Digital recordkeeping has forever changed the way plan administrators, sponsors, and employees operate and interact. In the days before recordkeeping was digitized, the entire process was disjointed, because integration of systems did not exist in the absence of digital records.
This in turn led to far longer lead times to produce statements and file returns. And all of this was made worse by the fact that the process was more expensive as well, given the amount of effort involved.
‘Traditional’ digital recordkeeping
Fast forward to today, and digital recordkeeping has helped deliver efficiency, accuracy, lower costs, and a far improved overall user experience. However, not all digital recordkeeping was created equal.
According to a study by the Everest Group, as many as 80% of the leading recordkeeping enterprises in the USA use custom-built platforms for their recordkeeping operations, while 77% of recordkeepers deploy systems that are mainframe-based.
These software platforms are expensive to build and operate, resulting in high costs and tightened margins for these recordkeepers.
Additionally, given the fast-evolving and increasingly complex regulatory environment in the industry, these legacy systems fall short when it comes to adapting fast to mandates like ERISA, Section 404(C), Secure Act, and the Department of Labor’s fiduciary rule.
Due to these shortcomings, far from delivering significant benefits, legacy recordkeeping systems are actually resulting in fines, lawsuits and sanctions from the Department of Labor and the Internal Revenue Service.
To compound these problems, there is also a gaping 28% demand-supply gap in mainframe-based skills required to maintain and manage these recordkeeping systems.
Getting digital recordkeeping right
Given the many areas where mainframe-based recordkeeping systems fail to deliver value to record-keepers, the time for change is now.
The cloud has revolutionized the way enterprises collect, store and process data, and run their applications, and the benefits of the cloud translate readily to recordkeeping and plan administration functions. Here’s a few examples of how:
- By harnessing cloud-based technology, digital records can be integrated far more easily across different applications. This in turn enables plan administrators to automate routine processes to a significant degree, and achieve major increases in efficiency.
- Integration of digital records also enables self-service or DIY operations, where end-users can retrieve exactly the data they want, when they want it, without the need to depend on representatives of the plan administrator.
- Taking this a step further, data integration in recordkeeping makes it possible to deploy automated robo-advisors that can take on data-dependent roles that would earlier need to be played by human representatives.
- Additionally, by harnessing the power of these data lakes of recordkeeping data, it is possible for plan administration enterprises to run deep analyses to identify trends, and develop and offer multi-fund offerings and custom plans to drive business growth.
Each of these presents an opportunity for plan administrators to move further along the path towards high operational efficiency, low costs, and an improved customer experience.
The improved service delivery and increased ROI delivered by optimized, cloud-based recordkeeping can go a long way towards helping plan administrators stay resilient in these volatile times.
If you’re a recordkeeper working with legacy technology systems weighing you down, get a personalized demo of CORE 2.0 today. See the platform in action to understand the business impact it can have for your recordkeeping business. Speak to our consultants now!