PLANADVISER - November/December 2019 - 9

Ted Schmelzle
Kent Peterson
recordkeeping arrangement that the provider presents as low
cost, but in fact only appears to be, because they are hiding the
true cost in some other element.
Beyond that, some providers aggressively mine data on participants
leaving a company, to drive them to their IRA products.
That's a captive audience that can be easy to persuade. If a
provider's recordkeeping is relying on fees from IRA rollovers,
then it's not self-sustaining, and that has implications both for
the plan participants and the people that buy the IRAs. If the
recordkeeping services are priced too low, that means recordkeeping
expenses are being embedded in the cost of the IRAs.
Advisers should look out for those arrangements, and get
representations from the provider that they won't use participant
data without the sponsor's permission.
Schmelzle: All this represents a service opportunity for
advisers, to identify the total cost picture. Those that are dedicated
to the retirement markets, and take a fiduciary responsibility,
recognize that recordkeeping is not a commodity, and
see the conflicts of interest and distortion of the fees. We're
finding our greatest success with those advisers who are on
guard and understand that responsibility, and see that those
solutions are not aligned with their interests, or the interests
of their clients. And in general, advisers who are more sophisticated
and take a 3(38) or 3(21) fiduciary stance are gaining
share in the market.
Advisers can also help clients navigate the disclosures providers
are making. We all know how lengthy and complicated the
disclosures are, and many sponsors just aren't in a position to
understand them, or digest or apply them.
PA: You mentioned that sponsors and advisers have
been forced to make up for reduced service levels. How
does that come about?
Schmelzle: Recordkeepers are calling their services more efficient,
or streamlined, but that may be a kind way of saying
" less service. " For the sponsors, the recordkeeper may not have
dedicated account or relationship managers they can call and
talk to. Another point is the intake of participant data, and
the effort to ensure it's suitable-does the recordkeeper just
load it in their system as is, or do they work with the sponsor
to ensure it's as good as can be? That point might seem
like it's in the weeds, but everything depends on clean data.
For the participants, straight-through processing may be efficient,
but does it take out all the human interaction, and lose
some of the important protections on the security side? Does
the recordkeeper have customer service representatives that
have sufficient experience and acumen, and are dedicated to
retirement plans? Let's face it-we're in a business where the
details matter.
All this can mean extra work for the sponsor's staff, which eats
up the savings in the recordkeeping fees. And advisers have
to recognize that streamlined services can create more work
for them, too. Advisers have told me that " If I go with Brand X
recordkeeper, I have to charge nine basis points more to cover
picking up the slack from the lower quality of service. "
Securian Financial has been offering consultative retirement plan solutions
to help employees achieve retirement readiness since 1930. Our
innovative, fiduciary-friendly approach includes lowest cost share
classes, extensive administrative outsourcing and exceptional service
provided by long-tenured retirement plan specialists. Bundled and
unbundled service platforms are available to clients of all sizes.
These materials are for informational and educational purposes only and
are not designed, or intended, to be applicable to any person's individual
circumstances. It should not be considered investment advice, nor
does it constitute a recommendation that anyone engage in (or refrain
from) a particular course of action. Securian Financial Group, and its
affiliates, have a financial interest in the sale of its products.
Securian Financial's qualified retirement plan products are offered
through a group variable annuity contract issued by Minnesota Life
Insurance Company.
Securian Financial is the marketing name for Securian Financial Group,
Inc., and its affiliates. Minnesota Life Insurance Company is an affiliate
of Securian Financial Group, Inc.
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PLANADVISER - November/December 2019

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