For advisors, pooled employer plans are a new market with promise, but also uncertainties. Will they be a game-changer? This feature article in the latest issue of NAPA Net the Magazine takes a look at five of the uncertainties currently surrounding PEPs.
When Scott Matheson thinks about pooled employer plans, he keeps coming back to why PEPs got included in the SECURE Act. “The goal is to expand coverage to American workers who don’t currently have a workplace retirement plan. The goal was not to create PEPs as a way to bring scale to advisors or providers for their existing small plans, nor was it to help employers that currently offer a plan a way to wash their hands of the fiduciary risk associated with sponsoring their plan,” says Matheson, managing director and head of client solutions at CAPTRUST in Raleigh, North Carolina. “The real growth in coverage would come from the start-up market, from organizations that otherwise would not have a plan.”
Because of that important goal to expand coverage, CAPTRUST feels motivated to get involved somehow, Matheson says. The advisory firm hasn’t focused on the start-up market in the past, he adds, “because we would have to charge too much for it to be workable for them, to deliver the services at our standards.” Now, he and his colleagues are thinking about how best to get involved with PEPs, which launch starting Jan. 1, 2021.
It wouldn’t be a stretch for CAPTRUST to serve as a 3(38) fiduciary investment manager for PEPs, Matheson says, since it already has taken on that role with about 700 client plans. “The issue is if we want to start our own PEP, and be a plan provider,” he says. “The question is, how could we do that in a way that achieves scale and also preserves our commitment to exceed our clients’ service expectations? We’re having a lot of conversations internally about what that would look like. “
CAPTRUST doesn’t feel compelled to enter the PEP market in January 2021, Matheson says, since the advisory firm’s culture is to weigh decisions like that carefully. “We’ve been reluctant to be the ‘first mover,’ and going in on 1-1-21 with a PEP is not our desire,” he says. “We’d rather be a ‘close follower,’ to make sure that we are delivering something that is consistent with our service standards.”
For advisors, PEPs are a new market with promise, but also uncertainties. Here’s a look at five of the uncertainties currently surrounding PEPs.
Read the full article here.
