Vendor Consolidation in Higher Education: Getting More from Less

During such volatile times, when plan sponsors, especially in higher education, are under pressure to find solutions that balance organizational fiscal imperatives with employee needs, a simplified plan design is emerging as a highly attractive option. A vital first step on the path toward simplification is vendor consolidation.  

Like their counterparts in the health care industry, plan sponsors in higher education are aware of the critical role strong employee benefits programs play in the recruitment and retention of the most talented faculty and staff. To remain competitive, such plans typically must include multiple retirement, health, and welfare options. Historically, ERISA and non-ERISA 403(b) plan sponsors in the higher education market have offered their participants access to multiple investment providers, all in the name of maximizing choice. At some larger institutions, plan providers have numbered in the dozens. However, the requirements of the latest 403(b) regulations—including plan document creation, recordkeeping, data sharing, and transaction oversight—mean that the complexities of plan administration and compliance monitoring increase exponentially with the number of vendors.   

Today, when an open-architecture plan design with a single provider of recordkeeping services can provide participants access to hundreds of investment options from multiple providers, reducing the total number of vendors in a plan to as few as possible simply makes sense. Paring the number of vendors isn’t always easy, but for many plan sponsors, it’s becoming a necessity.  

This Fidelity Market Insights Brief presents :  

• The benefits and opportunities afforded by vendor consolidation  
• Stories of success from those who have reduced the number of vendors  
• A guide to starting the process