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401(k) Conversions: What Advisors Need to Look for When Switching Service Providers

401(k) Conversions: What Advisors Need to Look for When Switching Service Providers

Last Updated: November 30, 2023

A great retirement plan service provider can transform your practice. They can help you strengthen client relationships and focus on growing your business. With the right partner, you can make retirement planning a seamless and rewarding experience for everyone involved.

However, some providers just don’t live up to expectations. If you and your clients are dealing with tedious administrative work, impersonal customer service, or limited investment options, it may be time to consider switching providers.

In this article, we’ll guide you through the key factors to weigh when choosing to partner with a new 401(k) plan provider. We’ll also discuss certain capabilities that can streamline the 401(k) plan conversion process for your clients. Let’s dive in.

Key Factors to Consider When Switching Providers

1. Does the Provider Handle the Day-to-Day Work?

If the 401(k) plan provider you're considering doesn't handle day-to-day operations, your clients could find themselves buried under a mountain of administrative tasks. And these tasks are not trivial—they're essential for ensuring the plan runs smoothly and complies with regulations.

A 3(16) fiduciary can manage the day-to-day administrative work of a 401(k) plan. If you’re looking for a bundled solution, by choosing a provider that offers 3(16) fiduciary services, you can not only lighten the administrative load for your client but also help minimize the risk of compliance missteps and help the plan run more efficiently.

2. Can Your Clients Get the Customer Support They Need?

You and your clients shouldn't constantly be receiving emails from a round-robin service team.

A top-tier provider will take care of your client’s needs so that you can remain focused on your core business. Having quality customer support means that you don't have to be the go-between for your clients and the provider. Instead, you can trust that your clients receive immediate and expert assistance when needed.

In addition to service for your clients, look for a provider that provides dedicated support for advisors, too. Advisors that partner with Vestwell each have a 1:1 touchpoint on our Client Success team to help ensure they’re getting the direct support they need to better serve their clients.

3. Are There Flexible Investment Options?

When considering a switch, make sure you review the investment options available. Keep in mind that if a recordkeeper has proprietary funds that could pose a conflict of interest. Whether you're interested in an off-the-shelf offering or want to hand-pick investments or asset allocation models for your client, make sure the provider you choose to partner with gives you the flexibility to build the right fund line-up for you and your clients.

Vestwell offers advisors the ability to manage plans cumulatively. We set up investment programs in which changes to any of the investment options cascade across all plans. This approach streamlines your workflow and allows you to optimize investment strategies easily.

4. Are the Right Payroll Integrations Available for Your Clients?

For many advisors and their clients, the ease of managing a retirement plan is paramount. Finding a provider that supports payroll integration can simplify plan administration. Contributions can be automated by directly linking the payroll system to the retirement plan.

Payroll integrations don’t just mean less manual work; they can also mean fewer errors. The contributions adjust automatically when payroll changes—whether it's due to salary adjustments, bonuses, or new hires. This minimizes the risk of discrepancies and over or under-contributions. This approach leads to a more streamlined, efficient, and error-free retirement plan management experience for both you and your clients.

5. Is the Pricing Straightforward and Transparent?

Your clients deserve to know exactly what they're paying for and why. If there are hidden fees or the provider is charging premiums without delivering equally high-quality services, it may be time to consider a switch.

When evaluating potential providers, take a close look at their pricing model. Is it easy to understand? Are there any hidden fees or costs that might surprise your clients down the road? Remember, clear, upfront, and transparent pricing can save you and your clients potential headaches in the future.

Explore 401(k) conversions with Vestwell.

How Vestwell Streamlines 401(k) Conversions

At Vestwell, we’re on a mission to be your firm’s go-to solution for plans of any size. To achieve this, our easy-to-use platform supports conversions in several key ways:

  • Faster onboarding. We recognize the importance of a smooth transition. That's why we've improved our onboarding process, dramatically reducing the time it takes to transfer a plan. Plus, our proprietary recordkeeping system is faster and more efficient than many traditional options out there.
  • Flexibility for any plan size. The service provider you partner with should offer a plan design that grows with your client’s business. With Vestwell, you can choose between our Flex unbundled offering (where we’ve seen 400% year-over-year growth) or our full-service offering with 3(16) administration at no extra charge. This flexibility ensures that you get a solution that suits your clients, no matter the complexity or size of the plan.
  • Excellent customer service. Our dedication to exceptional customer service is reflected in our net promoter scores of close to 100. We have a responsive employee contact team to take calls during business hours, a new employer consultation team for plan design changes, and a client success team to be your 1:1 touch-point.

Conclusion - Simplify the Switch

Switching your 401(k) plan provider can yield significant benefits. These include more efficient plan administration, improved customer support, and more flexibility for you and your clients. A successful conversion can be a strategic move that sets your clients and your practice up for success.

Ready to explore a 401(k) plan conversion? By offering faster onboarding, increased flexibility, and top-tier customer service, our digital retirement plan platform makes it simple to make the switch. Vestwell combines technology with best-in-class retirement plans and user-first design, making it easy for your clients to offer and administer a company-sponsored 401(k) that meets their needs. We aim to be the most modern, advisor-friendly recordkeeper in the market. Click here to get started with Vestwell.

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