Throughout a current Retirement Plan Advisor RFP with an $80 million outlined contribution plan, the principle points revolved round service after their prior file keeper was acquired. Their present RPA was not capable of assist with the transition or present the mandatory assist afterward, and, because of this, they didn’t even make the finals. Equally, at a TPSU program years again, two plan sponsors with the identical file keeper have been equally comfortable and sad as a result of one plan’s supplier was acquired.
Hardly ever, if ever, does a plan sponsor say that they loved the combination course of or that service improved instantly after. Even when the brand new file keeper has a greater web site or expertise, they’re totally different and takes time to be taught.
There are presently 40 nationwide file keepers and lots of of native ones, which implies corporations like OneAmerica that wouldn’t have scale or a singular distribution or service mannequin are prone to be acquired.
All of which is a blessing for knowledgeable RPAs.
Whereas advisors bombard OneAmerica shoppers, and the present RPAs, in addition to Voya, will do every little thing to retain the consumer, even after an acquisition, DC plans with less-than-stellar advisors who didn’t undergo the required RFP course of earlier than they accepted the buying supplier create innumerable alternatives.
After integration, the brand new file keeper’s service might undergo as they might have to chop prices whereas struggling to coach service folks on a brand new system. This is a chance for RPAs who’re keen to tackle extra service duties or who know learn how to navigate the brand new file keeper, maybe with higher leverage.
This results in a extra delicate problem—if plan sponsors are required or really useful to conduct a full RFP when their file keeper is acquired, what about their advisor? Even when the lead advisor stays for the payout interval and past, they’re typically not the lead service or contact individual. To justify the worth, aggregators might want to combine new advisors into their techniques and procedures, which implies change and may actually have a centralized or regional service mannequin.
The acquired advisor doesn’t have the identical authority or autonomy and could also be compelled to supply services that may create conflicts. Granted, the brand new advisory agency might have extra assets and higher expertise, however it’s totally different and takes time to get used to.
Take into consideration two totally different approaches after an advisor is acquired:
- “It is best to conduct an RFP with an unbiased advisor to see if our new agency is the precise match for you going ahead”
- “No must conduct an RFP,” or, even worse, “I can benchmark our companies which is simply pretty much as good as an RFP.”
Like dying and taxes, trade consolidation is inevitable. For some advisors, this is usually a nice alternative, however it would value those that usually are not proactive.
Fred Barstein is founder and CEO of TRAU, TPSU and 401kTV.
