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A $375MM Illinois Plan Selects Northwest Plan Services

Northwest Plan Services is thrilled to report the successful sale, conversion and go-live status of the Church of the Brethren Benefit Trust 403(b) plan.  NWPS will oversee some $375 million in retirement assets, covering nearly 4,500 participants.  The conversion was particularly demanding as the plan is a Multiple Employer Plan, yet was record kept by Empower as individual plans, limiting needed reporting.  During the conversion, NWPS consolidated the plans into a true, singular defined contribution plan.  The size and scope of the work has piqued the interest of the industry media, including 401kwire.com who reports on the story here.

Wiz Bang Participant Websites Not a Panacea

We couldn’t agree more! Judy Ward’s terrific article in the May/June edition of PLANADVISOR Magazine hits the nail on the head. Entitled “High Tech Meets High Touch,” the article illustrates how thoughtful advisors blend technology and coaching to successfully engage plan participants. Bemoaning the fact that many service providers spend millions on their retirement calculators and participant websites, only to find that less than 20% of participants even log on to their site once a year, Ms. Ward interviewed a number of successful retirement plan advisors to find the balance between technology and touch. James Lyday, managing director of Pensionmark Nashville is representative of the others interviewed for the article. Everyone thinks participants need snazzy feature such as gamification to get motivated to engage. “A customized retirement income illustration is by far the home run to engage people,” says Lyday, a 2019 PLANSPONSOR Retirement Plan Advisor of the year finalist. Indeed, most participants need real help from a trusted advisor in translating their retirement outlook data into an action plan to improve their situation. Based on her interviews, Ms. Ward puts forth four simple ideas for how to blend technology and touch to build participant engagement: demystify the website calculator, narrow the financial

BIG DATA Comes to 401k Plans

It’s no secret that the use of proprietary funds has been on a steady decline for years. As a result, the largest providers (mutual fund and insurance companies) are scrambling for new sources of revenue, including demanding shelf space (or the vaguely worded ‘infrastructure’) payments from fund companies and additional fees to plan sponsors and participants. Enter Big Data. The dominant providers in the 401(k) business (mutual fund and insurance companies) are mining participant data to reveal opportunities for cross-selling other financial products and services. While not a concern to Northwest Plan Services (NWPS), as we are not an asset gatherer and have nothing to sell to participants, this last effort (cross selling) is being examined in a new and significant light. Enter tort terror Jerome Schlichter, the notable protector of participant costs and now apparently, participant data. In the recent Vanderbilt University case, Schlichter and his clients, the participants of the University’s 403(b) plan, claim the University allowed excessive fees to permeate their plan. Plaintiffs then filed an amended complaint accusing the University of failing to protect plan data by allowing their service providers (at the time Fidelity, TIAA and 2 others) to market products and services to plan participants. Vanderbilt recently settled the

Trick or Treat – How does that fund wind up on the platform?

The next time you’re speaking with a 401(k) service provider, ask them how that fund (any of the funds) happened to make it onto their platform.  Is it because that fund has superior investment performance?  Is it because the platform provider or insurance company’s well-heeled cadre of analysts deemed that fund to be investment worthy?  While we’re sure (well

Insurance Products Still Have a Long Way to Go.

Many 401(k) plans are moving away from revenue sharing as sponsors and advisors cite the need for transparency and simplicity.  So called ‘clean shares’ have no revenue sharing whatsoever in them and make no payments to recordkeepers or advisors.  This is the wave of the future for both large and small plans using straight mutual funds, ETFs or CITs. Unfortunately, the same cannot be said for unbundled offerings using an insurance company platform and a local Third Party Administrator (TPA).  Very often the insurance companies have special arrangements with TPAs whereby revenue is shared (and hopefully disclosed).  Many (but not all) TPAs will offset their fees dollar for dollar with any revenue sharing.  However, the dollar amount of these payments to the TPA can vary greatly from one insurance company to another depending on the volume of business that TPA has with that carrier.  A TPA may receive 5 basis points from one insurance company for a given plan, while receiving 10 basis points from another insurance company for the very same plan. Even if the TPA offsets their fees with this revenue sharing, there may be more or less revenue available depending on the platform and the TPA.  To be fair, many

Actuarial Services Need Not be a Black Box

A defined benefit (DB) or cash balance (CB) plan is more than just an employee benefit.  Properly structured, a DB or CB plan can be an elegant tool to help manage cash flow, maximize profitability, and super charge the retirement accounts of key employees and business owners. For many advisors and indeed even for most plan sponsors, the actuarial services for a DB or CB plan remain a mystery, in a black box somewhere.  It appears that actuarial service providers have taken their eye off the ball for all but the largest of clients.  Often, the only time a client hears from their service provider is when the annual funding notice comes detailing the amount that must be contributed to the plan. That’s not the way Northwest Plan Service (NWPS) operates. We open the black box to explain how the calculations are constructed and how to use the plan to meet business objectives.  With the client’s long term goals in mind, NWPS can develop a multi-year funding strategy that best meets the goals for cash flow, balance sheet considerations, maximizing tax-deferrals and minimizing PBGC premiums.  We carefully monitor the plan and the rate of accrual for benefits.  We’ll then provide a quarterly scorecard