Recordkeeping Consolidation

Continued fee compression in 401(k) plan recordkeeping services is accelerating the need for economies of scale. Whether it is continued technological improvements, such as the adoption of cloud technologies or the need to offer a wider suite of services, recordkeepers are realizing they need to adjust or exit the business. 

Perhaps the best example of this trend occurred in 2020 when Vanguard partnered with Infosys, Ltd. of India. Infosys has assumed operational control of the recordkeeping platform, including integrating all of Vanguard’s 401(k) operations employees and will be responsible for all future enhancements to the system. 

A sample of other recordkeeping consolidation transactions include:
  • Principal acquires Wells Fargo’s 401(k) recordkeeping busines
  • Empower acquires MassMutual’s 401(k) recordkeeping business
  • Ascensus and Empower acquire BB&T’s 401(k) recordkeeping business
  • Newport Group acquires PNC Bank 401(k) recordkeeping business

It is imperative as a fiduciary to continually review and evaluate the services and fees delivered by your plan administrative/recordkeeping provider.

Some questions Committees should ask include:
  • What changes to the existing level of service can we expect to see?
  • Are there additional services that the recordkeeper will be trying to get our plan to adopt?
  • How will the recordkeeper change the way they interact with my employees?

Evaluating your recordkeeper and the changes underway due to consolidation is critical in knowing how it will impact you and your participants.  Change is on the way and you need to be prepared to ask the right questions or have a firm to support you in this process.