servicing strategies | PLANADVISER July/August 2017

Bringing it All Together

The adviser’s role when working with a client’s multiple retirement plans.

By John Manganaro | July/August 2017
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Art by Sam D'Orazio

Generally speaking, total retirement outsourcing (TRO) refers to the farming out of all administrative functions associated with a company’s multiple retirement plans—defined contribution (DC), defined benefit (DB) and nonqualified.

Outsourcing plan administration is nothing new, but, as the recordkeeper marketplace evolves, more providers are gaining the expertise to administer multiple plan types—meaning advisers can help plan sponsors find one provider for their DB, DC and, sometimes, nonqualified deferred compensation (NQDC) plans.

If an adviser has worked with a client on one plan, moving to TRO can give him the benefit of overseeing more plan assets under administration (AUA).

Advantages for plan sponsors are substantial, too, says Stephanie Sorenson, a Milliman benefits analyst in Seattle. These include time saved for benefits staff; a single transmission of census data for both 401(k) and defined benefit plans, and, with that, greater visibility of the value of benefits to employees; better access to advanced benefits management technology without direct capital investment; a single point of contact for the vendor relationship; and, finally, a combined nondiscrimination testing environment. Assuming the price is right, it can be an appealing picture for resource-strapped sponsors and human resource (HR) committees.

In the past, bundled administration arrangements may have operated three separate platforms, one each for DB, DC and NQDC, all under one brand heading. Service from the provider was, perhaps, coordinated by a single account representative or a small team, but the real legwork of running the various plans was not truly unified.

Yet, years of competition and technological development have honed and strengthened the TRO marketplace, while also driving down costs, experts say. Against this backdrop, advisers may want to consider how their own expertise in coordinating the various moving pieces in TRO can complement their more traditional DC business.