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  • Writer's pictureSamantha Diggs

Solving the Puzzle: Who Should be Servicing my Retirement Plan?

Updated: May 21

Who are All the Providers Servicing My Plan?

What Do They Do?

Do I Want a One Size Fits All or a Build Your Own?

As an industrious business owner, you may not have time to ask all these questions, let alone sort through the answers. Understanding your plan administration can become complicated, but it does not have to. There are two main options for you to choose from: Bundled vs. Unbundled—or you can think of them as a One Size Fits All approach vs. a Build Your Own Option.

Before we begin dissecting these options, let’s review the elements of a retirement plan, because they are the building blocks for a retirement plan servicing team.

Elements of a Retirement Plan

At the center of attention is the Retirement Plan itself, and at the forefront of the plan is the Plan Sponsor—That’s you.

The retirement plan is encapsulated by three separate elements that each provide unique services.

First, you have your financial advisor. They serve as a liaison for you, the client. They conduct employee education, aid in the selection of investments, monitor those investments, and provide fiduciary guidance.

Secondly, there’s the recordkeeper, sometimes referred to as the investment company.

They supply educational materials, send participant statements, and provide a website that allows participants and sponsors to view statements, change their investments, and request distributions. The recordkeeper supports the advisor in the delivery of their services both locally and nationally.

The third piece of the puzzle is the Third Party Administrator (TPA) aka your ERISA consultant. The TPA creates custom plan design to meet the goals of the plan sponsor, prepares the legal plan documents, and conducts required IRS compliance testing to ensure the plan remains qualified. They offer ongoing plan consultation and prepare the required tax reports. Your TPA provides a highly credentialed, experienced, and dedicated team of consultants.

With all three pieces in place, you have the necessary elements for a retirement plan to be properly maintained.

What Are My Options?

Now comes the paramount decision: Do I go with a One Size Fits All or a Build Your Own?

The One Size Fits All, or bundled approach sounds like a no-brainer. What could be bad about a universal fit? It sounds like this is less work for you as the plan sponsor because the puzzle has already been built for you and you only need to have one point of contact. In this service model, a single provider is responsible. Your investment selections, recordkeeping services, and plan administration are all housed as one.

The alternative Build Your Own model, or unbundled, implies that you must do some research, make complex decisions, pick and choose from a variety of options and worry that all the pieces will fit together properly. Besides, do you really have time to contact three different entities when you need some answers? In this service model, you select the various providers that you think best fit the needs of the plan and build your own team.

However, it should be noted as a cautionary tale that these options are not as

straight-forward as they may seem at first.

The bundled option may remove some pressure of decision-making, but it also limits your flexibility. You do not get to choose all the pieces of the puzzle that best fit your needs. Instead, the puzzle is put together for you. While this appears to result in less moving parts, it does not necessarily result in a seamless process. Often, the services are poorly integrated because your service provider typically had one primary focus (like gathering assets) before introducing additional services to improve their status in the market. Whichever of the three elements was the primary focus will likely receive the largest budget and the most specialized staff. Therefore, the other aspects of your servicing team could be lacking in expertise or resources because they are really a loss leader.

In contrast, the unbundled option allows you to hand-select a group of experienced specialists and build your own highly-integrated team. You can choose a recordkeeper with a national presence, who will be well-known and established within the industry. You can add to that a local financial advisor who will be available for meetings and will understand the environment in which you are running your business. To complete the puzzle, you can select a TPA who has established itself as an industry-leader with a positive track record of working with local businesses and advisors, as well as national recordkeepers.

When you choose a preeminent TPA, you will find that the highly-credentialed and knowledgeable consultants are able to make the complex simple. They digest the tedious details of regulations and compliance and deliver to you what you need to know. The TPA actually becomes an extension of your human resource staff. Most importantly, the third-party administrator provides an “independent” review of the financial and legal aspects of your retirement plan. They are the second set of eyes that double-check to make sure all parties have operated the plan accurately and properly. Much like the bundled providers, the TPA is highly coordinated with all parties. You do not have to be concerned about any lapses in communication. Instead, you will have at your fingertips a dedicated point of contact that will either answer your questions or connect you with someone who can. In summary, the unbundled option provides a high level of service that the bundled version does not and protects you from the mire of an impersonal, pre-packaged team that does not meet your needs.

Next steps

Let’s digest what we unpacked over the last few paragraphs. You have two main options for packaging your retirement plan service providers. You don’t care what they call it; you just want to know which option will offer a highly-integrated and specialized team of industry experts to give you the best solutions for your investment, recordkeeping, and compliance needs. The good news is that such an option exists.

When you choose to work with a TPA like RPCSI, you reap all of the benefits of unbundled service. You can choose an industry-leading recordkeeper, a financial advisor to offer investment insight, and RPCSI to manage your compliance and regulatory needs. With this flexibility, you can handpick professionals that deliver services that meet your standards, while replacing pieces that no longer fit your retirement plan puzzle at any time.

At RPCSI, our goal is to provide you with the best possible service at the most reasonable cost. Personal attention to our clients is the foundation of our successful service model. We value long-term client relationships based on both exemplary service and open communication. We have built strong alliances and relationships with selected financial advisors and recordkeepers in order to be able to offer our clients a dedicated and resourceful network that services all aspects of a company’s retirement plan. Our mission is to help you build a highly-integrated team of specialists that will maintain your plan and ensure that you remain in compliance and that your company is serviced to the highest standards. We are always available as a resource for you. We want to help you become informed so that you can choose and maintain the best team to service your plan. As your dedicated retirement plan partners, we run your retirement plan so that you can run your business.

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