2024 Regional Summits | Pooled Plans

Alex Kahn leads a panel with Larry Boesch from Voya and Jason Neal from Principal as they explore coverage gaps and the future of multiple employer plans. Retirement planning is undergoing significant transformations, driven by the need to bridge the coverage gap and adapt to new regulatory environments. A recent discussion among industry experts shed light on several key areas of focus, including multiple employer plans (MEPs), pooled employer plans (PEPs), and the evolving role of advisors in this space. Here, we delve into the main takeaways from their insights.

The coverage gap in retirement planning is something that regulators are quite interested in resolving. Industry experts predict that 80% of groups can have their needs met by an exchange, group plan, or a PEP type product. These solutions aim to simplify the complexity involved in maintaining retirement plans while providing extensive coverage.

Larry from Voya highlighted the growth of MEPs, with Voya adding over 60 MEPs to their platform in the past year. MEPs are particularly appealing for smaller employers looking to manage fiduciary risks while maintaining cost efficiency. Larry emphasized the importance of adapting business strategies to incorporate these solutions, which are here to stay and present significant opportunities for growth.

Jason talked on the advantages of group plans and PEPs from the perspective of an advisor. He emphasized that these technologies facilitate advisors' management of numerous clients by providing economies of scale and lowering friction points. However, it's important to understand that it's not a one-size-fits-all situation. Advisors have to evaluate the needs of each client to decide if a standalone solution or a PEP is more suited. A common misconception is that PEPs are inherently lower in cost than standalone plans. However, once PEPs exceed 100 participants, you now have auditing costs that fall onto the record keeper, which comes at a pretty significant cost; and could also at times be passed onto the business owner who is also a part of that plan. Advisors need to weigh having the peace of mind and the benefits of fiduciary responsibility against the potential cost implications. It's important to communicate the value of these solutions effectively to business owners, ensuring they understand the trade-offs involved.

Advisors are essential in assisting clients in navigating the intricacies of retirement programs. Advisors need to present themselves as consultants and advocates for what they do, whether that means controlling expenses, lowering fiduciary responsibility, or offering continuing education and financial wellness initiatives. Advisors can improve their value proposition by comprehending the changing demands of their clients and customizing solutions accordingly.

The panelists went on to discuss some specific case studies that they had prepared. Larry began by talking about one that he is currently working on. He discussed his observations on a 403(b) PEP created for a non-profit organization, stressing the need for tailoring solutions to meet particular needs. This PEP highlighted the need for a customized strategy in several market categories, including distinctive components like TPA and payroll provider integration. Jason emphasized the significance of retirement plans mandated by the state and the requirement for record keepers to provide more effective solutions. For example, the Principal's Simply Retirement program expedites the setup procedure, cutting the duration of commitment to payroll from more than 20 weeks to only 5 - 6 weeks. For advisors who want to grow their business in the small market segment, this efficiency is essential.

A notable trend is the shift towards upfront flat fees for setting up retirement plans, rather than relying solely on basis points. This model ensures that advisors receive fair compensation for their efforts, particularly in the early years when plan assets may be minimal. Incorporating Secure Act tax credits into the billing process further enhances the financial viability of serving the startup market.

The field of retirement planning is changing quickly, and advisors' and business owners' approaches to retirement plans are being changed by new frameworks and solutions. To effectively cater to the various demands of clients, it is essential to maintain flexibility and proactive behavior, whether through MEPs, PEPs, or other cutting-edge offerings. Those who accept these changes and make the most of the solutions and resources at their disposal will be in the greatest position for success as the industry continues to transform.

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