During a recent Retirement Plan Advisor RFP with an $80 million defined contribution plan, the main issues revolved around the service after their previous holder was bought out. Their current RPA was unable to help with the transition or provide the support needed afterwards and, as a result, they didn't even make the finals. Similarly, in a TPSU program years ago, two plan sponsors with the same record holder were equally happy and unhappy because one plan provider was acquired.
Rarely, if ever, does a plan sponsor say they enjoyed the onboarding process or that service improved immediately afterward. Even if the new record holder has a better website or technology, they are different and take time to learn.
There are currently 40 national record holders and hundreds of local ones, meaning firms like OneAmerica that lack scale or a unique delivery or service model are likely to be acquired.
All of this is a boon for experienced RPAs.
As advisors bombard OneAmerica clients, and current RPAs, like Voya, will do anything to keep the client, even after an acquisition, DC plans with less-than-stellar advisors who didn't go through the required RFP process up front that accepting the acquiring provider creates countless opportunities.
After integration, the new record keeper's service may suffer as they may have to cut costs while trying to train service people on a new system. This is an opportunity for RPAs who are willing to take on more service tasks or who know how to navigate the new record keeper, perhaps with greater leverage.
This leads to a more subtle issue – if plan sponsors are required or recommended to perform a full KP when the data keeper is acquired, what about their advisor? Even if the primary advisor stays for the pay period and beyond, they are generally not the primary service or contact person. To justify the price, aggregators will need to integrate new advisors into their systems and procedures, which means change and may even have a centralized or regional service model.
The acquired advisor does not have the same authority or autonomy and may be forced to offer products and services that may create conflicts. Granted, the new consulting firm may have more resources and better technology, but it's different and takes time to get used to.
Consider two different approaches after getting a counselor:
- “You should do an RFP with an independent consultant to see if our new firm is a good fit for you going forward”
- “There's no need to do an RFP,” or, even worse, “I can compare our services which are just as good as an RFP.”
Like death and taxes, industry consolidation is inevitable. For some advisors, this can be a great opportunity, but it will cost those who are not proactive.
Fred Barstein is the founder and CEO of TRAU, TPSU and 401kTV.