By Laura Zindel & Cindy Sandomenico
Consolidation among service providers has been a long-developing trend. Empower, the nation’s second largest recordkeeper, has made headlines over the past few years with several large acquisitions including Personal Capital, Mass Mutual, and Prudential. Smaller deals are making headlines as well.
Consolidation activity can affect retirement plans of all shapes and sizes. As clients of service providers that may be affected by consolidation activity, plan sponsors will need to evaluate how that activity affects them. Some plan sponsors may welcome the new relationship, while others may use the change as an opportunity to examine the value being provided and search for new providers.
While areas like payroll integration can be rather straightforward when transitioning service providers, plan sponsors should be careful to ensure the particulars of the plan document are being satisfied. For example, auto-enrollment procedures, investment allocations, vesting schedules, and processes for uncashed checks are areas that may require attention.
When a service provider is acquired benefits to plan sponsors may include:
Potential drawbacks and challenges may include:
Fiduciaries need to act in the best interests of plan participants. If your service provider is acquired, plan management should contact their existing service provider representative to understand the short-, mid- and long-term goals relating to the acquisition and the impact(s) to their plan.
Insight: Being Proactive Is Being Prepared
Getting a “new” service provider as a result of a merger or acquisition can be tricky even for the savviest plan sponsors. If your service provider is going through a transition, we can help you navigate the process.