Qualified Plan Cross-Selling and Its Impact on Fiduciaries

Jun 20, 2019

It is no secret that retirement benefit plan cost structures have been under intense scrutiny in recent years. Across the board, plan fees have seen a marked decrease which is positive for plan participants and their retirement savings. With these fee compressions, retirement industry service providers with multiple financial services business units have been searching for alternate revenue streams to fill the void. Plan fiduciaries need to evaluate and understand what is being done with plan participant data, as well as the solicitation practices associated with these non-plan products and services.

Examples of non-plan services may include: retail investment products, annuities, insurance, banking products, along with other financial or non-financial services. These products generally provide higher profit margins than revenue generated solely from retirement plans. The reason this should be concerning to plan sponsors is that participants often view services offered under the retirement plan service provider’s brand umbrella as implicitly endorsed by the employer.
There is no doubt that participants need help with managing their retirement savings and value may be derived from these products and services. However, as with most ERISA best practices, plan fiduciaries need to evaluate and understand the service provider’s policies and potential uses of participant data as well as the solicitation practices associated with these non-plan products and services.

To learn more about how Newport Group can support you and your clients in this area, please contact your Newport Group representative.

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