Of the various segments of the defined-contribution industry, record keepers are the most mature, consolidated and powerful. Advisers are closer to the clients, but record keepers own the data and provide the platform to reach them. Leaders of the top record keepers attending the RPA Convergence Roundtable and Think Tank Dec. 14 and 15 shared what is on their minds in the current environment.
There has been a shift from providing a service to creating an experience for plan participants, said Mike Domingos, head of sales and strategic relationships at Prudential Financial.
And that experience should be an easy one for 401(k) savers, said Kevin Morris, chief marketing officer for retirement and income solutions at Principal Financial.
“Participants, especially those that have accumulated assets, just want to be told what to do,” Morris said.
Darren Zino, vice president and head of U.S. retirement sales at Transamerica, said that the pandemic and remote work reality have made companies rethink how they operate.
“We were forced to do what we didn’t think would work during the pandemic — and many things did work,” Zino said. In fact, he said he was concerned that clients will force record keepers to go back to the old model that includes more in-person meetings.
Amy Philbrook, who recently took over as head of sales at Fidelity’s core market group, after heading up its diversity and inclusion division, has a unique perspective the industry.
“I’m surprised by the complicated partnerships and competitive relationships with advisers,” Philbrook said. Not only is the 401(k) world not very diverse — it does not pay enough attention overall to a diverse customer base, she said. “No one seems to be focused on minority-owned businesses.”
Financial wellness is an ongoing challenge, Fidelity vice president Lisa Smith said.
“Advisers need to drive participant engagement,” Smith said. “The challenge is that many are building their own financial wellness tools.”
A few guests noted that broker-dealers change their technology requests from record keepers “every two to three weeks,” which makes many hesitant to build systems to more efficiently provide data. And while participant engagement and financial wellness are at the top of advisers’ minds, some providers said they think that only a few are willing to lead with those services, sticking instead to what they know well.
“Plan sponsors want help with all employees, but providers want to focus on high-net-worth only,” said Tim Rouse, executive director at Spark Institute.
And catering to a diverse range of advisers can be demanding.
“We have to service many different adviser personas, ranging from wealth managers, RPAs, aggregators and consultants,” said Mike Shamburger, head of core market at T. Rowe Price’s retirement plan services. That company is in a unique position, as a world-class money manager and record keeper serving both the small market, which is in early stages, and larger plans that represent a more mature part of its business.
Though record keepers, particularly Transamerica, are interested in pooled employer plans, some have concern that plan sponsors want the locked-down protection of outsourced 3(38) and 3(16) services, along with customization.
At the end of the Think Tank, there were enthusiastic discussions about ways for record keepers to collaborate:
• Plan and participant data
• Research
• Implications and use of blockchain
• Lobbying
• Cybersecurity
• Best practices post-pandemic
The industry is consolidating, with more big deals expected in 2021. But prices and interest in record keeping are at an all-time high. Transamerica’s global parent put a high priority on U.S. retirement, for example, Zino said. The almost $20 trillion in assets and 90 million participants are hard to ignore. And record keepers, in partnership with advisers, consultants, aggregators and broker-dealers especially, are well-positioned, carrying best practices developed during the pandemic into the future.
Fred Barstein is founder and CEO of The Retirement Advisor University and The Plan Sponsor University. He is also a contributing editor for InvestmentNews’ RPA Convergence newsletter.
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