The US retirement system is under rising pressure as it faces increasing competition, decreasing revenue growth, escalating regulatory pressure, and an aging population. The structural challenges that contribute to these challenges are unlikely to ease in the near future.

The increasing demand for low-cost services and higher transparency is becoming a survival threat for recordkeepers and plan advisors. However, reducing margins and revenue have forced the consolidation or exit of several recordkeeping firms. The increased competition has further brought down retirement plan administration and recordkeeping fees.

Amidst the chaotic industry conditions, retirement plan service providers and recordkeepers need to find better ways to serve customers at scale while fulfilling their evolving needs. Here is a roadmap defining four paths to unearth the hidden opportunities in the US retirement industry.

Four paths to success

Retirement plan administration service providers and recordkeepers are now realizing that cost competitiveness will hamper their long-term growth objectives. They must think beyond the structural challenges and take the right actions to bolster customer relations. Focusing on filling industry gaps and offering the best customer experience will put retirement service providers on the road to long-term success.

The paths to be adopted are:

1. Address evolving customer needs

Recordkeeping partners and retirement service providers are striving to improve participant outcomes. Technology solutions driven by artificial intelligence (AI) track behavioral changes. The machine learning (ML) algorithm analyzes the data and sends personalized communications to participants. The hyper-personalized participant-specific advice empowers them to achieve their financial wellness goals. Adding to the customer-centric experience, using Robo advisors allows for assisting participants in real time and being available 24/7.

2. Rethink your business model

Recordkeeping firms and plan administrators must focus on improving customer experience while controlling costs. Refocusing the business to deliver defined services and addressing the needs of specific market segments can provide sustainable growth even during these challenging times. Outsourcing seasonal yet critical functions like enrollment processing, plan management, 401(k) compliance testing, and Form 5500 filing can help reduce the workload. Handling these tasks in-house is a huge expense as it requires a team of experts to be employed full-time. However, the same can be outsourced to experts for better service at a fixed fee.

3. Digitize your operations

Embracing digital capabilities has become imperative for businesses in the retirement plan industry post the tectonic shift in technology adoption during the COVID-19 pandemic. As retirement plan administration service providers concentrate on client engagement and retirement outcomes, they need access to more data and analytics. Digitizing operations and leveraging cloud-based platforms help minimize costs while increasing customer engagement. Deep technology integration improves data accuracy and results in hyper-personalized retirement plan guidance. Including automation and self-service tools helps meet the growing needs of plan participants and sponsors while reducing fee pressure.

4. Focus on quality of service

Amidst rising fee-based competition, recordkeepers and plan administrators must build a competitive advantage for their businesses. Service quality can be the key differentiator for sustainable growth while navigating market challenges. Industry leaders suggest a more human-centric approach to improve overall service quality. From participant education to accountability in meeting fiduciary regulations, there is much to improve for building a loyal customer base. Improving service quality requires a cultural shift towards customer-centric solutions. Technology can help in adopting a preventive approach. It also helps track errors and rectifies them quickly compared to manual techniques and legacy systems.

How can Congruent help?

Congruent is a specialist technology solutions and outsourced plan administration services provider to the Retirement Plan industry in the US. Our CORE suite of solutions is built on contemporary technology and for the cloud. It facilitates intelligent recordkeeping and automates retirement plan administration operations.

Our outsourced plan administration services help plan providers, record keepers, and TPAs to free up their high-cost resources to focus on providing better service to sponsors and participants while our trained associates take care of entire administration needs.

Discover how we can help you; contact our experts today!

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