Throughout a current Retirement Plan Advisor RFP with an $80 million outlined contribution plan, the principle points revolved round service after their prior file keeper was acquired. Their present RPA was not capable of assist with the transition or present the mandatory help afterward, and, in consequence, they didn’t even make the finals. Equally, at a TPSU program years again, two plan sponsors with the identical file keeper had been equally pleased and sad as a result of one plan’s supplier was acquired.
Hardly ever, if ever, does a plan sponsor say that they loved the combination course of or that service improved instantly after. Even when the brand new file keeper has a greater web site or expertise, they’re completely different and takes time to study.
There are at the moment 40 nationwide file keepers and lots of of native ones, which suggests companies like OneAmerica that wouldn’t have scale or a novel distribution or service mannequin are prone to be acquired.
All of which is a blessing for skilled RPAs.
Whereas advisors bombard OneAmerica purchasers, and the present RPAs, in addition to Voya, will do all the pieces to retain the shopper, even after an acquisition, DC plans with less-than-stellar advisors who didn’t undergo the required RFP course of earlier than they accepted the buying supplier create innumerable alternatives.
After integration, the brand new file keeper’s service might undergo as they could have to chop prices whereas struggling to coach service individuals on a brand new system. This is a chance for RPAs who’re keen to tackle extra service duties or who know methods to navigate the brand new file keeper, maybe with better leverage.
This results in a extra delicate challenge—if plan sponsors are required or really useful to conduct a full RFP when their file keeper is acquired, what about their advisor? Even when the lead advisor stays for the payout interval and past, they’re typically not the lead service or contact particular person. To justify the value, aggregators might want to combine new advisors into their methods and procedures, which suggests change and may also have a centralized or regional service mannequin.
The acquired advisor doesn’t have the identical authority or autonomy and could also be compelled to supply services that may create conflicts. Granted, the brand new advisory agency might have extra sources and higher expertise, however it’s completely different and takes time to get used to.
Take into consideration two completely different approaches after an advisor is acquired:
- “You must conduct an RFP with an impartial marketing consultant to see if our new agency is the correct match for you going ahead”
- “No must conduct an RFP,” or, even worse, “I can benchmark our companies which is simply pretty much as good as an RFP.”
Like loss of life and taxes, trade consolidation is inevitable. For some advisors, this is usually a nice alternative, however it should value those that should not proactive.
Fred Barstein is founder and CEO of TRAU, TPSU and 401kTV.