Exploring the Benefits of Streamlining Retirement Plan Providers

In today’s fast-paced, digital-first business environment, efficiency is key to maintaining a competitive edge. When it comes to managing retirement plans, consolidating your plan providers can offer significant advantages. 

First, it’s important to know the different roles of providers within a retirement plan. This can be relatively straightforward if your organization offers a single plan (like a 401(k)).  The roles typically involved in these plans include: 

• Recordkeeper: responsible for managing and maintaining accurate records of all transactions and participant information within the plan.
• Third-Party Administrator (TPA): handles the administrative and regulatory tasks of the plan, ensuring compliance with legal requirements and managing plan operations; sometimes serves in a consulting role.
• Investment Advisor: provides guidance on investment options and strategies, ensuring the plan’s assets are managed in the best interest of the participants, often acting as a fiduciary.

This can get increasingly complex if you offer more than one plan (say a 401(k) and ESOP or pension).

The retirement industry is vast. There are many strong providers that offer a single service (like recordkeeping). And then there are some providers that can serve in many (or all) the necessary roles.

Once you understand the roles and responsibilities within a plan, you can explore the benefits of potentially consolidating providers into just one or two organizations that can streamline the operations for your plan. The potential benefits may include:

Relationship Management 

Managing multiple retirement plan providers can be cumbersome and time-consuming. By consolidating your services with a single provider, you can limit the number of contacts you need to coordinate. This can simplify communication and ensure you receive consistent service. 

Team Collaboration and Accessibility 

A collaborative team approach ensures that all aspects of your retirement plan(s) are managed efficiently and effectively. This collaboration enhances service delivery across recordkeeping, TPA, and investment advisory services, providing a cohesive unit.

Efficiency 

Relying on multiple outside data sources and communication channels can lead to inefficiencies and errors. Consolidating providers can minimize these risks. With fewer parties involved, the potential for misunderstandings or mistakes in information transmission can be significantly reduced.

Cross-Functional Information and Task Management

Consolidation enhances the efficiency of cross-functional tasks, such as fund changes, website updates, and form revisions. With an integrated approach, these tasks are handled more smoothly, ensuring that your plan’s operations run without a hitch.

Operational and Cost Efficiencies

Streamlining providers can lead to significant operational efficiencies and potential cost savings. By consolidating services, you reduce redundancies and leverage economies of scale, which can potentially result in lower overall costs.

Combined Plan Testing 

For organizations with multiple retirement plans, such as ESOPs, pensions, and 401(k)s, combined plan testing becomes more streamlined and efficient. A single provider can conduct comprehensive testing for all your plans, ensuring compliance and optimal performance.

Integrated Systems 

Internal systems designed to “talk to each other” provide a cohesive and integrated approach to managing your retirement plans. This integration ensures that all aspects of your plan(s) are managed efficiently. 

Unified Web Presence 

Participants can access information about their retirement plan(s) through a single, consolidated website. This unified approach can simplify navigation and enhances the user experience, making it easier for participants to manage their retirement savings.’

Simplified Employee Communications 

Streamlined employee meetings and communications can unify the retirement message for employees. Whether it’s plan updates, educational sessions, or regular communications, having a single provider can facilitate consistent messaging and better engagement with your employees.

Consistent Investment Approach and Philosophies 

When you have more than one plan, and each plan has its own investment advisor, there is a potential for inconsistencies in the investment philosophy and approach. Consolidating providers can help present a unified front, particularly when more than one defined contribution plan is involved.

Effective Plan Review Meetings 

Plan review meetings can be more efficient when you have a limited number of providers managing your plan(s). This approach presents an opportunity for consistent insights and recommendations for your entire retirement program.