PANC 2019: Multiple Employer Plans—Opportunity or Threat?

The SECURE Act could make ‘open’ MEPs a reality—and a benefit to advisers if they are proactive.

Attendees of the 2019 PLANADVISER National Conference discuss the challenges and opportunities associated with open multiple employer plans. Photograph by Matt Kalinowski.


If the SECURE Act gets passed and small businesses have the opportunity to join “open” multiple employer plans (MEPs)—i.e., without the common nexus requirement—this would offer plan advisers a huge opportunity, said Robert Goldstein, principal with StoneStreet Equity, in the “Multiple Employer Plans—Opportunity or Threat?” panel at the 2019 PLANADVISER National Conference (PANC). For the first time, they’d be able to efficiently, economically, serve small businesses as the adviser, not to mention as the 3(16) and/or 3(38) fiduciary.

By aggregating the functions of a retirement plan, MEPs create “huge scale” in the micro market that advisers otherwise could not achieve, said Goldstein, who served as the panel’s moderator. “The plan files only one Form 5500, goes through one audit and has one fund lineup. The ability to market these could be a threat—unless you take advantage of it.” Because of the current requirement that members of the MEP have a common nexus, these types of plans are most common among associates, he said.

“MEPs are treated as a single plan, for the purposes of ERISA [Employee Retirement Income Security Act],” added David Kaleda, a principal with Groom Law Group, Chartered. “One lead sponsor can be the capital administrator, and it limits each plan sponsor’s individual fiduciary responsibilities. The MEP can create a subsidiary that handles TPA [third-party administrator] services. That has worked under the law.” However, “the DOL has historically not favored these plans, thus limiting companies’ ability to have open MEPs.”

The most common type of MEPs are association MEPs, such as car dealerships, chambers of commerce or broadband providers, Kaleda said.

“The DOL recently issued an association retirement plan regulation, which was just an expansion of its opinions on association MEPs, to say that the commonality could be based on geography,” he said. “But that region has to be smaller than a state.

“While the DOL thinks it has taken MEPs as far as it can, the Trump administration, on the other hand, thinks open MEPs could be very beneficial,” Kaleda continued. “These plans could even be used by the self-employed. The SECURE Act would allow for open MEPs, and the sponsors of those could even be financial service providers.”

Eric Levy, executive vice president, AIG Retirement Services and AIG Life & Retirement, said he is very much in favor of open MEPs, “as there are hundreds of thousands of companies and organizations that don’t have a retirement plan, particularly charitable organizations and nonprofits.”

“The SECURE Act would raise the tide for retirement plan advisers and help the underserved: libraries, museums, ballet corps,” Levy said.

Perennial Pension & Wealth Latest Hub Acquisition

Hub International’s buying streak of retirement specialist brokerage and advisory firms continues.

The acquisition of Perennial Pension & Wealth, an independent broker/dealer and registered investment adviser, is Hub International’s fifth acquisition to be announced in just the last week.

Hub’s acquisition activity is clearly focused on the retirement plan advisory and wealth management space. Well-established firms acquired already this week include EPIC Retirement Services, Washington Financial, StoneStreet and WhartonHill. None of the parties have disclosed the financial terms of their transactions.

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“Perennial Pension & Wealth is committed to understanding the unique needs of their clients, defining their goals and helping them feel more confident about their financial future,” says David Reich, national president, Hub retirement and private wealth. “They are a great addition to our advisory team and will enhance our retirement planning and wealth management services for all types of businesses and individuals.”

Bob Krieger, the founder and CEO of Perennial Pension & Wealth, will join Hub Northeast, reporting to Reich and collaborating extensively with Paul Collins, president and CEO of Hub Northeast. Reflecting on what the acquisition means for the firm he founded, Krieger says his team will be able to expand its offerings and have a greater positive financial impact on “many more lives and families.”

“This partnership with Hub will allow us to expand our resources and commitment to our existing clients,” he says.

A Big Week (and Year) for Retirement Industry M&A

The deals announced by Hub International this week are just the latest in a flurry of retirement advisory industry M&A transactions closed in 2019. Hub itself kicked off the year of acquisition activity by announcing early in January that it would purchase Sheridan Road, the PLANSPONSOR 2015 Retirement Plan Adviser Multi-office Team of the Year.

Beyond Hub’s activity, Cerity Partners acquired Blue Prairie Group, and CAPTRUST has been on a buying streak of its own, with a clear focus on merging the retirement and wealth sides of the business. One firm that was brought most recently into CAPTRUST is Watermark Asset Management, based outside of San Francisco, which handles individual client accounts with a high-touch approach and has $400 million in assets under advisement across nearly 400 clients. On the other hand, the newly acquired Rogers Financial, out of Harrisonburg, Virginia, is an institutional advisory firm that advises on more than $2.5 billion in assets for 35 retirement plans.

Amid this M&A activity, independent shops seeking to remain solo continue to affiliate with entities such as GRP Advisor Alliance and Resources Investment Advisors LLC. These firms offer scalable back-office support and access to many of the client-facing solutions a CAPTRUST or Hub can bring to bear.

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