Recordkeeping advice may be just what the plan fiduciary needs! Does working with a single recordkeeper have advantages over partnering with several different providers? According to a new study, the answer is, “Yes!”
Plan sponsors and retirement plan committees could benefit from the following recordkeeping advice. Using a single recordkeeper to oversee multiple retirement plans results in many benefits. Retirement committees and plan fiduciaries who use a single recordkeeper experience greater time savings and fewer administrative headaches than those who use multiple providers. This recordkeeping advice comes from a new study commissioned by Principal Financial Group and conducted by NMG Consulting. Depending on the type of plan, sponsors with a single provider said they saved 17-50% of their time using a single recordkeeper. That’s equal to three workweeks! In addition, three-quarters (75%) of plan sponsors said they would save time by using just one provider.
Sponsors with one provider also reported higher participant satisfaction and retirement plan engagement. These are two common but significant goals for most plan sponsors and retirement plan committees. Indeed, 73% of those surveyed that had a single recordkeeper said employee satisfaction with their retirement benefits was a “top three” business outcome. This compared to less than two-thirds (60%) with multiple providers. And nearly three-quarters (73%) of plan sponsors partnering with a single recordkeeper saw stronger employee engagement with retirement benefits.
Those with multiple providers also found administrative bottlenecks. For example, needing additional staff to coordinate accounts was reported by nearly half (46%) of respondents. Other administrative drawbacks included additional effort to integrate plan data, more time and effort spent on non-discrimination testing, and requirements for additional resources to manage plan benefits.
Adhering to the recordkeeping advice of using a single recordkeeper for all plans simplifies participant engagement. The study found, a single recordkeeper requires fewer touch points to view or make changes to their retirement accounts. Among those using a single recordkeeper, 73% of sponsors said their employees received a soup-to-nuts view of their retirement savings. This favorably compares to 58% using more than one recordkeeper. A majority of plan sponsors and retirement plan committees with a single recordkeeper (72%) reported having access to deep subject matter expertise from their plan provider.
Plan sponsors and retirement plan committees should take stock of their current recordkeeper relationships to determine if working with a single recordkeeper or multiple providers is in the best interests of their plan and participants, and where necessary adjust their provider relationships accordingly to accommodate their needs.