CAPTRUST, T. Rowe, NBS Team Up on ‘MEP-PEP Alternative’ for Small Clients

The Direct Fiduciary program aims to allow companies to significantly reduce the amount of time spent managing an individual 401(k) plan by outsourcing administrative and investment fiduciary responsibilities.

CAPTRUST Financial Advisors has announced the launch of a new service dubbed “Direct Fiduciary,” billed as a comprehensive retirement plan outsourcing solution for small companies.

The program, launched in collaboration with T. Rowe Price and National Benefit Services (NBS), seeks to deliver better outcomes and lower costs for small business retirement plan clients that wish to maintain flexibility by operating an individual plan—as opposed to what may happen in a pooled employer plan (PEP) or multiple employer plan (MEP).

Within the service, CAPTRUST will provide 3(38) investment management, as well as participant investment advice, while NBS will act as the third-party administrator (TPA), 3(16) plan administrator, and primary contact for employers. T. Rowe Price will be the recordkeeper and the day-to-day contact for plan participants.

According to a statement announcing the service launch, CAPTRUST will assist plan sponsors with navigating certain fiduciary responsibilities that are not fully outsourced, including ongoing monitoring and due diligence of the plan’s service providers and determining fee reasonableness. CAPTRUST will also provide virtual investment advice to plan participants through managed accounts and give plan sponsors the option to add one-on-one participant advice and financial wellness services.

Links to both the virtual and one-on-one participant advice offerings from CAPTRUST are integrated within T. Rowe Price’s website.

“We designed Direct Fiduciary as an alternative for plan sponsors considering other aggregate models, including multiple employer plans or pooled employer plans,” explains Jennifer Doss, senior director and defined contribution (DC) practice leader, CAPTRUST. “We have created a premium service at a price point that is the same or less than most plan sponsors currently pay and are excited to offer smaller organizations an opportunity to leverage our collective scale and expertise while maintaining control of their plan.”

Doss emphasizes that Direct Fiduciary delivers an individual employer-sponsored retirement plan—not MEPs or PEPs—with the goal of allowing organizations to customize their plan to meet the unique needs of their employees.

The launch of the service comes as the MEP and PEP marketplaces are being aggressively developed by both established and newcomer providers in the retirement plan industry, and as the industry’s focus turns to creating solutions and strategies that can allow smaller businesses to emulate the retirement plans of larger organizations. The vision is that, by providing more affordable and less administratively burdensome options to small businesses, the industry can begin to close the sizable retirement plan coverage gap experienced by workers in the small business economy, who by some measures make up about half of the U.S. workforce.