A Team Approach
Alison Cooke Mintzer (photo by Chris Ramirez)
Our research team recently completed our annual PLANSPONSOR Recordkeeping Survey, in which we quantitatively report about recordkeepers’ products and services, as well as their total assets and overall client demographics. This research continues to turn up in industry-leading data about the provider marketplace. I still get a kick out of seeing it footnoted on TV commercials or in mainstream print ads when a provider states it is the biggest or has the most plans.
Each new set of findings causes me to reflect on the role of the recordkeeper in the industry—and the tough position such providers are in. That’s partially because each year the list is smaller, reflecting the stark reality of the recordkeeping business: It’s hard to be profitable, so mergers and acquisitions (M&As) are a constant.
This year feels different because of the current economic environment and the rushed but crucial work recordkeepers had to do this spring to comply with the Coronavirus Aid, Relief and Economic Security (CARES) Act. As one adviser said to me, “Usually retirement plan legislation takes forever, but with CARES, it was bam, here it is!” Suddenly, providers, advisers, sponsors and everyone else had to know how to respond and implement the provisions across their platforms and plans.
Each recordkeeper made choices about how to implement those changes and then explain them to advisers and plan sponsors. Some offered an opt-in approach for sponsors to amend their plan design, while others went the opt-out route, defaulting all plans into the provisions unless the sponsor opted out. Not everyone I’ve spoken to liked their recordkeeper’s choice. Still, what other options did providers have, when the last thing on many clients’ minds was amending their plan—trying instead to keep the lights on and employees paid?
Due to the timing of this year’s data collection, we could ask how recordkeepers managed the CARES provision processes. It’s notable that, of the 48 that answered questions about CARES Act provision implementations, most allowed for the client to decide which retirement distribution provisions to adopt; only two reported offering a choice of all or none. Also, most—29—providers surveyed chose the opt-in method, so if clients took no action, nothing was amended. And 28 had no deadline for plan sponsors to respond; this gave both sponsors and advisers a chance to think their choices through.
To me, that shows providers acting as a partner, a role in which many envision themselves—but not that all advisers embrace. Whatever approach plan providers took, it opened a door for advisers to step through and be that trusted counsel for sponsor clients as they determined what was best for their plan. To meet clients’ broader needs as this pandemic, and all of the uncertainties, continue, many of you may need support as well.
Whatever happens, retirement plan sponsors and employees/participants will need to turn to experts as they grapple with their finances, whether that’s managing hardship withdrawals or seeking to learn how to increase savings or set up emergency funds. For advisers trying to scale up their business and support clients, the recordkeepers can be integral to the success of clients’ plans. They have services and support to assist you in these difficult conversations as you help your sponsors make decisions affecting their benefits programs through the rest of 2020 and into 2021. Consider adding them to your key partner list, if you haven’t already.