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Recordkeepers

The universe is not as it appears. Neither are retirement plan service providers.

This past week, NASA unveiled images from the James Webb Space Telescope. These pictures have delighted, awed, and amazed us with images of deep space and the immeasurable number of stars, galaxies, and constellations in the earliest and deepest reaches of the universe. Immeasurable indeed! Astronomers tell us that if you held a grain of sand up to the sky at arm’s length, that tiny speck is the size of Webb’s now famous first image. It occurs to us that the universe of retirement plan service providers is quite similar. Everyone’s heard of the large recordkeepers, the Milky Ways and Andromedas of our industry: Fidelity, Vanguard, Empower, and the like. Perhaps more interesting are the smaller, more focused, and attentive recordkeepers that dot the spacescape. Here you’ll find NWPS. NWPS is certainly not a household name. When we ask most retirement plan advisors if they’ve heard of NWPS, we are treated to blank stares and stammers. Ask an advisor or client who has worked with NWPS however, and you’ll hear a galaxy of compliments: stellar, awesome, outstanding, capable, helpful, responsive. The list really does go on. We work with clients who are delighted that their NWPS consultant gets back to them the same day

Don’t let your current recordkeeper decide who your new recordkeeper will be.

Don’t let your current recordkeeper decide who your new recordkeeper will be. There has been considerable consolidation among retirement plan recordkeepers over the past few years.  The retirement plan business of Prudential Financial and MassMutual were recently purchased by Empower.  Principal acquired Wells Fargo’s retirement plan recordkeeping and trust business.  PNC Bank sold their book of retirement plan clients to Newport Group, who in turn recently announced that they (Newport) will merge into Ascensus.  Ascensus themselves has acquired over 30 third party administrators over the past few years.  Voya is rumored to be buying Alight.  It’s hard to keep track without a score card. Yet, plan sponsors and retirement plan advisors must keep track! The objective of the acquirer of course is to pick up several hundred or thousands of new plan clients from the exiting recordkeeper.  Post-acquisition, sponsors will likely have to transition to the new recordkeeper’s systems.  There will most assuredly be a new service agreement, new contacts, perhaps a new fee schedule and undoubtedly new (or missing!)  processes, procedures, features and benefits.  Despite this potential turmoil, many sponsors and advisors simply go with the flow and stand by while the plan transitions. This is unwise at best and negligent at worst. 

Recordkeeper consolidation may be coming, but don’t squeeze the participant!

The idea that a recordkeeper should “monetize” participants is appalling. George and Abigail Revoir of AMRev Consulting, writing in the November 4th 2020 edition of RPA Convergence opine on recordkeeper consolidation and the ever widening gap between mega and midsize providers. No question there is revenue pressure in our business, but one comment in their otherwise satisfactory analysis of this trend stopped us in our tracks. The end game, says the Revoirs, is to “monetize the participants.” Monetize the participants? How appalling! What plan sponsor wants to hear that in a “finals” presentation! “Mr. Plan Sponsor, we offer X, Y and Z services, but what we’re really after is access to your employees to upsell them non-plan related products and services.” Which CFO is OK providing 100% of employees’ personally identifiable information to an organization that will use it to “monetize” her employees? Be assured, it is quite possible to profitably serve plan sponsors and their participants with accurate, responsive and innovate recordkeeping without having to view participants as piggy banks. NWPS has been doing it for 26 years and we are certainly not the only ones. And let’s not forget the current discussion over who really owns the participant data

NWPS COVID-19 Update

First and foremost, our thoughts and prayers are with the individuals and families most affected by the COVID-19 outbreak, and our profound gratitude goes out to the medical first responders and the every-day, hard-working Americans who are delivering our food, stocking the shelves and manning the gas stations. At NWPS, we take our responsibilities to our clients, plan participants, and staff very seriously. During this COVID-19 pandemic, our top priority is keeping everyone on our team healthy so they can continue to perform their jobs while doing our civic duty to help slow the pace of infection. With that in mind, we have implemented a plan that ensures, from your perspective and the perspective of your plan participants, it will be business as usual, and we are committed to keeping the quality of our services and our responsiveness at the level you expect from us. Rest assured that contributions are being processed, phones are being answered and distribution checks are being sent. Because of our careful planning, we are confident we have the infrastructure and processes in place to be successful. We will keep you posted as new events develop, but in the meantime, don’t hesitate to reach out to us if

The Value of Participant Data

In the tech world, there is an old saying: “if the product is free, you’re not the customer; you’re the product.”  Turns out this was first presented as a concept regarding the relationship between TV networks and viewers way back in 1973.  It’s as true now as it was then! What does this have to do with retirement plans you might ask.  Well, in several recent ERISA lawsuits the use of participant data by a plan’s provider to cross-sell other products and services has been raised as an ERISA violation both by the plan sponsor and by the providers.  To wit: “Even worse,” the lawsuit states, “Shell defendants allowed the Fidelity defendants to use plan participants’ highly confidential data, including Social Security numbers, financial assets, investment choices and years of investment history to aggressively market lucrative non-plan retail financial products and services, which enriched Fidelity defendants at the expense of participants’ retirement security.” We thought it would be interesting to consider the enterprise value of participant data by making some comparisons with the tech and social media giants.  In 2015 a tech blog published these numbers (market capitalization/monthly average user count).  We calculated the 2020 numbers (with some difficulty!). Value of a User 2015 2020 Facebook $158 $246 Google $182 $500 Alibaba $621 $850 Amazon $733 $3,500 What the table