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5 ‘Must-Haves’ To Consider When Outsourcing 401(K) Recordkeeping Services

The costs and complexity of retirement plan recordkeeping are continuing to increase given the demand to keep up with fiduciary rules and regulations. In today’s market, there are a lot of headwinds that 401(k) advisors and TPAs are facing—with pressure to quickly adapt to these changes. If they don’t have the scale, or operate on a sub-scale level with regard to technology investment, service level, or compliance—it could cripple their business.

At one time or another, every 401(k) advisor and TPA has to evaluate whether outsourcing services is a better long-term decision for their business so they can focus on delivering their core and critical offerings at a high standard. This decision-making process must align with the service provider’s go-to-market strategy, as well as address the retirement savings crisis by helping participants proactively engage in the preparation of their retirement through insightful tools, effective plan management and cost containment. This strategy and its underlying technology platforms must also respond to the 21st-century millennials’ demand for digital interaction as the main touch point.

What’s an advisor or TPA to do? It’s important to understand the benefits of what each type of program can deliver and what best positions your organization in establishing and maintaining a competitive advantage. So as you deliberate through the pros and cons of in-house retirement recordkeeping versus Business Process Outsourcing (BPO), you must have a deep understanding of the core strengths that you deem critical for your firm to retain and deliver, and how your clients perceive the value of providing those services.

Start with the end in mind. Identify the key performance factors of a competitive retirement program.

  • Greater visibility and control through transparency and customization
  • Improved financial performance
  • Service expansion in non-core functions without infusion of capital
  • Ability to invest in additional services and increase revenue
  • Increased service quality
  • Ability to attract new and grow existing customers

Aligning the solution to your model

The right BPO service provider assists 401(k) advisors and TPAs with retirement management administration with one system to manage all plan types on a configurable platform providing flexibility and choice. By outsourcing retirement services, the focus can remain on your core business, allowing you to deliver superior customer service through a holistic model.

Business Process Outsourcing addresses fragmented and costly operations with a continuous service—through a technology-enabled system—that provides controls, monitoring, and real-time visibility to all aspects of managing a plan throughout the retirement plan lifecycle from concept to full inception. The result is improved governance and scale at a fraction of the cost. BPO is a strategic tool designed for business growth that integrates tools, analytics, best practices and experience to provide more insight into your business. The optimal benefit of BPO is that it makes it easier for companies to automate, standardize and improve business processes for scale, cost savings and competitive advantage.

5 must-haves in a BPO partner

  1. Client Control. Customized programs designed to meet individual client needs with regard to business preferences and requirements.
  2. Expansive Capabilities and Service Levels. Structured to deliver a single-threaded account management model with a single point of contact.
  3. Consolidation. One administrative platform to view all plan types through one vendor and one primary contact to manage all stakeholders.
  4. Competitive Cost Structure. Pricing configured to reduce overall cost and administrative processing risk.
  5. Customization. Private-Label Branding program delivers customer brand identity to maintain loyalty.

Mark Agustin is President and Chief Operating Officer at Aspire Financial Services, a technology-enabled turnkey service provider of customized, cost-effective, fee-transparent smart retirement solutions offered through financial advisors and third-party administrators (TPAs) for all plan types, tax codes and stakeholders in small and medium-sized businesses, non-profit and government organizations.

Source: 401K Specialist Mag

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