In Depth: Another Recordkeeper Bites The Dust

February 8, 2001 ( - Plan sponsors could be looking at another rush for the exits in participant recordkeeping, as Southeastern regional bank Wachovia Thursday joined a growing club of traditional players choosing to opt out of the recordkeeping business.

Wachovia chose Invesco to run its recordkeeping business, positioning the move as an attempt to play to their relationship strategy, rather than stay tied to a function burdened with high technology and personnel investment requirements. Such moves are typically predicated on a notion that the provider will retain – and perhaps expand – the more lucrative services, primarily investment management.

Earlier this week, John Hancock announced that it was seeking a buyer for its recordkeeping business, hoping to focus on expansion of its asset management franchise.

Coming and Going?

The trend stands in stark contrast to the emergence of a number of Internet-only recordkeepers, who seem to view the ownership of participant records as a key to getting a slice of the asset management pie.

Wachovia’s 140-odd clients can take solace in the fact that Invesco uses the same recordkeeping platform – and has a sizeable presence in Winston-Salem, North Carolina, Wachovia’s base of operation.  Wachovia is also planning to bring its administrative and consulting functions geographically closer to clients, reestablishing a presence in Richmond, Raleigh, NC, Atlanta, Columbia, SC and Charlotte, NC, in addition to Winston-Salem. The expansion reverses consolidation moves taken several years ago to save costs.

The conversion of Wachovia’s client records accounts will occur in the first half of 2001, according to Greg Clark, manager of Wachovia Retirement Services.

Clark told that clients will be able to interact directly with Invesco going forward, but Wachovia will continue to provide trustee, investment management and participant communications services. The arrangement with Invesco is not “exclusive” according to Clark.    

But provider exits can be a messy business, particularly when daily valuation, toll-free 24/7 access are the order of the day.

Wachovia’s own 401(k) plan will transition to Hewitt, which already provides a variety of benefit services to the bank.

For plan sponsors, the challenge remains to choose providers wisely – those committed to the business, and with the wherewithal to sustain the commitment.