401(k) Specialist Issue 1 - 2020 - 43

401(k) PROVIDER PERSPECTIVE
financial data is becoming a serious
and expensive issue for plan sponsors.
Payroll firms may be better equipped
to manage the transfer and storage of
sensitive data.
* Flexibility and affordability. By partnering
with an established retirement
firm, payroll providers can offer multiple
plan options like SIMPLE, SEP and Payroll
Deducted IRAs to their clients that
typically cost less than a 401(k) plan.
Beyond these operational benefits,
payroll providers that decide to offer retirement
plans as part of their suite of services
may strengthen their relationships with
existing clients and create a differentiator
when prospecting for new clients.
The employers may reap additional benefits,
including reduced turnover, too. Small
businesses tend to have higher employee
turnover (2.8%) than larger businesses
(1%), according to benefits information
website Workest, but offering workplace
retirement options can help with recruiting
and retaining talent.
In addition to helping recruit and retain
talent, plan sponsors and providers know
that workplace plans can potentially help
employers boost employee morale and
help them financially prepare for retirement.
Sponsoring a great plan may even
improve profitability, according to a paper
from T. Rowe Price. The firm contends there
are " ...significant correlations between
401(k) plan performance and corporate
financial performance. And the correlations
don't just occur in large, highly profitable
companies, but in companies of all sizes
and in all industry sectors. "
Some larger payroll providers already
have their own retirement recordkeeping
business, but that approach is likely too expensive
and involved for a typical regional
or even local payroll provider. For mid-market
firms that are interested in offering retirement
benefits to clients, partnering with
a retirement provider that specializes in
solutions for small businesses may provide
an easier path to entry.
Eliminating retirement insecurity is a
challenging and multifaceted pursuit. Payroll
providers may be another avenue for
smaller employers to sponsor retirement
plans cost-effectively. While some may
dislike the potential industry disruption, it's
important to keep an eye on the real goal:
improving Americans' retirement security.
Terry Dunne is senior vice president and managing
director of Retirement Services at Millennium Trust
Company, LLC. Mr. Dunne has over 40 years of
extensive consulting experience in the financial services
industry. Millennium Trust Company performs
the duties of a directed custodian, and as such
does not sell investments or provide investment,
legal or tax advice.
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ISSUE 1 2020 | 401kSpecialist.com
43
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401(k) Specialist Issue 1 - 2020

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