PLANSPONSOR - June/July 2021 - 34

BEST PRACTICES | PLAN MANAGEMENT
More than half of American adults
felt stress and anxiety about their
personal finances even before
the COVID-19 pandemic, according
to a recent FINRA study.
can work with their adviser to evaluate
these programs or to shop around for one
that might be a better fit.
Industry Consolidation
In an effort to build scale, increase efficiencies
and reduce their costs, recordkeepers
have been merging with one another for
years. Large recordkeepers continue to
acquire smaller organizations unable to
effectively compete in this market.
" In the recordkeeping business, scale
is key, " McKay says. " Scale is giving the
biggest recordkeepers an opportunity
to build a platform with more advanced
technology and solutions for sponsors and
participants. The top recordkeepers and
providers are looking to create something
even more advanced and innovative [that
incorporates] wellness solutions, managed
account solutions and customization. "
Some advisers have been joining
forces, as well.
" There's been [substantial] consolidation
and aggregation of advisers and advisory
teams under the DC aggregators, "
McKay says. " Many of them have come
together to pool all their resources and
build scale under one umbrella, so they
can bring more solutions to plan sponsors
and participants. We've seen that a lot over
the past five years. "
About 70% of plan sponsors use
a bundled recordkeeper service, a
percentage, according to Deloitte, that has
held steady since 2015.
What this means for plan sponsors:
If a plan sponsor's recordkeeper gets
acquired or merges with another firm, it
is important to re-evaluate the services
it offers to verify that the goals of both
34 PLANSPONSOR.COM June - July 2021
sponsor and recordkeeper are still aligned.
" The goal is for the plan sponsor to
find the best solutions for its plan, whether
that's through one provider or through
multiple providers, " McKay says. To do
that, sponsors need to see what individual
services are being offered in a bundle to
determine whether they meet the plan's
needs, and without sacrificing quality.
" Many of the bundled companies
are just starting to offer more and more
services, " Dulko says. " That appeals to the
plan sponsors, but then you look at other
choices or pull the pieces apart and you
might see that it's not always in the best
interest of the participants. "
For plan sponsors that opt to go the
bundled route, Dulko recommends having
at least a few independent providers as well,
including a good Employee Retirement
Income Security Act (ERISA) attorney, an
auditor and an investment adviser. " There
is really no reason not to have an investment
adviser in this litigious environment, "
she adds.
The Rise of 'Wellness'
As plan sponsors take a holistic view of
participant wellness, they are increasingly
partnering with additional vendors
that can help with other aspects of participants'
financial lives. They may introduce
a benefit to help participants pay down
student loans, for example, or give them
access to financial planners or coaches.
Collins says technology has allowed
recordkeepers to evolve both their digital
and service offerings to help participants
take a broader view of the holistic financial
solutions available to them.
The services are meeting a vital need:
More than half of American adults felt
stress and anxiety about their personal
finances even before the COVID-19
pandemic, according to a recent FINRA
study.
" Financial wellness has come a long
way in the past three years, but we're
still getting to that point where all of the
providers are truly collaborating, " McKay
observes.
What this means for plan sponsors:
Plan sponsors should work with their
adviser to review any new benefits offered
by their existing providers to determine
whether it makes sense to either add those
benefits to their plan or consider bringing
them in from a third party.
Best-in-class providers will be willing
to work with other vendors that the plan
sponsor selects, Collins says.
" At the end of the day, the sponsor
knows its employees or its associates best, "
Collins says. " We're always thinking about
how we're going to work with an adviser
that's providing additional services to a
plan sponsor or with a wellness adviser
that the plan sponsor has hired independently.
It might not be the one we have,
but it's the right one for their plan. "
Litigation Concerns
A recent paper from the SageView
Advisory Group finds that ERISA fiduciary
litigation continues to increase, with
more than 200 " cookie-cutter ERISA class
action lawsuits " filed since 2015 and more
than 90 filed in 2020 alone.
" There are certain attorneys out
there who are looking for opportunities
to go after plans for various reasons, and
it's typically the plan sponsor they target, "
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