In a year unlike any in recent memory, we asked advisors to identify their primary considerations in recommending that a recordkeeping partner get hired—or fired. And no, it’s not fees.
As part of the third annual NAPA 401(k) Summit Insider, in September we asked the advisor attendees of the 2020 NAPA 401(k) Summit—virtually—and, according to some 400 survey respondents, asked to rank as either a primary consideration, a secondary consideration, or “irrelevant” to their recommendations regarding a recordkeeper, it’s not surprising that “service” topped the list, with nearly all (93%) of respondents according it “primary” consideration.
What might be a bit surprising is that the next most common consideration—fees—drew only half as much consideration as a primary factor—and that was only slightly ahead of participant engagement.
We added a new consideration this year—participant data utilization policies—and while it didn’t garner much attention, since it has arisen in several litigation cases of late, it could be something to watch—and watch out for—in the future.
‘Leave’ Behinds
There’s the reasons “for,” and then there are the reasons to leave—and we also asked the Summit Insiders to pick their top three reasons for proposing a change in recordkeepers.
As one might expect, the criteria mirrors that for selecting a recordkeeper in the first place—where good service was a reason to choose, bad service is a reason to leave, etc. But if fees was a distant (albeit primary) concern in selection, it showed up far more frequently as a reason to leave.
Beyond that, the primary reasons for leaving seemed to be based not so much on poor delivery on promises/expectations, but on situations where a plan’s size (or needs) simply outgrew the capabilities of the recordkeeper:
What about TPAs (third-party administrators)? Tomorrow…
