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Article<\/h6>\n

Is your retirement plan committee thinking about doing an RFP for recordkeeping services? This article provides insights into that industry, how it\u2019s evolved, and what to expect in the future. <\/b><\/p>\n

The defined contribution (\u201cDC\u201d) plan recordkeeping industry plays a crucial role in managing retirement savings in 401(k) and 403(b) plans for millions of employees across various companies in the United States. The industry responsible for recordkeeping encompasses the administrative and technological infrastructure necessary to manage these plans efficiently.<\/b>[\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row column_structure=”2_5,3_5″ _builder_version=”4.0.6″][et_pb_column type=”2_5″ _builder_version=”4.0.6″][et_pb_image src=”https:\/\/rolandcriss.com\/wp-content\/uploads\/2023\/09\/RFP-1-resized.png” force_fullwidth=”on” _builder_version=”4.0.6″][\/et_pb_image][\/et_pb_column][et_pb_column type=”3_5″ _builder_version=”4.0.6″][et_pb_text admin_label=”Text – Caption” _builder_version=”4.0.6″]<\/p>\n

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While the DC plan recordkeeping industry has made significant progress, several challenges and trends are likely to shape its future.<\/b><\/b><\/em><\/span>[\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.0.6″][et_pb_column type=”4_4″ _builder_version=”4.0.6″][et_pb_text admin_label=”Text” _builder_version=”4.0.6″]<\/p>\n

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The Recordkeeping Industry is Changing<\/h2>\n

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The DC plan recordkeeping industry has witnessed significant growth and transformation over the years, driven by factors such as technological advancements, regulatory changes, consolidation, revenue for the players, and shifts in retirement trends. Here are some key aspects of the industry:<\/b><\/p>\n

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• Technology and Innovation:<\/b>Technology has been a driving force in reshaping the industry. Advanced recordkeeping platforms have emerged, offering features such as online access to account information, mobile apps for managing contributions, and tools for retirement planning. Automated services, including robo-advisors and personalized investment advice algorithms, have gained traction, allowing participants to receive tailored investment recommendations based on their risk tolerance and retirement goals.<\/li>\n

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• Regulatory Environment:<\/b> The regulatory landscape significantly impacts the industry. Regulations from entities such as the Department of Labor (“DOL”) and the Internal Revenue Service (“IRS”) dictate the standards for plan administration, investment options, and participant disclosures. The introduction of enhanced fiduciary rules and other regulatory changes has prompted plan sponsors and recordkeepers to adapt their practices to ensure compliance.<\/li>\n

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• Consolidation:<\/b> The industry has experienced consolidation, with larger financial institutions acquiring smaller recordkeeping firms to gain a competitive edge and expand their service offerings. This consolidation trend has been driven by the need for economies of scale to manage the increasing complexities of compliance, technology investments, and customer service.<\/li>\n

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• Fee Transparency:<\/b> Fee transparency has become a significant focus, driven by increased scrutiny on plan costs and the potential impact on participants’ retirement savings. Regulatory efforts, such as fee disclosure requirements, have prompted greater transparency in how fees are assessed and disclosed to participants.<\/li>\n

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• Participant Engagement:<\/b> Recordkeepers have invested in improving participant engagement through educational resources, personalized communications, and retirement planning tools. The goal is to help participants make informed decisions about their investments and retirement goals.<\/li>\n

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• Customization and Personalization:<\/b> The industry has moved toward offering more customizable and personalized solutions. Participants now have access to a range of investment options, allowing them to tailor their portfolios based on risk tolerance, investment preferences, and time horizon.<\/li>\n

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  In light of the pace of change in the recordkeeping community, plan committees that fail to stay abreast increase the risk of losing the race to transform their retirement plans as innovations unfold.<\/b><\/p>\n

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  Challenges and Future Outlook<\/h2>\n

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  While the DC plan recordkeeping industry has made significant progress, several challenges and trends are likely to shape its future.<\/b><\/p>\n

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  • Regulatory Changes:<\/b> Ongoing changes in regulations will continue to impact how plans are administered, how fees are disclosed, and how participants receive retirement advice. Keeping up with these changes will be crucial for recordkeepers and plan sponsors.<\/li>\n

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  • Digital Transformation:<\/b> Technology will continue to play a pivotal role. Innovations such as artificial intelligence and machine learning could enhance participant education, investment strategies, and administrative efficiency.<\/li>\n

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  • Retirement Readiness:<\/b> Ensuring participants are financially prepared for retirement will remain a focus. The industry will likely emphasize education, tools, and advice to help participants make better decisions about contributions and investments.<\/li>\n

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  • Fee Compression:<\/b> Pressure on fees is expected to persist. As more participants and plan sponsors demand transparency and cost-effective solutions, recordkeepers will need to balance service quality with cost considerations.<\/li>\n

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  • Cybersecurity:<\/b> With the increasing reliance on digital platforms, cybersecurity will become even more critical. Recordkeepers will need to invest in robust security measures to protect participants’ sensitive personal and financial data.<\/li>\n

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  • Evolving Demographics:<\/b> The industry will need to address the retirement needs of diverse demographic groups, including millennials and Generation Z. Tailoring services to different age groups and life stages will be important.<\/li>\n

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    The DC plan recordkeeping industry has evolved significantly, driven by technological advancements, regulatory changes, and a growing emphasis on participant outcomes. While challenges exist, opportunities for innovation and improved retirement outcomes are abundant, making this industry a dynamic and critical component of the broader retirement landscape.<\/b><\/p>\n

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    Enhance Your Resources<\/h2>\n

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    Many organizations lack the time and internal resources necessary to manage the selection of a plan service provider and conduct retirement plan evaluations. An unbiased expert can help by ensuring that an RFP is executed smoothly and that it produces relevant and accurate results.<\/b><\/p>\n

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    Continued monitoring of AI-enabled services begins with knowing where that technology exists in vendors\u2019 offerings and whether it’s accommodated in their data security policies and practices. This post provides ways to embrace AI in employee benefit plan cybersecurity oversight.<\/strong>\t\t<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"on","_et_pb_old_content":"

    Practical Tip<\/h6>\r\nTo meet emerging cybersecurity standards as plan sponsors, employers need to understand some basic rules, specifically the Employee Retirement Income Security Act (\"ERISA\").<\/strong>\r\n\r\nThe U.S. Department of Labor (\"DOL\") is developing cybersecurity objectives for plan fiduciaries that form the basis for its plan audits. It's likely that the DOL's guidelines will add to the foundation on which data security related class action lawsuits are litigated.<\/strong>\r\n\r\n\r\nCybersecurity for benefit plans often falls outside the scope\r\nof cybersecurity planning for enterprisess at large.<\/strong><\/em>\r\n\u00a0\r\n\u00a0\r\nBenefit plans often maintain and share sensitive employee data and asset information across multiple unrelated entities as a part of the benefit plan administration process. This data and asset information should be specifically considered when implementing cybersecurity risk management measures.<\/strong>\r\n\r\nBecause benefit plans are regulated by ERISA, anyone who interacts with the plan should be particularly aware of the impact that breaches have on participants and beneficiaries and the associated rights and duties of plan fiduciaries arising under ERISA.<\/strong>\r\n\r\nEveryone who comes in contact with personally identifiable information (\u201cPII\u201d) has a role to play in protecting plan data.<\/strong>\r\n\r\nHere's where to start...<\/strong>\r\n\u00a0\r\n

    \r\n

    Adopt a Cybersecurity Policy<\/h2>\r\nRegardless of a plan's size or complexity, the need for a cybersecurity policy statement<\/em> (\"CPS\") has escalated to the same level of importance as an investment policy statement. If your plan currently lacks a CPS, don't delay in adding one to the policies on which you rely to demonstrate that your plan is being managed prudently.<\/strong>\r\n

    Conduct a Cybersecurity Risk Assessment<\/h2>\r\nInitiate an examination of your plan's current cybersecurity sensitivities, resourced either internally or by a qualified third-party expert. A legally defensible risk assessment will adhere to 18 discovery tasks. Scored on a scale of 1 to 100, an assessment offers a way to ensure continued improvement. Ask Roland|Criss for a list<\/em><\/a>.<\/strong>\r\n\r\n

    Elevate Cybersecurity to a High Monitoring Priority<\/h2>\r\nThe agendas of benefit plan related committees should include a permanent entry for monitoring a security management plan<\/em>. Best practices for ERISA governance, risk management, and compliance (\"GRC\") systems now require evidence of robust monitoring. Using a technology application tailored for that purpose is a must. Ask us about FiduciaryGRC<\/a>^{\u2122<\/sup>, a state of the art cybersecurity solution that covers the entire risk spectrum; assessment, technology, and monitoring.<\/strong>\r\n\r\nFiduciaryGRC\u2122<\/sup> is a trademark of Roland|Criss.<\/span>","_et_gb_content_width":"","om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"sync_status":"","episode_type":"","audio_file":"","castos_file_data":"","podmotor_file_id":"","cover_image":"","cover_image_id":"","duration":"","filesize":"","filesize_raw":"","date_recorded":"","explicit":"","block":"","footnotes":""},"categories":[7],"tags":[],"class_list":["post-38069","post","type-post","status-publish","format-standard","hentry","category-retirement-plans"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/rolandcriss.com\/wp-json\/wp\/v2\/posts\/38069","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/rolandcriss.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/rolandcriss.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/rolandcriss.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/rolandcriss.com\/wp-json\/wp\/v2\/comments?post=38069"}],"version-history":[{"count":25,"href":"https:\/\/rolandcriss.com\/wp-json\/wp\/v2\/posts\/38069\/revisions"}],"predecessor-version":[{"id":38136,"href":"https:\/\/rolandcriss.com\/wp-json\/wp\/v2\/posts\/38069\/revisions\/38136"}],"wp:attachment":[{"href":"https:\/\/rolandcriss.com\/wp-json\/wp\/v2\/media?parent=38069"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/rolandcriss.com\/wp-json\/wp\/v2\/categories?post=38069"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/rolandcriss.com\/wp-json\/wp\/v2\/tags?post=38069"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}}