The Best and the Brightest

Sometimes it was challenging to keep up with what seemed to be a constant stream of consolidations and ownership changes within the recordkeeping industry, over the past decade. Such changes, of course, are often a reflection of the dedication of the companies that were involved. It is important that plan sponsors understand the various market dynamics—and the potential impact on their plan. After all, they could wake up one day to find their plan has a new recordkeeper, by no choice of their own.

These mergers and acquisitions (M&As) have reshaped the industry—and our 2019 DC [Defined Contribution] Best in Class (BIC) Providers list. For example, Principal Financial Group’s recent acquisition of Wells Fargo’s retirement plan business, and the latter’s disappearance as a player, shifted the Top 10 largest recordkeepers list. How can plan sponsors prepare for such industry shifts and ensure they keep getting the services that are crucial to their plan?

For many sponsors, understanding the marketplace can also be a challenge. Experts note the benefits of having a retirement plan adviser or consultant to provide education and an industry context. Plan sponsor fiduciaries should know where their recordkeeper sits in the competitive landscape and how that position may affect their business.

Robert Massa, managing director at Qualified Plan Advisors in Houston, says, “As a plan sponsor’s business evolves, it’s important that the sponsor understand what it wants to get out of the recordkeeper relationship for both the company and the employees. Each recordkeeper will tell you it can do everything for you—except the things it doesn’t do.”

Based on findings of the 2019 PLANSPONSOR DC Survey, recordkeepers are looking more closely at their overall value proposition, adopting a bigger-picture view of how they can help participants reach their retirement goals. Many are providing customized services, based on what participants want. Being able to differentiate themselves by offering this value can help them keep a competitive edge.

Travis Whitten, senior vice president at CAPTRUST, in Dallas, says, as an adviser, his role is to marry up the goals and objectives of each client with the recordkeeper that best fits that particular client. Change is inevitable, at both at the client and recordkeeper level, he says. Change of a company’s fees and services is also inevitable. “That’s why it’s important that, every five to seven years, plan sponsors go out to bid and see what other options are out there that can meet those goals or objectives,” he says.

What differentiates the providers? “They all have different objectives and end games,” Massa says. “And their approach to education and guidance is based on what other goods and services they could put in front of plan participants. Some recordkeepers such as T. Rowe Price and Fidelity are more tied to asset management; at the end of the day, their strategy is to manage assets. Schwab and Fidelity, somewhat, are going after the retail brokerage side of it. And Empower and Principal have other ancillary services such as financial wellness protocols, and they may be pushing some insurance.”

Whitten notes that advisers play a specialist role here, helping clients understand the pros and cons of each recordkeeper so as to help them meet their end goal. “Some have better technology than others; others are trying to get up to speed when it comes to technology. What does the participant interface look like? How can that provider engage employees and get the best outcome possible?” he says.

The survey that follows remains a valued means by which to evaluate providers, based on plan sponsor reviews. We present our findings in six asset-based market segments. Providers are included in each segment where they earned enough feedback to receive a score. A plan sponsor seeking to benchmark its provider can simply look for information supplied by sponsors in the segment that corresponds to its plan.

—Judy Faust Hartnett