Deals & People July 9, 2015

DST to Acquire Rollover Provider WMSI

WMSI’s suite of services and rollover solutions will be part of DST Retirement Solutions.

Reported by

DST, a global provider of data management, business processing, and customer communication solutions, has agreed to acquire Wealth Management Systems Inc. (WMSI), a provider of rollover services and financial planning and education solutions to the retirement services industry.

On completion of the deal, WMSI’s suite of services and rollover solutions will come to market as part of DST Retirement Solutions, a provider of defined contribution technology, strategic advisory and business processing solutions to the industry.

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According to Jude Metcalfe, president of DST Retirement Solutions, the firms’ complementary technologies will come together at a critical time in the retirement marketplace. “As a normal consequence of the nation’s aging demographics, there’s a predictable migration of funds from retirement plans to investment management platforms,” says Metcalfe. “This acquisition of an established leader in the rollover business places us squarely at that point of intersection. I think DST is uniquely positioned now to help asset managers and broker-dealers grow and retain assets in the retirement space.”

With more than 40 firms participating in its network, WMSI is connected to recordkeepers servicing more than 12 million participants, and provides automatic rollover services to more than 25,000 plan sponsors. In addition to its New York City location, the firm has offices in West Palm Beach, Florida; Boston; and Waltham, Massachusetts.

As part of the DST Enterprise, WMSI and its employees will become part of the DST Retirement Solutions business unit.

The acquisition is subject to certain approvals and other closing conditions.

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Data & Research July 9, 2015

Advisers Could Help Boost 403(b) Outcomes

“There are many ways for an adviser to add value,” says Aaron Friedman with The Principal.

Reported by

Rebecca Moore

Fewer than half (46.7%) of organizations use an independent retirement plan adviser separate from their service provider, according to the 2015 403(b) Plan Survey from the Plan Sponsor Council of America (PSCA).

Aaron Friedman, national tax-exempt practice leader at The Principal, which sponsored the survey, tells PLANADVISER only 25.8% of 403(b) plans with fewer than 50 participants use an independent adviser. The most common services for which 403(b)s use advisers include investments (73.6%), plan design (64.4%), participant education (60.3%) and provider selection (52.3%).

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The survey found an average of 27 funds for employer contributions were offered by 403(b) plans in 2014, and an average of 29 funds were offered for participant contributions. More than one-quarter of plans have 26 to 50 fund choices and 8.5% have more than 50 for participant contributions.

“The number of funds offered for participants to choose among continues to rise,” says Friedman. “As we know, studies have shown this tends to overwhelm participants and reduces action. Advisers have to help bring the number of investment options to manageable numbers that don’t overwhelm participants.”

Friedman adds, “There are many ways for an adviser to add value. Given the limited resources at smaller non-profit organizations, they in particular have a need for advisers.”

NEXT: Help with plan design and compliance.

Friedman notes it is not just for investments that plan sponsors use advisers; advisers can help with plan design, participant education and provider selection. The survey found only 16.2% of 403(b) plans use automatic enrollment. “The low take-up rate on automatic enrollment for 403(b) plans continues to be disappointing. It greatly lags that of 401(k) plans, which sits at more than 50%,” says Friedman. “There’s definite room for improvement here, and an opportunity for advisers to work with plan sponsors to design plans that help create the best outcomes for participants.”

According to the survey, around half of plan sponsors monitor participant contribution levels, loans and hardship withdrawals. Less than one-quarter (23.1%) monitor participant investment allocations. Half of 403(b) plan sponsors made no changes to their plans last year.

One-quarter of surveyed plans offer investment advice to participants, with the most common method being one-on-one counseling in person.

Only 16.8% of survey respondents are re-evaluating the allocation of plan-related expenses. Two-thirds of 403(b) plan sponsors formally evaluate plan-paid fees annually, but nearly 3% state that they never review fees, and 7% indicate they do not receive fee information from their providers.

More plans are facing compliance requirements. More than half (52.3%) had a financial audit in 2014; 54% of which received a qualified opinion and 45% received an unqualified opinion. Eight percent of plans have been audited by the Internal Revenue Service (IRS)—another area in which an adviser can add value.

PSCA’s 2015 403(b) Plan Survey reports on the 2014 plan-year experience of 478 not-for-profit organizations. More information can be found here.