Becoming the Provider of Choice

The evolution of service models in technology


Improving constituent outcomes across advisers, sponsors and participants is critical in today’s rapidly evolving retirement marketplace. Providers must focus on equipping advisers and sponsors with the tools needed to help American workers understand and prepare for their financial future. Four executives from SunGard’s Wealth and Retirement Administration business—Mike Rogalski, group president; Ian Sheridan, executive vice president, strategy and product management; William Byerly, executive vice president and general manager – Omni; and Misty Austin-Wessels, executive vice president and general manager – Relius—spoke with Alison Cooke Mintzer, editor-in-chief of PLANSPONSOR, about the retirement plan climate and how SunGard, through its investments in technology, data analytics and services, is helping its clients adapt in order to improve outcomes for their businesses and for the clients they serve.

PS: How have SunGard and its offerings evolved into what they are today?

Rogalski: Simply put, our focus is on delivering solutions that position our clients for success. SunGard has proven itself as the business behind the business—providing core systems that help firms around the world process, manage and account for trillions of dollars in assets. Yet excelling in today’s climate takes more, so we continue to make very specific research and development (R&D) investments around our technologies and service offerings to drive innovation across the customer value chain. For example, we’ve developed adviser- and sponsor-focused tools to gather assets, retirement readiness assessments for individual investors, business intelligence dashboards and payroll clearing technology, all with mobile access. We frequently host these technologies for our clients, and in some cases actually become their back-office administrator—or, as we like to call it, providing business processes as a service (BPaaS). It’s all about our proprietary technology, surrounded with a broader set of services, where we can build scale and deliver a differentiated solution to the market. SunGard has always had deep-rooted domain expertise and a fantastic team of employees specifically focused on serving the retirement industry. We have complemented this rich product and technology knowledge with experienced leaders who have come out of organizations similar to the companies we serve. In fact, the majority of Ian’s, Bill’s, Misty’s and my careers were spent working for retirement providers, so we truly understand our clients’ perspective.

PS: When it comes to managing the business, what are you hearing from your clients?

Austin-Wessels: As I travel around the country meeting with leaders in the retirement space, I hear two reoccurring themes: fee pressure and shrinking margins. Regardless of size or length of time in the business, these challenges are taking a toll on providers in our industry. The conversations we have with those clients are generally about effectively managing their costs while delivering scale. We dig deeper and talk to them about how they run their operations, what’s core to their business and what’s not. We offer them a partnership: We’ll serve as their back office so they can focus on growing the business. And it’s business growth that gets people energized!

Byerly: Our clients realize they need to focus not only on helping improve retention and cash flow, but also on creating new conversations that allow them to demonstrate the value they bring to each investor across their customer chain—from sponsor to participant. We have the metrics to show that our platforms help enable and empower those conversations. To that end, our approach is to continue to build out those platforms, and extend the value from the back to the front office in ways that ultimately help our clients get better outcomes.

Sheridan: Our clients are confronted with change on multiple fronts. Huge waves of investors are moving from accumulation to the income distribution phase. Regulatory pressure remains strong, but the bigger issue is regulatory uncertainty tied to the political change. There’s also continued margin pressure and a simultaneous need to improve the value being delivered to three distinct constituents: the sponsors, participants and the advisers that serve them.  With that in mind, we believe the climate is right for retirement providers and recordkeepers to consider leveraging outsourcing specialists, whether it’s for comprehensive business processing as a service or software as a service. We work with our clients to help them determine what point along this continuum of options will allow them to build a winning formula.

PS: What trends do you see in the retirement plan space?

Sheridan: We see a great convergence happening across financial services. Plan design drives plan health and better participant outcomes. Our role is to create technologies that will empower holistic planning, starting with the analytics, so we can see what’s working and what’s not. From there we help guide the client to actionable changes to improve its business model or its ability to serve its customers. That’s a big piece. At the technology end, we see that firms want to bundle software with professional services and custom applications, so they can showcase their thought leadership. They’re looking for ways to differentiate themselves in a market that has become mature, and frankly, there’s a lot of similarity across retirement providers, so differentiating themselves is really important. Our technology platforms have to be able to empower that, and they do.

Rogalski: On the services side, we’re also seeing a new openness to partner with SunGard for the administration of certain business processes. As we have conversations about how firms can maximize value—the value of their companies, the value they bring to sponsors and advisers, and the value of the plans they manage—examining new operating models is a necessity, not to mention an obligation of sound financial stewardship.

PS: How do you see retirement and retirement plans adapting to keep up with the varied demographics of participants and the various needs that plan sponsors are looking to fill?

Sheridan: Generally speaking, we need better analytics in the retirement business. In the early days, the conversation was around plan health only, how many people are participating and the average deferral rate. We’ve evolved to a much more analytical perspective in regard to helping participants achieve a healthy outcome; that perspective is driving new technology solutions, including equipping the advisers with the data and tools to turn insights into action.

Austin-Wessels: To help facilitate smart decisions with better analytics, we’ve developed new dashboards and reporting packages designed with input from our clients. These dashboards allow advisers and/or providers to quickly assess what’s happening across their businesses and take action.We also focus on the plan sponsor experience and how they need to communicate to their audience. We want to make sure we have the right tools in place, whether it’s on-site communication, on the phone, or via chat and email on tablets, mobile devices or a website. It's critical that our clients are delivering and their participants are receiving consistently excellent interactions.

Byerly: Our clients need to adapt to all kinds of different media to communicate information to their clients. It’s not just about print anymore. It’s all forms of media delivered through two-way messaging platforms like Twitter, YouTube and Facebook. Years ago, we created compact discs (CDs) and sent them out to truck drivers to listen to while they were on the road. Now, those same truck drivers are wired with satellite in their cabs. So you must be adaptable to your audience. It's about communicating to multi-generational audiences in new ways and with tailored messages. The type of information we provide is as crucial as how we deliver it. In addition to the tools we offer for enhancing client communication, we also work to evolve how we aggregate, analyze and report on data—what some people call “big data.” Providers want to understand how they can help their plan sponsors, advisers and participants use data more broadly. Clients want to see what investments participants are choosing and how many plans use auto-enrollment or auto-escalation, how many people have qualified default investment alternatives (QDIAs) and what they look like, what kinds of funds are in use, etc. Firms want to know, first, how they’re doing in their industry and, second, how they’re competing.

Sheridan: Finally, there’s an increasing emphasis on predictable cost models and scalable platforms.These are the things our customers are talking to us about, as well as strategic partnerships that allow them to differentiate themselves in the market and change the conversation. We’re honored to be their trusted provider and help them navigate this landscape.    

The Provider  “Stoplight”

Providers in the green zone:

• Are continuously improving, focusing on making their retention even better;

• Seek new forms of cash flow; and

• Recognize the early enterprise value of the defined contribution (DC) business.

Providers in the yellow zone:

• Are seeking efficiency and struggle with lean management;

• Have limited technology spending, so they innovate through strategic and trusted partnerships; and

• Operate under a reduced expense model, with tremendous pressure to grow revenue.

Providers in the red zone:

• Have yet to realize the full value of their DC business;

• Are under absolute margin pressure; and

• Might become acquisition targets.

—Ian Sheridan, executive vice president, strategy and product management

Working With SunGard

SunGard supports more than 1,000 clients in the wealth and retirement sector, from small start-ups and independent providers to some of the world’s largest financial services institutions. Our clients include independent advisers, third-party administrators (TPAs), trust companies, banks, brokerage houses and insurance firms. We’re committed to providing software, services and industry expertise to help them acquire, manage and grow investment assets in a cost-effective manner. Our product and solution set spans the entire investment lifecycle from the front to back office. Plan sponsors choosing a provider that’s supported by SunGard can have confidence that we are working together to put the plan participant first and helping prepare their employees for the future.

—Mike Rogalski, group president, SunGard Wealth and Retirement Administration