Thinking about Changing Recordkeepers? Consider These 6 Factors

If you’re considering changing retirement plan service providers, now may be a good time to do so.? That’s according to Chris Carosa, CTFA, who penned a recent article about it featured in Fiduciary News.? In the article, titled “The Fiduciary How (And Why) 401k Plan Sponsors Change Recordkeepers,” (registration may be required) Mr. Carosa opined that the decision to switch service providers, particularly recordkeepers, should not be taken lightly, as it involves significant considerations that impact both plan sponsors and participants.

Nonetheless, here are some of the main reasons why plan sponsors may decide to make the switch:

1. Technological Advancements

One of the most compelling reasons for changing recordkeepers is the need for better technology.? Modern recordkeeping platforms offer advanced features that enhance the user experience for both sponsors and participants.? These include intuitive interfaces, robust data analytics, and seamless integration with other financial tools.? More and more, plan sponsors are seeking recordkeepers that can provide cutting-edge technology to streamline operations and improve efficiencies to save them time and money.

2. Cost Efficiency

Speaking of saving money, cost is a major factor in a plan sponsor’s decision-making process.? Plan sponsors are always on the lookout for competitive pricing structures that align with their budgetary constraints.? By switching to a recordkeeper that offers better pricing without compromising on service quality, sponsors can achieve significant cost savings. However, the key here is not focusing solely on cost to the detriment of service quality and value.? Plan sponsors must be wary when switching providers, because the old adage holds true: You get what you pay for.

2. Enhanced Participant Experience?

The participant experience is at the heart of any retirement plan.? Plan sponsors aim to provide participants with the best possible tools and resources to manage their retirement savings effectively.? A recordkeeper that offers excellent participant education, communication, and support can significantly move the needle when it comes to participant engagement and satisfaction.? This focus on participant-centric services often drives a sponsor’s decision to switch recordkeepers.

4. Regulatory Compliance

Staying compliant with ever-changing regulations is a top priority for plan sponsors.? As such, a recordkeeper with a strong track record of regulatory compliance and the ability to adapt to new laws is highly valued.? Ensuring that the retirement plan remains compliant helps mitigate fiduciary risks and protects both sponsors and participants from potential legal issues.

5. Quality of Service and Support

The level of service and support provided by the recordkeeper is another crucial consideration.? Plan sponsors prioritize recordkeepers who offer responsive customer service teams that can effectively address any issues that arise.? High-touch service and support ensure that the plan runs smoothly and that any problems are resolved promptly, saving plan sponsors both time and unnecessary headaches.? As Mr. Carosa aptly pointed out, running a retirement plan is not a plan sponsor’s full-time job.? They’re also running a business, so high-quality recordkeeper support is paramount.

6. Reporting and Analytics

Access to detailed reporting and analytics tools is essential for plan sponsors to understand plan performance and participant behavior.? Recordkeepers that provide comprehensive and easy-to-understand reports enable sponsors to make informed decisions about their retirement plans.? This data-driven approach can helpful in terms of optimizing plan outcomes and achieving long-term goals.

While the reasons for changing recordkeepers may vary from one plan sponsor to another, common themes include the need for advanced technology, cost efficiency, enhanced participant experience, regulatory compliance, quality service, and robust reporting capabilities.? By carefully evaluating these factors, plan sponsors can select a recordkeeper that best meets their needs and supports their plan’s success.