Retirement plan providers are outsourcing their recordkeeping platforms and servicing operations to address increasing competitive pressure, changing customer expectations and high technology costs. Outsourcing also allows plans to overcome challenges like finding and retaining IT talent, maintaining legacy systems, meeting new regulatory changes as they arise, and overcoming the fee compression that stems from higher sponsor demands without increasing pricing.
Disparate legacy systems, which are often haphazardly built and maintained in-house, can be difficult to phase out, as they contain historical data required by the growing web of regulations. These systems inhibit automation, integration, scale and agility, making it difficult for plans to modernize.
Technology innovations like artificial intelligence (AI), data analytics, machine learning and robotic process automation can help plans meet the expectations of increasingly tech-savvy plan participants. Participants expect easier access and greater transparency to their accounts, investment performance and costs, all of which can be facilitated by technology. However, a full-scale platform overhaul is an enormous undertaking, and implementation can take years.
There are three approaches that plans can take to migrate to a new platform. They can take on the task themselves, which requires the highest upfront investment. Or, they could choose to partner or acquire, which carries high integration and implementation costs. The third option is to outsource to a BPO provider, which offers the opportunity to radically and rapidly transform to a more modern, efficient and agile operating model, with the lowest upfront investment and the fastest timeline of the three options.
As they make their decision, plan providers should ask themselves these questions:
- What are our core competencies and the value we provide?
- Are our technology capabilities keeping pace with end clients’ expectations?
- Are we spending money wisely?
- What’s our risk?
- Can we attract and retain the right talent to run a modern, competitive operational platform in-house?
- Can we maintain or grow margins in our current environment?
Nearly 400,000 plans and 12 million individual plan participants in the retirement ecosystem trust SS&C Retirement Solutions. Working with SS&C enables the digital transformation of your retirement business, dramatically reducing your servicing costs along with your IT footprint and overhead. Our outsourcing service is backed by best-in-class industry expertise.
To learn more about how to choose the right partner to help migrate to an advanced operational platform and overcome the challenges facing retirement plan providers, download our "Retirement Plan Recordkeeping and Servicing: Is Outsourcing the Answer" whitepaper.