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Working with a single instead of multiple recordkeepers can save time as well as provide features and services that make plan administration easier.
Plan sponsors with a single recordkeeper said they spend less time on administration and have access to the expertise and features they typically need, according to a recent Principal survey of more than 300 sponsors. Employees are more satisfied and engaged, and have a better understanding of their retirement benefits, they added.
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Survey results revealed seven ways in which employers can benefit from working with a single recordkeeper:
1. Plan administration is more efficient. Recordkeepers offer a wide array of services and products to help make plan administration easier. These features may benefit sponsors juggling oversight and management of multiple retirement plans, especially if the plans are serviced by one recordkeeper.
2. Single recordkeepers can provide access to expertise and plan provisions. Sponsors working with multiple recordkeepers report their plans have complex or specialized design provisions that require the expertise of a specialist recordkeeper and subject matter experts. However, sponsors who work with a single recordkeeper report they have access to the same capabilities.
3. Single point of contact. Having a single recordkeeper for all retirement plans means one point of contact and communication to help evaluate overall retirement plan strategy, measure how well it's working and make suggestions for improvements. Sponsors working with multiple recordkeepers are less likely to have access to such a person, especially for a small plan.
4. Working with a single recordkeeper may save time. Compared to working with multiple recordkeepers, sponsors with a single recordkeeper reported spending significantly less time on retirement benefits. The hourly time savings of using one recordkeeper translate to as many as 14 business days over the course of a year.
5. Multiple recordkeepers present other potential challenges. Plan sponsors cited a number of drawbacks compared to employers who work with a single recordkeeper. The most common challenges include additional effort to sync plan data, more time and effort for non-discrimination testing and the need for additional resources to manage benefits.
6. Holistic view for participants. Employers using a single recordkeeper are more likely to provide employees an integrated experience, making it easier to access and manage their retirement benefits. These features can help employees be more confident in their decision making, leading to better outcomes for both employees and employers.
7. Integration can enhance participant satisfaction and engagement. Sponsors want participants to value and take advantage of their benefit program. Employers with a single recordkeeper are more likely to have greater employee satisfaction with their retirement plan benefits.
"Plan sponsors have access to similar service and products from their recordkeepers," the survey report concluded. "There are some notable tradeoffs, however. Sponsors working with multiple recordkeepers likely are wrestling with inefficient processes and spending more time and energy managing their retirement benefits.
"Meanwhile, plan sponsors with a single recordkeeper spend much less item on their benefits and can offer employees an integrated experience that contributes to higher satisfaction and possibly better retirement outcomes."
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Alan Goforth
Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.
