Putting Clients at the Center of Provider Strategy

Industry experts say successful provider strategies are increasingly defined not by the number of relationships advisers maintain, but by whether those relationships support long-term client needs, operational efficiency and participant outcomes.  

“The best provider relationships create better outcomes for clients, not better incentives for advisers,” says Micheala Scott, founder of and principal in the Strategic Retirement Benefits Group at Osaic Inc. 

As the retirement industry continues to consolidate and as recordkeepers expand their technology offerings and participant-facing services, advisers face growing complexity when evaluating provider partnerships.  

“I would say half—but it’s probably 70%—of the firms we went to 10 years ago don’t exist today. They’re … either merged or out of the business,” says Vincent Allegra, a partner in and managing director of Creative Planning and one of this year’s Top Retirement Plan Advisers. “So, obviously, the consolidation of the recordkeepers has significantly changed the provider landscape.” 

Even as industry consolidation pushes advisers toward deeper relationships with fewer providers, experts say maintaining independence and keeping client interests first remain critical. 

Client Strategy Equals Provider Strategy 

When it comes to evaluating the provider options in the market, experts say advisers should start by understanding clients’ needs, rather than by identifying preferred recordkeepers or vendors. 

“We are always starting with the client,” Scott says. “Our provider relationships exist, first and foremost, to create better client experiences.”  

Providers are also increasingly evaluated based on factors such as operational capabilities, service quality, technology road maps, cybersecurity investments and their ability to support plan sponsors over the long term.  

“The primary pillars of lasting consultant relationships and satisfaction are reliability, innovation and partnership,” wrote Jason Key, head of consultant relations at TIAA, in an email to PLANADVISER.  

According to Key, reliability means the adviser can count on the provider to administer the plan with consistency and provide “quality service.” He defined innovation as both acting as a leader and bringing new services and products to market. 

“Partnership is an overused term, but [one] rarely delivered,” Key wrote. “Go beyond quality service of responsiveness and proactive communications to truly see and treat the adviser as a trusted partner. Continuously seek out opportunities to help the adviser serve their client and avoid pitfalls.” 

The growing pace of industry change has also shifted due diligence beyond current offerings to include future investment plans, as advisers seek providers that can evolve alongside clients’ needs.  

“We have a responsibility to our client that whoever we end up selecting … they will be a survivor three, five, 10 years from now,” Allegra says. 

Deeper Relationships Without Losing Independence 

“Recordkeeper consolidation among adviser firms is a noticeable trend,” Key wrote. “M&A in the recordkeeping industry is part of the reason, and it is becoming more common for advisory firms to seek deeper relationships with a fewer number of recordkeeping partners that can offer an aligned service model to achieve optimal plan and participant outcomes.” 

While many advisers have a concentrated business with a smaller group of providers, they caution against allowing those relationships to compromise objectivity.  

Experts describe a “Goldilocks” approach: building enough provider relationships to maintain marketplace knowledge and flexibility, while developing deeper partnerships with firms that consistently deliver for clients. The goal, they say, is to leverage provider relationships without becoming dependent on them.  

“We are the shock absorbers as the adviser. … Service for us can trickle down to the client … but by nature, the clients don’t feel the effect of a provider not being as strong,” says Scott.   

One area where advisers often play the middleman is in pricing negotiations, especially as providers grow their businesses within the pooled employer plan market.  

“The elephant in the room is pooled employer plans bringing a big, large swath of business to a provider,” Scott adds.  

PEPs are a significant factor in advisers’ slim selection of providers, according to Key.  

“Further consolidation is being driven by PEPs that enable advisers and recordkeepers to offer more administrative and service efficiency,” he says. 

However, even as M&A and PEPs continue to lead to the consolidation of providers, some advisers appreciate the specialization available via fewer provider relationships.  

“Our goal is to go really deep with a select few really good partners,” Allegra says. “The key is developing really deep relationships with your best recordkeeping partners and finding service models or service offerings that you can deliver through those partners.”