution side, though. I think when you think about the institutional strength we have on the benefits side and the institutional strength we have on the retirement side, our relevance with our strategic key distribution partners is very significant, and that role that the advisor plays is central to our success, and we do that really, really well and partner with them well.
On the customer-centric side, you know, I think another thing that we do that's very unusual or unique is, you know, we have 300 small businesses in a community that we talk to them on a regular basis and understand what needs they're going through, what sort of solutions they're looking for, and all of that's supplemented by proprietary research we do on an ongoing basis with our Well-Being Index. And so we have just core understanding of the expertise in that small to medium-sized business community. And then we also take opportunities to think about how can we help them in ways that may not just lead to immediate economics to us.
Something that we innovated over the last couple of years is something we've called Elevate, which is really an opportunity to offer a partnership with a small to medium-sized business owner and give them options of sort of 20+ different partners that can work with them on services they may need, like IT support or legal support, human resources support, or even purchasing support. One of the areas that we've seen tremendous help is we've been able to find these opportunities with these businesses. These aren't small businesses. These are fairly significant operations where we can work with them on a purchasing, a group purchasing, bring the power of multiple SMBs together and deliver business savings for them. The sort of the reactions we get from the customers are just like, "Well, what's in it for you?" Well, not a lot.
We're here to sort of help you invest in your business and get those cost savings. We know that inflationary pressures have been significant in your business, but you know, to the extent that you have other needs, like talent needs, we do have solutions that you might want to use some of those savings to invest back in Principal solutions to serve your employees. And we have seen good take-up there. So I think that's another thing. You know, Dan said we start with a customer. I think it's true, and we do, we're invested in their success, and I think that's also led to our success in the SMB market.
Thank you both. Amy.
Yeah. So I clearly always love the opportunity to talk about this, and you hit it at the opening, Beth. This is a vast opportunity. There is still more growth to be had here. There are players in this industry that I think are really kind of beginning to open the door so that businesses understand how you can help them grow as well. I would put Principal squarely in that category. When I talk and look at our own customer base, not only have these businesses weathered many economic cycles, but they've stayed with us and they're buying more with us.
They choose Principal again and again and again. And then when we think about how we're uniquely using, whether it's technology investments we've made, relationships with distribution, we're uniquely using that as points that we can grow. And so when I think about how we're built and what we're built for, I think one of the distributors on the opening segment said it really well. We bring people to this market. We bring a business model to this market, and we truly differentiate the way that we can help them drive results for themselves, for recommending us, and then also for the businesses they're supporting.
Good stuff. We've covered a lot in 20 minutes. Yes, that was 20 minutes. If anybody's keeping time, I think we're a couple of minutes over, but we have earned a break. When we come back from our 10-minute break, we will be discussing how Principal is redefining retirement with a conversation about the retirement ecosystem. There are refreshments in the back. Please take your 10-minute break, and then we'll reconvene. Thank you for your time.
Everybody, we are going to start our next session shortly. So please kindly return back to your seat. Thank you. Good afternoon and welcome back. I don't have the control. Okay, now it's working. Good afternoon and welcome back.
Our next discussion will focus on the retirement opportunity, where we're going to talk about how we at Principal are redefining retirement to fundamentally expand our addressable market and also the competitive advantage we believe we enjoy in this space. My name is Vivek Agrawal. I'm the Chief Growth Officer at Principal Financial Group, and joining me for this discussion are my colleagues, Chris Littlefield, who you've already met, and Kamal Bhatia, who's the President of Principal Asset Management. Before we talk about retirement, we're going to take a moment to hear from some of our clients on how we're supporting them and their employees on retirement.
At Principal, we recognize the market dynamics that drive the retirement industry, and we're ready to seize our clear opportunity within the $38 trillion United States retirement ecosystem. We're unlocking the full value of retirement through our depth and breadth of solutions across record keeping, asset management, wealth management, and income solutions. We've proven our retirement capabilities with 14 million individuals and 50,000 employers like Shaw Industries. Principal has worked with Shaw for more than a decade to optimize its 401(k) and non-qualified deferred compensation plans with $1.7 billion in assets. As one of the world's largest flooring manufacturers, Shaw trusts our understanding of the complexities of all types of retirement needs. We appreciate how Principal comes alongside Shaw Industries and provides us with expertise around investments that are offered to our teammates under the guidance of the fiduciaries that put our associates, our teammates, first in all decisions.
Through plan enhancements such as auto escalation, an increased employer match, and Roth contributions, Shaw has boosted its 401(k) participation beyond 90% as part of the cost-effective plan with Principal investments. Principal also delivers relevant and convenient financial education to Shaw's workforce when and how they need it. Principal excels in this area of the retirement plan business. Participant education is key to driving participants to do more, save more, learn more, and it has just been a real driver for our plan. We will continue to deliver excellence as we unlock the full value of retirement and provide greater financial security for participants, clients, and shareholders.
Our clients appreciate the value we're providing them and their employees. In fact, this is what's special about Principal. This is what attracted me to join Principal. I'm relatively new to Principal. I joined last year. Prior to joining Principal for the last 25 years, I was working quite deeply in the industry, both with asset managers, wealth managers, record keepers, insurers in the United States and globally as they are preparing and going after the retirement opportunity. And what really impressed me about Principal was really the breadth of capabilities across all of these industries because retirement is where it all intersects.
Now, we heard earlier this afternoon when Dan and Deanna talked about how at Principal we're increasing our focus on retirement as we look to deliver sustained high growth. And we all know how large retirement is as an asset pool. Everyone understands that. I think there was a stat earlier. We talked about $38 trillion in the United States, $45 trillion globally. We also know how complex retirement is.
Retirement is an umbrella term under which all of these industries are intersecting, as I mentioned: record keeping, asset management, wealth management, insurance. While all that is well understood, what is less well understood is how fast retirement is changing. Retirement anxiety is growing, and what's changing even faster than that is the rules of the game on how value is being created and will be created. If you look at the majority, or I should say overwhelming majority, of customers in the United States that own a very large proportion of assets, that asset pool we talked about, they don't actually have access to advisors, and as anxiety in retirement is growing, they're looking at their employers, their workplace to find those solutions.
And that's creating a tremendous opportunity for at-scale record keepers, again, at scale, but record keepers who have those capabilities to really bring them together and deliver them on their record keeping platform. That market opportunity we've estimated is in excess of $100 billion in profits on an annual basis, $100 billion. That is the largest profit pool in financial services in the world. It is larger than banking. It is larger than payments. It's larger than asset management ex- retirement. It's larger than wealth management ex- retirement. It's huge. So with that as context, Chris, I'll turn to you. How are you, Principal, thinking about the retirement market opportunity?
Yeah, thanks, Vivek, and good to be back up on stage again. I think as we think about that broad retirement landscape and that ecosystem, we do think about it as record keeping, asset management, wealth management, retirement income, and more. When I sort of look at that market set, I think there's two primary business models. Certainly, there are some exceptions to this, notable exceptions to this. When you think about how the market landscape exists today, generally, we have two primary business models.
The first is one that looks primarily at record keeping. Some are record keeping only. Some have added an advice or wealth management aspect to unlock value from the platform, but they don't have many of the other key elements across retirement. They don't have global asset management capabilities. Generally, they don't have a significant General Account to utilize, and they don't have that experience in providing guaranteed lifetime income.
The other category of players is primarily from the asset management side. These are people that are very focused on earning the investment management dates through plan lineups. They have asset management capabilities, but they generally don't have record keeping at scale. They don't generally lean in on wealth or advice, and they generally don't have a General Account or guaranteed income capabilities. They have to find that from others. And so what we think is going to be necessary to be successful in retirement long term is a combination of all of these capabilities, which uniquely Principal does have. When we start with record keeping, we have broad and comprehensive ability to serve small, mid, and large-sized business with customized solutions. We can do it across DB, DC, non-qual, ESOP, equity comp. We can provide a number of different solutions.
And the important piece there is that it does provide us privileged access to employers and their employees to serve the needs that they have. We don't have these acquisition costs to go find. We have them, and we'll talk about the scale of that. I think Kamal will touch on how we play in asset management in the retirement space.
Absolutely. It's good to see everyone. Thank you for joining Vivek and Chris here. So maybe I'll just talk about the asset management role in retirement. The way I think about it and we think about it is really our focus on retirement investment management. It's almost like if you had to custom build a firm, it would be Principal to be in that space. And there are a couple of reasons I say that.
One is if you look at where everybody's focused in retirement investment management, there's a lot of entrants that are focused on private markets. Dan talked about the history of Principal. We started as an insurance company, and that allowed us to do these private investments much longer than most companies have been doing it. But over time, when we became a big manager of defined contribution plans, not just here, but globally, most of that business was really anchored on public markets. And so we've had this enormous ability to be in two segments of the investment management space where we have blended it together, and we've learned how to do this really well. The edge we have is essentially being a 360-degree investor across publics and privates.
Then over time, as we expanded and became more global, I do think that ability to be a global asset manager who does both is going to be a powerful edge in retirement moving forward. The other piece, Amy and Chris talked about this, across the SMB segment, you heard how we have multiple solutions, even in Chris's business around TRS. As many of these clients started working with us, we naturally built an ability to do more solutions than products with these clients. Two of the things we do really, really well is our ALM business, which continues to grow, and our LDI business. So as you think about the retirement investment space, the ability to go beyond products to solutions has certainly been an edge we've been able to build, and I could talk about it.
Probably the third most important piece is what Principal does really well is we have learned how to balance our fee businesses and our spread businesses. For the asset management business, the blessing we have is to have this very large General Account that works closely with us to offer these spread products. Certainly, an ability to understand how to blend fee and spread products in retirement is going to be a winning proposition we can offer to the marketplace.
Start with privileged access, have asset management. The other place that we have is wealth management, what we're calling Worksite Personal Investing. We're calling it that because we offer different solutions under Worksite Personal Investing. We're not focused on going after the big high net worth clients.
We're actually focused on serving the mainstream of our client base, which is emerging and mass affluent, and providing those people, about 60% of whom are unadvised, solutions that will help them in retirement. So you heard Barbara Coombe from Shaw Industries talk about the exceptional participant education that we have. We are also building out the managed accounts. We've had managed accounts for a period of time, getting greater utilization there, as well as in-plan and out-of-plan advice as well.
That's going to be a key element for us going forward as we continue to accelerate growth and serve participants' needs better. Retirement income, we benefit from having been in the annuities business for a long time. Our annuities business is primarily focused on meeting the needs of our retirement customers, but we've also had in-plan annuity capabilities for a long time.
That area has been a little bit slower to take off. And we do think, as we think about target dates with built-in income, that's another area where we can bring this expertise we have in providing guaranteed income solutions for that market. And then, of course, when you think about retirement income, we've been a very good and significant profitable player in the PRT marketplace, which has been really successful. So when you think about those four big categories, then we also have these capabilities on the right to highlight. We have a limited charter bank that's there to serve bank products and IRAs to our retirement customers. We have a significant trust and custody business to meet the needs of employers that need trust and custody in their businesses.
And then I talked earlier about the consulting that we have, plan design consulting acros s DC, DB, ESOP, non-qual, and we have actuarial consulting as well. So we have, when you just sort of step back and think about all the levers and opportunities we have to sort of serve our customers, I think it's largely unmatched. And then when you think about that unmatched breadth of capability, add to that scale. We're an at-scale retirement leader, and scale matters, and scale is important. We're serving 50,000 employers. 14 million individuals are covered by the plans that we serve. Got over $1 trillion in assets, and we've got a significant distribution footprint with key distribution partners, leading to leadership positions in retirement and in asset management. So I really do think we're bringing the power of Principal to bear.
Very interesting. I heard two or three very important messages in what you both said. I think first, Chris, your representation of the fact is everybody knows retirement is an attractive profit-making opportunity. But I think what you referenced earlier was that there are several business models, two in particular to describe: record keepers and asset managers that are going after and serving this marketplace, and they're each bringing their capabilities, but none is bringing the full suite of capabilities that retirees or people who are solving for retirement, employees in particular that we're talking about, they're going to need. And I think what I heard you say was that we at Principal are able to bring all of those things together. So that's the first thing I heard.
The second thing I heard, which is actually a fundamental redefinition, because historically, when we refer to retirement within our company, we think of it as record keeping or income solutions, and both of which are very important components of it, and they will remain such. But what you're also saying is retirement, the record keeping business is now a platform. It's a platform that allows us to bring all of Principal to our customers, and that allows us to really serve them in a very differentiated way.
And then the third thing you said, very important, is the importance of scale, because scale is important, but scale will become more and more important as we go into this model, and we are at scale being able to bring these capabilities. So obviously, a very compelling situation for Principal as we think about the future here. Talk to us a little bit about what's unique about Principal's capabilities and where we are investing to further build that advantage?
Yeah, great. Thanks, Vivek. So if I start from the bottom of the slide here, what we're really talking about is the strong foundation that we've already built and have the benefit of. So when we talk about the breadth of our retirement solutions, that's sort of the Total Retirement Solutions piece. And when you think about Total Retirement Solutions, over 50% of our sales in retirement have multiple retirement solutions. It's not just a DC plan. It's a DC with a non-qual or a DC and an ESOP or something combination of plans. So that's significant that we, again, are able to earn multiple solutions from our customers.
And the important part about that is we know that when we have more than one solution with those customers, they have significant higher retention, leading to that long tenure that we referenced in the last SMB section. So we get very good persistency and long client relationships. If I think about where we're investing, and I hinted to it on the prior slide, we really are investing in Worksite Personal Investing. This is an area that's the fastest growing area. We want to serve our emerging and mass affluent customers, people with less than a million to $2 million in investable assets. And we want to be able to serve them not with just education, but advice. And advice is something that we just launched at the end of the third quarter this year. So we have salary-based advisors.
We have more than 160 salary-based advisors that are serving the needs of participants. And the early reads after just six to eight weeks are really, really positive. One of the main things customers have asked us for a long time is, "I understand I have options. Help me with those options. Help me understand what I should do." And so we're seeing very strong customer sentiment. And importantly, we're doing this in partnership with our key distribution partners, not in competition. And so this is another one that I think is going to be an area where we spend a lot of investment in as we launch advisory solutions both on and off platform and build those over the next several years. And then the next, the future area of growth is the sort of income solution space.
If you think about what's happening in retirement, we really have taken all the benefits that existed in the defined benefit world, and we're looking to replicate them in defined contribution world. If you think about you had a DB plan or a traditional pension plan, you were automatically enrolled. You benefited from professional investment advice, and then when you retired, you had a lifetime income that was provided through that defined benefit plan. If you look at what's happening in defined contribution, we have the advent and now the mandatory adoption of automated enrollment, so we're automatically enrolling employees, which is a big hurdle. We know that at Principal, when somebody's automatically enrolled, they stay automatically enrolled over 90% of the time, so it's a big driver of getting people on a better path to retirement.
And then the last frontier is really they benefit from professional asset management now because target date funds, managed accounts, we've built that all into the defined contribution system. And so that last frontier now is that income space. And how are we going to solve that puzzle for providing income? And so you'll see us really focus on guaranteed income solutions in retirement. And then finally, and I think Kamal will hit on this in his section too, there's expanded solutions, whether it's building privates in. We know that there's a lot of energy there as well as continued multi-asset innovation. So those are the areas that we're really focused on building in our retirement business.
It's actually fascinating because the full breadth of solutions that you've described, it's, I think, a waterfront of solutions, which at least in my knowledge, there isn't a company out there that is able to bring all of these capabilities under one roof in an integrated manner.
I think that's right, Vivek, and I'm sorry. One of the areas that we are focused on, on that foundational capacity, is what we call sort of that all of the above QDIA space, so the qualified default investment alternative. So that's where the majority of the flows are. And so when I think about the variety of solutions that we can offer, we can offer a target date, and we have different types of target date that we can offer. We can offer managed accounts.
We can offer the hybrid target date, which is a target date that switches to a managed account as somebody gets close to retirement. We have customized model portfolio capabilities, and we do co-manufacturing solutions with other partners if that's important. So I do think we are bringing a breadth to the investment space that I think is really unm atched.
And it's decades of building these capabilities. And as Dan and Deanna described, our strategy now is to start integrating them, using our platform for record keeping that gives us privileged access to 14 million individuals, which is a remarkable asset. Kamal, you spoke earlier about asset management priorities. Obviously, Principal Asset Management has had a long history of being able to work with our retirement platform to deliver products and solutions. Talk to us a little bit about how important does our asset management business see retirement as a market opportunity?
Sure, Vivek. So first, I would say the retirement business is core to what we do. Simple fact is we manage over $320 billion of retirement-related assets. It's a substantial portion of our AUM today, and we expect it to grow over a period of time. I'll touch a little bit on the privileged access and then go to something that Chris talked about, which is really our strategy has been to really ensure we have a market-leading position in this QDIA block for those who work in the retirement business. That's essentially the default option a sponsor will choose. And today, when we think about 70% of our participants, Chris talked about the participant count earlier, they actually use a QDIA option. 50% of our assets are there.
If you look at new 401(k) plans, 90% of them choose this. Fundamental to what it has been to our strategy is to ensure we remain a market leader in QDIA. A simple fact I would give you is Dan had it in the slides. We are a top 10 provider of target date funds. We have over $100 billion in target date funds today. Controlling that space is tremendously powerful. Over time, what we have done is, because of this privileged access, we have developed a proprietary edge around investment behavior, around how participants move or the breadth of the platform and the scale of the platform allows us to continue to scale it up. The other piece I would highlight for you on platform is there is a tremendous interest as we hear about all these waves of retirement happening.
The ultimate prize in this business is to ensure you can capture the rollover flows, and I would tell you we have a head start. We have $26 billion in rollover solutions that asset management manages today, so not only do we have a leading position in the QDIA space, we actually have substantial assets on the rollover side, and I'll pick on something Chris talked about, which is the history of innovation, and I'll pick up on the point I made earlier about fee and spread. One of our most recent innovations, and we'll bring this to the marketplace, is to launch a Strategic Index Lifetime product. It uses some of the passive engineering at the core, but it's much more enhanced from that space, and that will further increase our market share in the marketplace.
Yeah, I think that's excellent. What about off-platform?
It's something that most of our investors do not appreciate, so I'll touch upon it, and so really off-platform, our strategy has been is because we have the brand in retirement, probably 10, 15 years ago, we started purposefully going to other record keepers, other retirement platforms and saying, "Principal has this retirement investment edge," and slowly but surely, that business has grown. We manage about $30 billion of AUM with other platforms.
I'll talk about this a little bit more in the asset management section because it's critical to our strategy, but I'll just leave you with a highlight. I'll show you the power of what we are delivering there. Just most recently on DCIO, this is our product on somebody else's retirement plan system. We won our largest mandate in the history of Principal Asset Management. On somebody else's platform, we had a single mandate win of hybrid target date. It was $850 million in a single mandate.
That's amazing. So what I'm hearing is a tight integration between asset management and our retirement platform and then extending that capabilities off-platform. DC is, of course, huge. What about beyond DC?
Absolutely. And this is something that I think is absolutely something Principal is able to do, but probably the only one that's able to do. So one of the things we observe is, as Chris said, they serve DB and DC plans. And we wanted to ensure that we are one of the providers that work across the retirement ecosystem in a full life cycle. So what do I mean by that is there are a lot of pension plans, DB plans, who essentially still want to manage their plan.
They want to have oversight of their plan. They have their own investment committee. They're only looking for an investment provider. Think of it like DBIO. And we are one of those providers. In fact, when I look at our DBIO business, we manage about $44 billion there. And a lot of those plans are investing in our private market capability. So that gives us edge. When I think about plans, particularly DB plans, that have decided that they don't want to increase the plan for whatever reason, they're either immunizing, they need a solution. So they are kind of capped as a plan. They will come to us and work with us on ALM or LDI. Today, we manage $6 billion of LDI assets that continue to stay on our book for a very long period of time.
Probably the third most interesting piece, because a lot of the small segment of the retirement ecosystem, as the complexity of managing these plans increases, they are of the view, "Principal, you have, as Chris said, you have the consulting capability, you have the admin capability. I just want to outsource this over to you." So we have slowly become a top 25 provider of these OCIO solutions. We have over 550 clients who've essentially turned over to us at Principal to say, "Manage this program for us." So across the, to use your term, across the waterfront, we have a market-leading position in this business.
Yeah. What I'm also hearing is just this tight integration between asset management and our retirement platform. As you described, retirement is central to our asset management strategy. But what that does is it creates a whole greater than sum of parts because those capabilities you're extending off-platform and then beyond DC on the entire value chain in retirement. So we've covered a lot of ground here. Chris, perhaps you could speak a little bit about what we should expect to see. How will all of this unfold over the next few years?
Yeah. So I think I've talked about how we're going to continue to leverage our capabilities. I mean, I think when we think about it simply, we think about we're going to continue to scale our platform. We're an at-scale retirement leader. We're going to continue to maintain and grow scale in both the large market, small market, mid-market. And we're going to grow with participants. And we're also going to work with these participants to give them better retirement outcomes.
So, help them increase their deferral rates, their participation in the plans, provide them the advice they need, whether it's with their roll-ins, their investment selections, just really focus on growing our scale and growing the platform. Secondly, we're going to look to unlock that value. I think we have more levers. I think our capabilities are unmatched in the industry, and we have more levers. We're going to work on continuing asset management opportunities, continuing General Account and the fixed product solutions within retirement accounts, which has been a focus for us over the last year or two. It will continue to be a focus. The breadth of our solutions, the better experiences and advice solutions, advisory solutions, the Worksite Personal Investing, the retirement income space, the bank and trust, and consulting.
We're going to bring all those to bear to really bring opportunities to really drive that value, one, help participants, but also drive value for the shareholders. And then we're going to continue to optimize the platform. We're going to continue to invest in the experiences. We're very focused. And as you've heard us talk on our regular calls, we're very focused on revenue growth and margin and making sure that we continue to have a cost-efficient platform that can continue to win new business. And then as we find those savings, we're going to invest back in the business, invest back in pricing, invest back in that experience to continue to grow that scale and just continue to work the virtuous cycle. So that's really our focus in the retirement ecosystem.
That's very exciting. I'll just summarize with the three things that I'm taking away from the last 25 minutes. First, just the sheer power of retirement as a profit pool. Again, largest profit pool in financial services, larger than banking. But what's interesting about it is it's not sitting in a clean vertical, not in an industry. You have to take a customer-bracketed view to really understand how large that profit pool is. Second, how central the workplace is in terms of how you access that profit pool. You can't access through the advisors, which is how the industry has historically gone after these profits. And then the third is the power of at-scale record-keeping platforms. And this will be probably no more than three or four in the industry.
But within those, those who can bring capabilities to those platforms in an integrated way, the waterfront you talked about, obviously positions Principal in a very exciting way. Thank you. That was a pleasure to chat with you about it. Our next discussion will move to global asset management led by Kamal and Deanna. Thank you, Chris.
Thank you.
Thank you all.
Thank you.
I give this to you.
That was the most complicated part of this whole thing was figuring out the logistics of our operation here. So you get Kamal and I again. Kamal, to pivot a little bit to talk about asset management, which will build upon what you just talked about in retirement. And I'll help kind of facilitate the Q&A relative to this. But before we begin, let us hear from a couple of our investment professionals on how we're thinking about the opportunities here.
After 34 years of building solid foundations in international retirement and global investments, Principal Asset Management is well positioned to unlock even greater value for a more integrated approach and with a focus on continued performance. Investors in today's environment are looking for trusted partners. Can you evolve and grow with them as their needs change? And whether that's with performance, whether that's with evolving product needs and vehicles, we have to be there for them and grow with them. As money moves back to risk assets, our breadth of investment solutions across public and private markets gives Principal a 360-degree view, enabling us to identify the most compelling opportunities. Our well-established leadership in real estate makes us a logical place for investors to turn for their private asset needs. At the same time, we are expanding beyond real estate.
Two examples are our successful build-out of a private credit capability and our more recent move into private infrastructure supported by industry leaders who are experienced in navigating the underlying forces of private markets. Principal harnesses the combined power of global and local investment capabilities, fueled by nearly 1,000 investment professionals worldwide. Our global products are resonating with international investors. Due to our local expertise, we have equity investors across five continents, and our integrated approach allows us to bring together these insights across different teams to both apply local solutions as well as global solutions.
Integrated asset management is a catalyst for our company's future. We intend to drive above-industry growth and enhance shareholder value through differentiated capabilities with privileged access across the U.S. retirement ecosystem. We're leveraging a large and diverse global institutional client base. We deliver solutions through an at-scale and expanding private market. We forge strong international partnerships in high-growth markets. All this gives us confidence in our ability to sustain growth.
So Kamal and I are very excited to be here today to talk you through really where we're focusing our strategy from an asset management perspective. The two individuals you saw on the screen, George Maris and John Berg, are important leaders on Kamal's team and are working very closely with us as we accelerate our growth in this part of the market. If we go back to Dan and I's initial discussion, we talked about how immense the opportunity was in global asset management. There's a number of different places you can choose to play in that, but an immense profit pool that we summarized at $100 billion of annual opportunities.
The other thing that we've talked about, and as I'm out talking to investors, we do talk about the shifts that are happening in this business. I think one of the outcomes of those shifts is that we're seeing a widening gap when we look at performance among industry players. But ultimately, relative to our performance over the last several years, our net flows have been more resilient, especially when you compare them to our active asset management peers.
Our fee rate has remained stable despite industry-wide fee pressures, and our margins have remained fairly consistent as well, aligned with our targets that we've outlined. So from that, we have a great foundation to build, but ultimately to seize the opportunities that can drive growth. So let's dig in. The video, I think, did a great job of outlining where we're really focused to drive growth, but it'd be great for you to summarize how you think about our strategy going forward.
Absolutely, Deanna. Excited to talk about asset management. So there are four key pillars, as Deanna said. Our focus is to generate above-industry growth rates, and we've done that. And I'll talk to you about why we believe we can continue doing that. First, we just spent some time talking about retirement. We are a formidable player in the retirement ecosystem. The privileged access, which allows us to have a distribution moat in this business, is quite a powerful tailwind for our business. And I give you a sense of how we have extrapolated that off-platform as well.
And then when you combine that with what it does for our investment engine, there's a strong flywheel effect there. The second piece is really our very large and diverse institutional investor base, and we'll spend some time on it. I think in the video you heard, we have over 1,000 investment professionals, and we have clients in over 80 countries. And if you really think about the institutional business globally, having that diversity of investment professionals who are working on different products and different markets gives enormous diversification to our flow pattern and where our clients engage with us. If you think about all these clients, each country is at a different stage of investing, at a different microeconomic position, and just having access to that creates a powerful diversification component. And it's a fairly large business for us that I'll talk to you about.
The third piece is, obviously, there is a huge focus in private markets across all asset management. We actually have an at-scale platform we talked about earlier, starting with real estate, but that's continued to do very, very well for us, and we'll spend some time thinking about it. One of the things I probably would highlight for you at this stage is just our real estate business in the last few years has generated over $100 million of operating earnings in a market that has not been easy for a real estate operation. And so it just shows you where scale really plays a big role in that business. And then the last piece we'll talk about is the power of our international partnerships. Dan mentioned some of the partnerships we've had with Banco, CIMB, and CCB. I think it would be very difficult to replicate what that is.
It's, I would say, almost impossible. But when you look at those results, I'd highlight for you something that I think is incredible. Just in China itself, which has, if you look at the last 10 years, a lot of people have questioned if China is a market where asset management can grow. We have done 35% CAGR annually last 10 years in our China AUM. And this is in a tough market. So it shows the power of what we deliver in terms of execution. And then I'll go back, Deanna, to close it all out. Our metrics prove that we execute well in this business. So our organic NCF compared to active management figures, almost 500 basis points higher, 5% annually. When I think about the fee rate, there is obviously fee compression in the asset management business. We've been very stable around that 28-29 basis points.
We are extremely disciplined to ensure we continue to deliver on that. Probably the most important piece in this business is to really have a long-term focus, particularly focus on margins, because this is a business that can generate tremendous margins for Principal Financial Group. When we look at external studies, we have generated 600 basis points over our peers in the margin in this business.
Yeah, so obviously a great base to focus on. I think it would make sense to go just a little bit deeper into each of those opportunities. We're going to start with the one you just talked about. This slide was actually utilized in the last panel discussion. You really talked about how when you think about retirement, what we have is virtually unmatched. So just talk maybe one click deeper how you think about the opportunities relative to retirement.
Absolutely. So maybe I'll pick on the DCIO piece. We talked a little bit about the on-platform privileged edge we have with Chris's business and the retirement business in the U.S. And I talked about the DB piece. But the DCIO piece, and if you take a step back at the size of the defined contribution market, it's about $6 trillion or so. And the investment-only piece of the defined contribution market actually goes faster than the marketplace itself because more and more of these providers want newer investment solutions, and there is an opportunity to participate in that. I mentioned to you the $30 billion in AUM we have there. That business alone for today for us, the DCIO business, generates almost $140 million in revenue.
So combining that with what it does for our retirement business is quite powerful. If you think about what we have done in that business, we have obviously a dedicated distribution team that has executed really well. Over time, we have built 150 relationships. And these relationships are not just with other record keepers. We have a relationship with RIA aggregators as the RIA marketplace plays a big role in the retirement business. We have built these relationships with investment consultants, particularly on the large end of the marketplace where the consultants are a big part of the retirement marketplace. And then obviously many of the advisory groups have these relations. So we have expanded to almost 150 key relationships. And we have grown our market share in that marketplace.
An example I'd leave you with is we have a relationship with what I would say is a top record keeper in the U.S. today. And today, just on their platform, we manage over $5 billion of AUM, Principal Asset Management, managing that AUM with them. And in that system, we have over 1,100 plan sponsors who work with us. So we've expanded beyond our core capability there.
Yeah, thanks, Kamal, for going there. I think the takeaway from this is really you're not just focused on working with Chris's organization, but you're taking what you have built that has worked well there and applying it and leveraging it with third-party clients as well. And so I think a powerful opportunity to bring that together. So now we'll move to institutional. Today, as it shows here on this screen, we have about $140 billion of institutional AUM across a very diverse client base. So tell us a little bit more what sets us apart when you work with these investors.
Yes. So what sets us apart is the global diversity of this base and the opportunity, Deanna, that's in front of us. Most of our business today, the $140 billion, is largely in the U.S. with some portion in Europe. But the opportunity that Asia and LATAM open up for us is quite powerful. As I said, 600 clients, historically, given where we came from, we have deep relationships in the insurance and the pension segment, but we'll continue to expand into other segments of that marketplace. Core to it is what we do in real estate, $100 billion in real estate assets with a lot of these institutions.
As we continue to do newer products with them, that relationship will expand beyond one product into multiple products. In fact, outside the U.S., we today almost have $10 billion in local capabilities that we are selling to regional institutions now in Asia and LATAM. I expect that to grow over a period of time. Last quarter alone, we talked about this. We had almost $2.1 billion of net cash flow that came from clients in Chile, Mexico, and Southeast Asia in the institutional segment. The other piece I'd highlight is how diverse our institutional business is. We have clients in over 40 countries on the institutional business that work with us. Probably what is more powerful for us is one-third of that base has been with us for over 15 years.
So these are clients not only who know us well, we have the tenure of the relationship, and we can do more with these clients who know us well as we bring new products. So that is, it's quite a privilege to have relationships that work with you for over 15 years. And then obviously, the last piece I would highlight is we have staff in over 25 countries. So what's been working for us is a lot of our staff is in these global money centers where a large of these institutional clients are based. So these staff members work on the investment side, but over time, we've added a lot of sales capabilities. We have over 60 professionals who work across these institutions, which I will see grow over a period of time.
So where I see growth moving forward is we have been recently winning business with corporate plans in Latin America. It's a new segment for us. We will continue to grow that segment. We have added our first few insurance mandates in Europe. Europe is a big part of our global institutional business. And then most recently in Asia, we've been winning business from the sovereign wealth funds. So the platform also diversifies from a client perspective.
Great. So we'll now move on to the third one, which is really around privates. Ultimately, we know clients across every customer segment, whether it be institutional, retirement, or wealth, are becoming more and more interested in private solutions. We have a great foundation to build upon.
We talk here about our $82 billion in private market assets, really grounded in our real estate capabilities that was grounded in our General Account capabilities that we've invested in for a long time. So talk to us a little bit about how you're expanding those capabilities and how you're utilizing both the General Account and third-party assets to take advantage of that.
Yeah, I'll start with the $82 billion in 60 years, Deanna. That certainly very, very few firms can talk about that length of investing in private markets. Over those 60 years, we've probably seen more market cycles than anybody else has. And that's why our clients like to work with us because we've invested through all those cycles. And $82 billion certainly gives us the scale in this marketplace, most of which we have grown organically with our 350 investment professionals.
In fact, one of the measures of scale for us is the private market, the real estate business for us today is a business that generates 45% operating margin, which is quite enviable. And we want to keep focusing on it. But the core focus for us from a growth perspective is to grow both vertically and horizontally in private markets. So growing vertically for us has meant we always did real estate, equity, and debt. Over time, we got into REOC, which was a private equity way to operate in real estate. But most recently, we started an infrastructure business, an infrastructure business that we are growing ourselves. We brought on talent here just to give you a sense of how big the infrastructure debt business for us could be. When I look at what infra equity raise has been across the world, over $350 billion has been raised.
When you think about the debt needs for these infrastructure mandates, you almost need $600 billion of infra debt to be supplied. There are very, very few managers who operate in infra debt. We see this as a very long runway. The team's almost, so it's clearly a growth vector for us. The team's up to six people. We will certainly see many decades of growth in that space. So that's how we are growing vertically. You heard earlier about our edge in SMB. So three years ago, we started building a private credit business. We have done over $2.5 billion of transactions in that space. The business has generated very, very good IRRs, over 12% IRRs. So certainly a very, very good track record. And our view is we will stay focused on this mid-market segment of private credit. The space continues to grow.
That was really taking our underwriting expertise and moving horizontally. The last piece, which gives us a lot of edge, is the power of General Account that backs it. $70 billion of General Account, today $30 billion is in private markets. What that does for us is allows us the seed capital to build these capabilities. But what it also does is I go back to the point I made on institutions. When we go to some of these very marquee institutions, they want to see capital being invested side by side. With General Account, we have been able to do that. It helps our business grow both on the institutional side as well as the private market side.
Yeah, super excited. I've seen how we as a company have benefited from our private capabilities and ultimately now taking advantage of that with third-party clients as well. The last one that we talked about as the key area of focus is really around international, taking advantage of the international partnerships that we have had for decades. As we consider that, in fact, you and I were just in Chile, in Brazil, meeting with our employees, meeting with our partners. In fact, we're also very fortunate to have here with us today, Pablo Sprenger. Pablo has been with us for a little over a year leading our Latin American business, both pension and investment management. Definitely, this is a place that's going to unlock growth potential. Talk to us a little bit about how you think about that.
Yeah, so I think about our international partnerships, Deanna, one exactly how you described it. These are marquee relationships with the top distribution partners in the highest growth markets in the world. As I said earlier, I don't think so anybody can replicate this today. And kudos to Principal to planting the seeds many, many decades ago. What it does for us is it provides us extremely efficient access to the retail marketplace, over 800 million retail customers, bigger than the population of the United States by multiples. And this represents 20% of the global GDP. If one had to build this business directly, it would take an enormous amount of capital. And so we co-participate in the growth of these retail customers, certainly in places like China and Brazil.
And if I go back to Brazil, if you look at our partnership with Banco , where we have a market-leading position on the pension side, this relationship has existed for us 25 years. When I look at what that business has done for us, it has done 22% annual compounding rate of growth. Every four years, it's doubled. 25 years, you could do the multiple we have created in that business. And most recently, we have started working more in Brazil on the wealth management side, on the asset management side. In fact, in the last few years, on the wealth side in Brazil, we've generated over $1 billion in new net cash flow. And just this year, half of that has come just in this year. So I certainly think expanding those relationships beyond pension is going to pay dividends for us.
China, we started with an asset management business, entered pensions, and now we have a real estate joint venture, certainly focused on logistics, and as China kind of becomes an epicenter of doing more logistics, we would participate in the growth of the private market business, and then Dan talked about CIMB, so I do think of this as a strategic asset for us, but it also helps us on the growth front.
That's great. One of the things that we have talked about is we have brought PGI and PI together, and we started to see some opportunities on that, and also from an investor perspective, as we move to the end of the year, we will be changing how we're reporting to really move from a country-level focus to a capability-level focus.
And so really splitting out the results that are coming from the international pension arena, as well as then using that to be a springboard to integrating the investment management capabilities around the globe. So maybe talk a little bit about how you're thinking about those aspects.
Yeah, so the integration between PGI and PI is almost done. So as you said, going into next year, we report as a common segment. I'll start on the top. If you look at our AUM base, because one of the questions that's always asked in asset management, do you have scale? I would say we absolutely have scale. We now almost will have $1 trillion of AUM when you indirectly look at our China AUM. That clearly gives us scale, and that's diversified across multiple asset classes. We've kind of separated thinking about our traditional asset management business.
We'll report as investment management, which is almost two-thirds of that AUM. And what we have thought about is organizing ourselves around four key buckets. And I go back to industries where we see above-average growth, and we have a directed strategy of continuing to grow in that segment. We spend time on retirement. I talked about institutional wealth for us comes some directly through our own efforts in the U.S., but it also comes indirectly. And as certainly the retirement business grows, we will participate with that. And then the General Account, which is very important. On the international pension side, it is a great business for us. It generates a lot of operating earnings with a very high margin. As I explained earlier, it gives us great diversification from an earnings and a net cash flow perspective.
And we kind of think about the four key markets where we have at-scale pension businesses. So a powerful combination of businesses that not only diversifies our platform, but also diversifies our operating earnings going forward.
Well, great, Kamal. Just to wrap this up, we heard really around four key choices that you're making. Obviously, retirement is the key institutional, private, and international. And really, when you look at our capabilities as well as our market position, I do think these are the right choices. But any last thoughts that you really want to make relative to this opportunity?
Yeah, the last thought I would have is many of you know the asset management business well, the global asset management business. And I would say when you look at our business, I would say it's a very high-quality growth business. And I'll tell you why I say that.
Not all asset management businesses are growing. And there are forces in the industry, whether it's from a fee perspective, active-passive perspective, that our strategy effectively diffuses. And when you think about the moat we have in retirement, it allows us to participate in the growth of that industry, which naturally over time translates into operating earnings. When I think about the PGI-PI combination and the base we have in institutional, and we are already seeing early results of it, Deanna, it will generate new net cash flow growth for us. And we are seeing it, and it will only expand over a period of time. The at-scale private business gives us a very good recurring fee rate. And as long as we can continue expanding that capability, it sort of counteracts the fee pressures that other asset management businesses are seeing.
And then the last piece, when I think about the power of those partnerships, that allows us to head start in many geographies that others have to build over a period of time and immediately go to marketplace to offer our products and solutions. So the combination of those four things really excites me because it gives us a very good profile as a global asset management business.
So with that, we're going to end this one. Kamal, thanks for being here today. I'm going to ask you to leave, and then I'll kick off the last segment of the prepared remarks today. Thank you, Kamal. We're going to get rid of that chair. Ultimately, we'll probably get rid of this chair. So we're going to move into our last section of today's presentation. And I am very proud to introduce our Interim Chief Financial Officer, Joel Pitz.
Joel was our Controller. Prior to that, he was the Chief Financial Officer of our international business. And he's been with the company for over three decades. He's played a pivotal role across our domestic businesses, our international businesses, and our corporate functions, an incredible leader, deep knowledge of Principal. And ultimately, when you put all that together, it positions him very well to step in and lead during this interim transition. What we're going to try to do here is have Joel pull together the impact of executing on the strategies that you heard from Chris, Amy, and Kamal. We're starting from a position of strength, and we're well positioned for market-leading growth supported by strong earnings, robust capital generation, and disciplined expense management and capital deployment.
I'm confident that as we close out our prepared remarks, you'll agree that we have the right strategy, we have the right team, and we have the financial strength and discipline to drive growth now and into the future. Joel?
All right, thank you, Deanna, for those kind words and introduction. Very grateful for all of you for being here today to listen to our growth opportunities and performance that lie ahead for us. At our last Investor Day in 2021, I had the privilege of representing our Principal International business. I'm very proud of the progress we've made over the past three years and couldn't be more excited about what the future holds for customers, employees, and shareholders of Principal. Over the past two hours, you've heard about our competitive positioning and growth opportunities that lie ahead.
As a result of our sound strategy and ability to execute, we are operating from a position of strength. You can see from our powerful earnings generation supported by business and underlying expense growth, we have a clear path to delivering on our financial expectations and aspiration. We are in a strong position that affords us the ability to invest for growth across our diversified businesses while deploying meaningful capital to enhance shareholder returns. And importantly, we're delivering on our financial targets and objectives now. Our financial targets are ambitious, yet achievable. Since our last Investor Day, we have strengthened our portfolio and improved our financial performance across all three enterprise metrics. We will be delivering 9%-12% earnings per share growth this year.
We are on path to achieve 14%-16% return on equity by 2025, a meaningful improvement since our last Investor Day and a 90 basis points improvement from just one year ago. We are consistently achieving our 75%-85% free capital conversion, and we are confident in the sustained delivery of our financial targets. At Principal, we are laser-focused on meeting the needs of our customers. To do so, we realize the importance of differentiating our value proposition from that of the competition. That differentiation is needed to attract and retain employees. It's needed to attract and retain customers. It's needed to attract and retain investors. On this latter point, I'll direct your attention to the left-hand side of this slide, which compares our performance since the last time we met at Investor Day.
Importantly, during that period of time, we've exceeded the performance of our peer median by 12% per year. We've returned a meaningful amount of capital during that period of time, which translates to almost one-third of our market capitalization during this last three years. On that front, we've contributed $7 billion to shareholders during that period of time, more than $4 billion in the form of share buybacks and $2.5 billion in the form of dividends to shareholders. It's a testament to our capital-generating power of the organization. And importantly, this outperformance did not come at a great risk to shareholders. Given our diverse mix of businesses and geographies, Principal's EPS volatility is nearly one-half that of the competition.
Continuing on the differentiation theme, as you can see from the right hand of this slide, Principal's total shareholder return during that period of time is 53%, well in excess of our peer median and well in excess of benchmarks. We are anchored in a strong balance sheet and are proud of our diversified, yet synergistic businesses. This allows us to drive strong results through various economic cycles. At 402% RBC, we are at the high end of our 375%-400% target. As you recall, we lowered our target from 375 to 400 from its prior because the new target is better aligned with our new liability and capital profile following our 2022 reinsurance transactions.
The $1.6 billion of excess and available capital, the 22% debt-to-capital ratio, the 12.5 x interest coverage ratio are further proof points of our capital strength and flexibility. We feel very good about our capital position today and, importantly, our capital and earnings-generating power going forward. All businesses contribute meaningfully to the $2.5 billion of pre-tax earnings we've generated over the past 12 months, as you can see from the right hand of this slide. Importantly, this is a product of our diversified and integrated businesses. As Kamal mentioned earlier, Principal Asset Management is better because of our retirement franchise. Our Benefits and Protection business is better because of our strong asset management capabilities that support that business. Our Retirement Income Solutions and Benefits and Protection are better together because we can go collectively and holistically to meet the needs of small to mid-sized businesses.
We are clearly better together. Given our current mix of business and competitive positioning, we have great confidence in our ability to deliver sustained earnings per share growth under a variety of macroeconomic conditions and scenarios. As you can see from this slide, a majority of our growth is driven by strength in our underlying business in the form of revenue growth and margin expansion, with about one-third coming from share buybacks on a recurring basis. If I direct your attention to the left side of the slide, under revenue growth, you see customer growth. As I mentioned on the previous slide, we have meaningful contribution from all of our businesses, all of which are delivering at or above industry growth. Because of that diversification, we do not need to rely on any one business in order to achieve our targeted aspirations of growth.
As it relates to macro, given our diversified portfolio, many factors can impact our financial outlook. It can come in the form of equity returns, fixed income returns, wage growth, employment growth, foreign currency translation. Even when it comes to macro, we benefit from diversification, and then you see fee compression. Fee compression is a reality within the financial services industry. It's most prevalent in our RIS and asset management businesses, but it's partially offset by the rising premium trend within the Specialty Benefits division. As a result of our competitive position, value proposition, and capabilities, we have great confidence in our ability to manage fee compression, and then lastly, in margin, we have a great track record of making sure that we align expenses with revenues. We save in areas so that we can meaningfully invest in others, all that which leads to margin expansion over time.
So all that delivers 6%-9% earnings growth. And then when you have a situation where you're generating capital that's going to allow you to dedicate 35%-45% of your net income to share buybacks in any given year, that gives us the conviction and commitment to know that we can get a 3% accretion in EPS because of share buybacks alone, all of which is culminating to our 9%-2% EPS growth expectation going forward. We have always made it a priority to and have a history of aligning expenses with revenues. You heard from Deanna earlier today. We have and will continue to invest for growth and efficiencies. We lean heavily into capabilities such as AI to more effectively and efficiently serve our 68 million customers and counting worldwide.
Our expense growth is very muted and relatively flat during a high inflationary backdrop since our last Investor Day. We have expense discipline while investing for growth and efficiency that shows very favorably relative to peers during that same window of time. We continue to be vigilant in the management of our expenses while positioning our businesses to seize the opportunities highlighted by Amy, Chris, and Kamal earlier. As vigilant as we are in the management of expenses, we are equally vigilant in ensuring our capital is optimally deployed. This provides a very good visual of the evolution of our capital-generating power of our organization over the past five years. Recall in 2020, we built up excess capital in order to guard against the uncertainties that existed going into the COVID pandemic.
At Investor Day in 2021, we right-sized our excess capital to reflect a lower risk and less capital-intensive nature of our businesses following the 2022 reinsurance transaction. By the end of 2024, again, we will have deployed nearly $7 billion of capital over the last five years or, sorry, four years, more than $4 billion coming in the form of share buybacks. These share buybacks have resulted in a reduced share count of more than 40 million shares during that period of time, or a 14% reduction in share count since year-end 2020. We will continue to take a balanced and disciplined approach to capital deployment with plenty of capital to reinvest in our businesses while affording us the ability to deploy meaningful sums to shareholder priorities.
Double-clicking on capital deployment, I cannot talk about capital without highlighting the important priority we place on paying shareholder dividends. We feel it's very important to provide a steady income stream to our shareholders, and we have a very compelling and growing dividend that is anchored to a 40% dividend payout ratio. We actively seek input from shareholders to ensure we understand their priorities. We hear and understand that a healthy and growing dividend and realize the importance of that income stream. We consistently deliver attractive yields relative to our peers and distribute dividends that go in line with net income. As evidenced by our 10% growth year- over- year in dividends, which is in line with earnings per share growth, it demonstrates our commitment to this 40% dividend payout ratio.
Importantly, because of our diversified business, we are able to deliver in predictable and sustained ways. Financial targets and capital allocation priorities remain intact while we invest for long-term sustained growth. Our financial targets are no longer aspirational. We're delivering on them today. If I focus your attention on the left, 9%-12% EPS growth is being delivered in 2024. 14%-16% ROE is going to be delivered in 2025, and again, a 90 basis point improvement from just one year ago. And the consistent delivery of a 75%-85% free capital conversion positions us well to deploy capital in meaningful ways that will enhance shareholder returns.
We have great confidence in our ability to grow organically, and our key priorities are going to be here what you see on the right: investing in our business through organic growth, paying an attractive dividend, relevant share buybacks year in and year out, and opportunistic M&A as the opportunity presents itself. Given the vast opportunities across our diverse but integrated businesses, we have great confidence in our ability to grow organically, and we find comfort in not having to rely on M&A in order to meet our growth aspirations. We will continue to actively look and proactively look at M&A opportunities, but the bar remains very high as we consider strategic, financial, and cultural fits. In closing, as I've heard consistently throughout the day in Dan and Deanna's comments earlier and in the panel discussions, we are operating from a position of strength, importantly, competitively and financially.
We're excited for the opportunity to extend our reach beyond the 68 million customers we serve today and, in turn, our ability to deliver meaningful growth and dividends for investors with a much lower volatility profile than our peers. We are proud of the competitive position we find ourselves in and can assure you that Principal leadership is committed to the sustained delivery of our financial targets. On behalf of my colleagues and the 20,000 employees around the globe, thanks for your time today and for your continued interest in Principal. With that, we're going to take a little bit of break, probably get back about 3:30 P.M. Then we're going to have the whole executive team available for a question and answer session that's going to cover all the material we've covered today. So we look forward to seeing you soon. Thank you.
All right. I think we are getting to now at the long-awaited Q&A session for every body. So we'll have mic runners coming up and down the aisle. So if you want to ask a question, raise your hand, and then when you're being called, name your name and your firm for the record, and we'll do one question at a time, so you will make sure you have time to, if you have a follow-up, we can make sure you're back on the queue. All right, so let's raise your hands. All right, let's start with Suneet's over there, and then we'll gradually move up.
Thanks, Humphrey. So I want to talk about retirement for a second. So if we had any other life insurance company up there, they'd probably be talking about annuities for an hour, and you guys didn't really hit on it as much. I know you have the product solution, but can you give us your thoughts on that business, and do you need to be bigger in that business as you try to capture this rollover opportunity?
And the first reaction is we're certainly more than a life company. Is the mic on? No? We're now? Yes?
Yeah, we're good.
Now we're there. So we're certainly more than a life company. And, Suneet, I think the best way to think about that before I throw it to Chris is we've been very mindful of how we deploy our capital and where that can benefit all of our long-term shareholders. Having said that, there are significant opportunities for us to continue on the margin to have income and retirement solutions manufactured by Chris, and of course, those assets managed by asset management team. Chris, you want to maybe start with maybe PRT and then go into RILA and a few of the other capabilities?
Yeah, I mean, I think as we think about your question, Suneet, the annuity business has been an important part of Principal for a really long time, and we like it, but we like it primarily to serve our retirement customers. And so if we think about it, we've participated, we've had very strong success. And Sri Reddy's here, who leads that business for us on the income solution side. Our RILA business has been very strong this year. Now, we're not looking to be a top three or five writer of annuities in the marketplace.
That's not our strategy. Our strategy is more broad-based across retirement than those who say they're in retirement but are primarily just selling annuities. So we have a different footprint and different capabilities that we bring, which includes annuity products, PRT solutions, and everything that we've talked about this afternoon. So like the business, we want to grow the business. We focus on the returns we get on the capital we invest in that business, and then we look to sort of see where can we find opportunities for growth while also balancing the other metrics that are important to investors, which is the free capital flow metric as well. So we're trying to balance all those, but we like the business. It's there primarily to serve our retirement customers.
All right, thanks for the question. I guess Ryan Krueger.
Thanks, Ryan Krueger, KBW. I had a question on the change in your advice strategy within the workplace. I guess can you talk about, I guess, what has happened externally that is driving you to do this now? And then do you view this business as more of a means to reach more customers with Principal products, or do you also view it as a business you think you can drive standalone profits from as more of a wealth manager?
Chris, please.
Yeah, so I think as Dan indicated in the early session of this meeting, we've been serving participants for a long time, and we historically, for many decades, have primarily focused on an education-only model. We, in the past, had advisory solutions and people that were providing advice, and then the DOL came in, and with each passing administration, we took a different position.
And so I think we tried to take a bit of a step back and assess what is the right approach for us. But as we look at the marketplace and where the marketplace is going and the opportunity and the need for individuals, there's a point in time with employers where they actually just didn't want you talking to their employees about advice solutions, right?
That's changed remarkably over the last couple of years with the recognition that their people need help, and so they want you to have a level of advice solutions that can help people make decisions about roll-ins and investment selections and deferral rates and what do they do upon retirement or job termination. So that was really the catalyst to make sure that we were able to serve both our employer needs as well as those 14 million individuals that we serve. And that's really where we're investing for the future because there's a strong demand and need for it in the market.
The only thing I might add to that, Chri s, is the opportunity for the roll-ins as well. With the changing composition of the advice profile that we'll be using within Principal Connection, it will allow us to help consolidate individuals' assets with Principal in that new 401(k) plan participant.
Tom Gallagher.
Tom Gallagher, Evercore ISI. Kamal, you had mentioned one of the keys in the business being rollover retention. And can you talk a bit about where you are now? What percentage do you retain? This might be more for Chris, in terms of what your current retention rate is, where the best-in-class peers are. Do you need anything else from a firm standpoint? Do you need a bigger wealth business?
To Suneet's question, do you need a bigger profile presence in the annuity business? What will it take when you think longer term to succeed at retention?
Yeah, Chris, you want that?
Yeah, sure. I think as we've answered this question in the past, Tom, competitively everyone counts it differently, and nobody really competitively acknowledges what that actual retention rate is. What I would say is we've been very successful both retaining assets in plan as well as in IRAs on benefit event, and we'll continue to do so. I think what we see is the opportunity for that to get even greater with the rollout of advisory capabilities as opposed to relying primarily on education. So if I think about the, we've got over a million customers in our wealth business today, what we would consider Workplace Personal Investing.
When we look at the early returns on the Workplace Personal Investing and the advice launch that we had at the end of the third quarter, we're seeing like 80% of the time they accept a recommendation. Sometimes that recommendation is to stay in plan, sometimes it's to rollover to another Principal solution, or sometimes the recommendation is to rollover to a different solution entirely. But we do see that as a driver for increased retention, and I do think that we've been sort of, depending on how you look and how everyone talks about the numbers, top quartile performance in terms of our ability to retain assets.
So Kamal, I want to ask that you sort of weigh in here as well as it relates to DCIO and also winning mandates on our competitors' platforms for both 401(k) assets as well as IRAs.
Sure. Tom, I think the core of your question, Chris answered part of it, what's our track record with retaining assets. I think if you take a step back in really what the rollover proposition for the industry is, I think the shift has become as more sponsors are agreeable to advice, it's essentially how you package advice and investments. And I go back to our success with things like target date. At the core, that is packaging advice and investments. And as you think about what Dan talked about with our success we've seen with Connection and PFN, our goal is to ensure that for the segment that wants advice and investments packaged, we can deliver that, and we'll continue to do so. We'll do it in plan, whether they want offerings in active, hybrid, or now in passive.
We actually have other rollover solutions that package advice and investments. As you move up the segment, particularly on the large plan side, they may just want advice, and they may want to pick the investments underneath, but we actually have quite a few capabilities. The thing that I think we will make the most success in that segment is there's going to be a need for income solutions, which obviously was a question asked earlier. Because we have a very good credit business that we'll do over time and we have a stable fixed income business, that should help us in that income solution segment as well.
All right, we'll go to Wes and then Alex, a nd then Elyse.
Thank you. Wes Carmichael, Autonomous Research. Question again on retirement, and just thinking about the consolidation that's going on in that space, particularly in DC, what's Principal's view kind of going forward in terms of being a potential consolidator of plan providers? And I know you didn't really change your 0%-10% capital allocation to M&A , but if you look here today, how are you thinking about future acquisitions?
Yeah, I'll have Chris take that one, but I just want to be on the record with this. The acquisition that we made in Wells Fargo's retirement division was really a significant and important acquisition, both in scale and capabilities, and it really took us to where we needed to be to be a scaled player, and credit goes to Chris and his team for building a lot of capabilities around that and leveraging those capabilities. You can include significant relationship management on the largest accounts as a contributing factor. So it gave us scale, some capabilities, as well as got us into a market segment that otherwise Principal organically would have had a hard time getting into. Chris?
Just one other comment there, Wes, that I'll expand on. You're correct, we didn't change our 0%-1 0% , but one of the advantages that we have because of our low leverage ratio is that's an additional currency we can use if an attractive opportunity came. I think Joel did a great job. The bar is high for acquisitions, but ultimately, if we found one that was compelling to the overall enterprise strategy and our financial capabilities, we have that place to actually access currency as well.
So Wes, the thing I would add is that we are consolidating the industry already, and you can think about it both organically or inorganically. Dan touched on the inorganic piece of it, but organically, there is a flight to quality and there is a flight to scale. And when we think about the key distribution partners that we're working with, they don't want to be working with 40 different record keepers on their platform. And the worst thing that happens to them is when one of their record keeping partners, retirement solution partners, gets acquired because they spend a whole year of lost productivity trying to retain those plans. And so they're getting more thoughtful about who they're going to build their business with for the future.
One of the first and top questions we get in RFPs is, "Talk about your long-term commitment to retirement." I don't think you can go through today's session and not understand we've got a very firm commitment long-term to retirement. We're a significant player and we intend to stay that way.
Hi, it's Alex Scott from Barclays. I was interested if you could dig into the 6%-9% operating earnings growth, and I'm particularly interested in the revenue contribution to it. I mean, you went through a lot of different elements of your strategy on the growth front. There were a lot of different total addressable market metrics thrown out there. It seems like there's an enhanced focus on some of those areas. The 6%-9%, I think, is consistent with where it's been. I'm just trying to understand. Are those things truly an incremental revenue opportunity?
Yeah, I'll maybe spend a few minutes and then I'll kick it over to Joel to talk about it as well. 2024 is really the first year in a number of years where we've actually delivered on that 9%- 12% . I think what you heard today is a foundation that increases our confidence in being able to deliver that through different cycles, but year after year on a consistent basis. The other thing I would take you back to is we do need to invest in our business. From that perspective, in times when we see outsized revenue growth, some of that's going to go back to accelerate some investments that then allows us to then drive growth going forward. I'll see if Joel wants to mention that as well.
Yeah, and 2024 is a great year because we actually have comparability finally after the reinsurance transaction of 2022. This is the first year we have comparability of the same business footprint this year relative to last year. We just haven't had that since 2022. As it relates to 6%-9% growth in earnings, we feel really good about it. And how we try to frame it today is to let you know all the different clear paths in order to deliver on that. You saw earlier we had verticals, and when you look at things from a vertical perspective in industry, we don't have the level of growth that when you see it when you look at an integrated business and what we're able to deliver by working together. RIS partnering with B&P, asset management partnering with RIS, et cetera.
That puts us in a different growth trajectory that we're really excited about and really differentiated. And so when you combine that with our ability to manage expenses with revenues for margin expansion, but still investing in the business, as Deanna said, it gives us great conviction and confidence in our ability to deliver on that 6%-9%.
Thanks. Ely se Greenspan, Wells Fargo. Kamal, when you were talking earlier, you mentioned real estate adding around $100 million of earnings over the last few years, yet in the context of a more difficult backdrop. How do you see that number expanding from here and just kind of take us through the short to intermediate and even longer term?
Absolutely, Elyse. So I think if you think about the real estate cycle, which I would say is obviously stabilizing and now over the next few years will come back, what we haven't had in the last few years has really been some of the performances that actually add additional kicker to our management fee rate. We obviously have a big business in value-added real estate that as the real estate cycle turns and we can transact more on those properties and also underwrite more debt, you will certainly see the performance and transaction fee component come back in. So that adds value to our business. The other piece we are doing is we just recently have expanded our data center capability. Now, if you really think about the multiple expansion that gives over core real estate, that's quite valuable.
Historically, a large base of our real estate business has been in Core, Core Plus, and now we are essentially scaling up to more specialist capabilities. With the AI tailwinds, we certainly will have 8% of our AUM in data centers now, $4 billion. So as those cycles work through the next five, seven years, that will add incrementally more revenue left to our business as well.
All right. Wilma, and then Jimmy Bhullar, and then Joel.
Hey, good afternoon. Which of PFG's channels or products are higher margin and have good growth opportunities and thus could help fight fee compression? Thank you.
Yeah, I think there's a couple of things there. I think Kamal in his prepared remarks, we talked about that stable fee rate that we've experienced, 28%-29%. That doesn't mean all of our asset classes are at 28% and 29% . We have some that are significantly higher, some that are lower, and really those private opportunities are the ones that do offer that higher fee rate and margin, but I'll see if Kamal can add on to that.
Yeah, definitely. I think private markets is obviously higher than our average fee rate, but I would also highlight that we've actually seen much more stickiness on fee rates outside the U.S., particularly when I look at our Asia and LATAM business. The fee rates have been incredibly sticky because I think what we are doing is we are importing global capabilities to a lot of these geographies, which typically they have not had access, and they're willing to pay a premium to what they are investing in, so even when we do, recently we launched in Southeast Asia something called the Signature Series.
So this is in Malaysia where we've always had a pension business, and now there's a large cohort of wealth management business, particularly through banks, that wants a target risk-like strategy. Those capabilities are actually getting us a premium because what you're doing is you're taking your global multi-asset capability, exporting it to these geographies that they've typically not experienced. So I think there's a combination of forces that helps you in addition to being in private markets.
Hi, Jimmy Bhullar from JP Morgan. So I had a question for Kamal on your commentary on the opportunity for growth is very positive across a number of different opportunity sets you outlined. But if we look at the financial metrics for the asset management business, especially flows, those haven't been good. And I realize the whole industry has had challenges, and you've had some loss of low fee mandates and stuff. So as we think forward, should we assume a change in those metrics, or is it just that the whole industry is tough and you're doing better, but you have to keep doing those things to stay ahead of the rest of the group?
Look, it's a great question, and a big part of our NCF profile, as you heard today, is anchored in a couple of things: one, obviously real estate, and real estate has had NCF challenges, not for us, but for everybody because of the real estate cycle we have gone through, and as I said, I expect that to improve here, if not just near term, in the medium term, it will definitely improve and translate into a better NCF profile. The other piece that we are now more focused on is continuing to innovate in the retirement segment.
I think it had been a while since we launched new capabilities to capture more market share in the retirement segment, and certainly now working closely with Chris and his team, I view that over a period of time that will translate into incremental NCF. Then Deanna mentioned Pablo is here. We have Thomas in Asia. I think the international markets were also not generating a lot of NCF for many global asset managers. I do think those markets are going to be at a better place, particularly the retail businesses I talked to you about in Brazil and China, so I think in the next three to five years, you will see that curve bending. Those are probably the levers I would look to see how it's delivering on that.
John, before you do that, how do you just get called out for being Barnidge as opposed to first n ame like everyone else? Do you want to take any issues with that or are you comfortable with it?
I'm the youngest of five boys. I haven't taken issues much in my life. But John Barnidge, Piper Sandler , thank you for the opportunity. With the silver tsunami kicking into high gear for the next 20 years, are there additional products that you need to have? I'm not talking annuities here. To capture that will position the company to retain those multiple products into retirement years. It could be Specialty Benefits, it could be retirement. Just how are you thinking about retaining multiple products with each individual?
Yeah, John, I think where you'd start with, and I'll go back to the SMB panel discussion, we're not lacking solutions, right? We have solutions that are there for the employer, the employee, the business owner. And ultimately, it's about how do we leverage all of those to make sure we can drive growth. And so I don't think it's about additional solutions. It's really leaning into making sure we're making it easy for our customers to understand the value of those and ultimately broaden that relationship across all of those.
I do think relative to Worksite Personal Investing, whether it be investing in technology to make that relationship much more smooth and really leaning in, as Kamal just mentioned, to continue to refresh our retirement products that we're offering. There will be incremental product development, but I don't sit here to say that we have a huge gap as we sit here today.
So Barnidge, just one additional comment. The one thing that, and Chris touched on it ever so briefly, and I cannot emphasize this enough, prior to the pandemic, and I think that's roughly, just let's just say within the last five years, employers and advisors were highly sensitive to providing other solutions around financial security at the workplace, whether that was even increasing deferrals or participation, it was advice or education. There was really sort of a stand down, hands off. It's a 180. It is completely different. The number one demand you get in these large, medium, and small businesses, what else can you do around college savings? What can you do around payroll deducted IRAs if we don't put in a 401(k) plan? They're looking for options to enhance and improve on their credits. Do you have programs that would help them pay down student debt?
It's a richer opportunity, and it speaks really to your question that you raised on what are the other opportunities, how do we capitalize on those? Chris, anything you want to add there or Amy?
Yeah, actually a quick add on this is that we've made a commitment in the dental marketplace. We have a great dental network. We know we have a great insured dental product. But with that dental network, one of the ways that additional fees can come towards us is with a discount dental product. We've just done a complete revamp of our discount dental product. And the primary audience we would have for that is exactly the audience that you asked your question about.
So when people move away from the employer, sometimes an individual dental product is not what they want, but getting access to the discounts that come with a great network is a really attractive product. And so that's a very quick example of something that on the margins we're doing that basically is it's an asset we already have. It would increase fee revenue, which that fee revenue piece then tends to be higher margin, and it's going to use, it's going to basically allow us to link into the enterprise strategy to do that. So I'll give you just, that's one very small example of where we're rounding out some of our portfolio pieces.
Joel Hurwitz, Dowling & Partners. For Chris, you just recently launched a target date fund with in-plan guarantee, but you aren't using Principal's balance sheet for that. Can you just talk about the structure of that product and I guess the rationale for not using Principal's balance sheet on that?
Yeah, so thanks for that, Joel. We are launching a target date with retirement income product in 2025. And so it hasn't launched yet. It will be launched. And we did partner with IRIS on that solution, largely because it would help us with speed to market on that particular solution. And you will see us, that's generation one. There's more in the pipeline beyond just that initial product launch. So we will be using our own capabilities as we go forward.
But for speed to market and given the other opportunities in front of us and given the fact that retirement income is still kind of, we're still waiting for it to take off, we decided it'd be better to partner initially, continue to develop our own capabilities as that market continues to mature, and then put our investments in other areas for now.
Joshua Shanker.
Yeah, Joshua Shanker, Bank of America . If we go 10 years into the future and look at the SMB benefits market, is it materially more consolidated than it is today? Can we see that on an annual basis? And are there any catalysts that we can point to that would accelerate that change and make Principal winner of that consolidation?
Yeah, I'll just make a few comments. Obviously, there's been waves of consolidation both in the benefits business and the retirement business. I don't think it'll ever get to that there's three to five carriers in each of that. What you've found is sometimes the medical carriers lean in, then they lean out. Some of the smaller ones decide that they want to lean in. But I think ultimately we would be interested in that, but it would need to supplement our historic strengths.
So again, we've looked at the properties out there today, and really what we found is they either didn't complement our SMB strategy or they didn't bring capabilities that were additive to what we were. But ultimately, with either retirement or SMB, we look at all of those opportunities to see if it makes sense for us. But I'll see if Amy has additional thoughts.
Chris answered a question earlier with a really good dimension in terms of inorganic and organic. Deanna answered a bit more on the inorganic side. There's organic consolidation happening, and a lot of it is being driven by our distributors. Very similar, very complementary to what Chris was pointing out. Do you want to have 30 people that you're working with for these solutions, or would you rather have a stable that you're really comfortable that they're going to meet the needs, you can recommend them consistently, and you don't have to worry about people moving exactly wha t Deanna said in and out of the marketplace so that you're dealing with a renewal that was unexpected, 20% or 30% or 40% increase, and it takes away that credibility if you've recommended them.
So I see more of the consolidation 10 years happening organically in that some of the players that move in and out, that flex and then retreat again, they are not going to be the preferred players for the distributors that we grow our business with.
The other thing I'd mention there is that 9%-12% EPS growth is an organic EPS growth. And if I look out the next 5-10 years, I think we can continue to sustain that on an organic basis. If there's some additive inorganic opportunities, we'll explore those, but it is not necessary for us to have inorganic acquisitions for us to deliver on those objectives.
Does the significant M&A activity in the insurance brokerage space present an opportunity for Principal? Do they do better with large brokers than the smaller, more regional carriers?
Maybe I'll turn to Chris and Amy and talk a little bit about that. We have been seeing some consolidation there. Ultimately, we're also seeing some of the historical benefit advisors branch out into retirement, which is giving, or vice versa, which is giving us some opportunities as well. But maybe you can talk about that.
Here's how I would look at it, and I'll answer for more the benefit side. We can and do win with both. So it can be a large national player. It can be a very large kind of regional player, or it can be a smaller relationship that sits really squarely within that region. I think what's more important is what they value, what they take as a recommendation to their employer to say, "We help you do this.
We tend to do better with the brokers and advisors who are comfortable helping let some of our solutions, some of our consulting, some of our technology solutions that we've built come through the process. If they want to disintermediate and bring us, kind of keep us on the sideline, that doesn't tend to be where we bring the best solutions, especially on the more consultative sales. So I would say it's more dependent on who's aligned with our strategy. We can win with both models. We probably win a little bit more with the brokers and advisors who have made more of their future strategy about the consulting, the advice, and the differentiation they want to do rather than simply a price placement.
On the retirement side, Josh, I think we have been a net beneficiary generally. A lot of the strategic distribution partners we have been very acquisitive, and they're growing their footprint. And they also now have taken investments from third parties that are very much focused on their growth trajectory as well as their cost to serve. And again, I think that's a little bit of what's forcing this rationalization of who they're going to work with and why are they working with PFG and who can they partner with a deeper relationship over time.
So I think we've been a net beneficiary when we think about what the activity that's happened in the retirement space. And we have a broad enough distribution footprint where we're not getting, we're mindful of the concentration that we have as well. So I think we've been a net beneficiary in that space.
I think Wes had a follow-up.
Hey, Wes Carmichael, Autonomous Research. Question for Amy on group benefits. But in terms of the margin, I think you talked about in your prepared remarks maintaining or even growing that margin. You're already 300 basis points above peers. Your benefit ratios are better than peers. How do we do that from here? Is it price or what are the incremental levers going forward?
Yeah, so mix of business really matters in the answer to that question. So one of the pieces that gives me confidence that we stayed disciplined, we know what we've written in the last 10 years, 15 years. We understand that they stay with us. It's a really powerful margin lever when not every piece of business you have is truly acquisition. You're paying all the acquisition costs.
So when you're moving from one coverage place that they make a decision to have two or three or four, you don't pay new acquisition costs related to that. So part of our formula is that that deepening has to continue. So that's one of the things that I watch for. That's one of the things the team talks about is that is part of why that margin comes through. What I would also say is we actually underwrite and look for business in the segments that have more of that natural growth embedded within them. So there might be some industries that feel a little bit more retail-based, some employer groups that are newer to the business, haven't seen those economic cycles. We might actually decline to quote some of those pieces of business because they don't meet that criteria.
The third point I would say is the reason margin expansion feels possible also for us. Again, I'll maintain margin if that means we need to reinvest in a new technology or something else that's going to help us deliver things to the retirement platform or the asset management platform. So maintaining margin, not a bad result for us. But if we do slightly increase that margin, I could see that coming from a lot of the worksite portfolio products that we are putting in place. We're having a nice series of growth and success with those.
Tom.
Just a follow-up on RIS. Is the expectation there still high single-digit revenue growth, low single-digit earnings growth? I know that was the case a while back. Just want to make sure. Is there any movement in that? I think you've talked about more money potentially going into General Account, which I guess would be higher from a margin perspective, but maybe consume more capital. So just curious, is that similar to what it's been in the past or is that changing?
Yeah, and Tom, I'll make a comment and then Chris add on it. I think you're probably not quite remembering it right. Our target margin is more in that 1%-5% range from an RAS perspective. We're exceeding that this year more because of the tailwinds we're seeing from macro. And ultimately.
I got the low end right.
You got the low end right. And then I think the other thing is, as we think about that comprehensive portion regarding the retirement ecosystem, some of those economics don't show up in Chris's P&L. They show up in other parts of that as well. But I'll see if Chris wants to add to that as well.
I think as we've been talking to you over the last, pardon me, two years, we're prioritizing revenue and margin in our business, and we're looking at the profitability of our business. And so we are looking for ways to generate, build more favorable economics. Certainly, we were underweight in the using the GA space with fixed product. That has been an intentional effort of ours, and we've had very nice positive net cash flow in those GA products despite a risk-on environment, which is kind of usually risk-on. You see lower guaranteed product sales and risk-off, you see lots. We've been able to grow our GA exposure in both cycles.
We are looking for, constantly looking for ways to find good revenue opportunities, profitable plans, efficient ways to serve them, and making sure that our margins. If we think about our margins, we are above our revenue guidance, and we guided that we would be above it for the full year, and we'd be at the top of our margin guidance as well for this year. I think those trends will continue.
Can I just ask a quick follow-up? Just, are you seeing? What are you seeing at the top of the house from a competitive standpoint? The big private companies, the Fidelities and Vanguards of the world, are they still compressing fees for everyone else? What I've been led to believe is they've used that as essentially not a loss leader, but like subsidized growth in their asset management business. Would you say it's still, is that still happening? Is that stabilizing, diminishing at all in terms of the competitive pressure that you're seeing from the giants in the industry?
Yeah, I mean, we see a very competitive market. I wouldn't say that I see it as completely loss-leading. I think there's certain very plans and employers that have very favorable demographics, right? High salaries, high deferral rates. You can see people doing some short-term fee waivers and the like to try to get over the finish line with those plans. But overall, it's a competitive market. I do think that we've been able to succeed, and we have taken a number of plans from all of our competitors this year, including those that you've named. So it hasn't prevented us from being able to be competitive on the plans in which we want to compete.
Last Monday, I spoke at the Advisor360 conference out in Scottsdale for 45 minutes. And what I would tell you is we talk about funds and fees and fiduciary, but I can't tell you how much attention is now being given to the results of the plan itself. And are you getting people prepared for retirement? What is your education model? How are you getting my employees prepared for retirement? What are your TRS options? So in spite of all these other sort of variables that go into it, there's an intense amount of pressure on the part of advisors and employers to say, "It's got to be more than just those first three Fs. It's got to be, what are we doing to set up our employees for success?" And of course, Principal would be one of the leaders in that space, in particular around TRS.
I'm not seeing any questions. So thank you again for everybody being here today. So I think Dan is going to make a final comment.
So maybe just get comfortable. I'm going to talk about the next hour and go down memory lane. No, I promise. I'm going to take five minutes because I've got three things I want to cover with you. The first one is I really want to end where we started. What we do really matters for our customers. We have the right strategy. We have the right team, and we've got a track record of success. The other thing I talked about was starting my career out in West Texas. So the exciting locations like Muleshoe, Odessa, Midland, Amarillo. I mean, these are places that are hotspots. If you haven't been there, give them a try.
It was a great education for me, but the best education I ever got was when I was getting recruited to the Bankers Life Insurance Company, which is now the Principal, some 40 years ago. Chad Sims, who was the sales manager down there in Dallas, we were driving out to the airport, and Chad. I had several other offers. Chad said, "Hey, Dan, tell me about these other offers." I said, "Well, there's a, I'll use the actual names here. Goodyear Tire and Rubber." He says, "Dan, do you really want to be in the tire and the battery business the rest of your life?" I had, "Gee, Mr. Sims, that's probably not where I want to be. What's your other offer? Georgia-Pacific. Do you want to be in the plywood and lumber business the rest of your life?" "Gee, Mr.
Sims, that doesn't sound too glamorous. He says, "If you come to the Bankers Life Insurance Company of Des Moines, Iowa, you'll change lives the rest of your life." And what Chad meant was the products and the services that we provided at the Bankers Life. We were in the pension business. We were in the group benefits business. We were certainly an investor at the time. Our industry, the industry that you invest in and the industry that you cover, it's been around for hundreds of years, and it's going to continue to be around 100 years. As Thomas Jefferson said, "On matters of style, go with the flow. On matters of substance, stand like a rock." And this is a substantial industry, and it has a profound impact on people's lives. I also want to thank everyone in this room for your support over the years.
I see investment bankers, advisors to Principal, our 20,000 employees, those people who are investors that are putting us in your portfolio, having the confidence that Principal can deliver alpha and help you in your returns. All the sell- side, that dynamic tension is great. It ensures that we have good, healthy conversations, Barnidge. It's been a real pleasure. And then lastly, Deanna will be our 16th CEO over the last 145 years. We have a strong track record of succession, and every leader that came into this respective role has done certainly a better job than the one that preceded them. And I have no doubt Principal Financial Group's best days are ahead. And Deanna and her management team and her 20,000 associates are going to get this done for you as investors. And with that, we'll bring this to a close.
I know we've got refreshments and some appetizers for those that would like to stay. We look forward to having some one-on-one conversations with you. Thank you so much. Appreciate it.