SECURE 2.0: Challenges Plan Providers Face in Delivering for Sponsors & Participants

Over the past few blogs, we’ve discussed one of the most important and significant changes to the way Americans save for retirement—SECURE 2.0. An evolution of the 2019 SECURE Act, SECURE 2.0 aims to help Americans (and their employers) save more—and save more easily.

With a variety of provisions coming online over the past few years, plan sponsors and providers have had to make significant changes to the way they communicate, coordinate, and collaborate on retirement offerings.

And after discussing some of the challenges an individual or plan sponsor may face, we’re finally shifting the focus to you, the plan provider. After all, no matter how great the work may be… it can always be better. No matter how much you’ve stepped up to keep all the moving plates spinning, there are always more getting added.

Not only do you have to help plan sponsors adapt to new requirements, you have evolving regulations of your own to worry about. Added to this, new provisions require new communications, requiring you to deliver clear and consistent messaging for all those involved. And as new documents come out seemingly every week, you have to constantly adapt to new clarifications.

It’s a challenge—but one that can be overcome. And that’s what we hope to discuss today, some of the challenges that a plan provider like you faces and the opportunities you have to overcome them.

Staying Ahead of Compliance Requirements

Your clients aren’t the only ones who face immense compliance pressures under SECURE 2.0. Providers face a host of challenges of their own. And all too often, these requirements demand immediate updates to the way you operate—an IRS or DOL clarification might require you to make a reasonably significant change in very little time.

Ask yourself this: If a legislative or regulatory update required you to change one phrase, how long would it take you to make that change? And how many hoops would you have to jump through to do so on behalf of every single client?

Easy compliance requires easy change. And the easiest way to make this happen is to embrace a solution that allows you to quickly update messages to reflect a regulatory change or provisional milestone. Template and workflow management can go a long way in making this happen… but we’ll get to that in an upcoming blog.

Maintaining Effectiveness in Plan Communication

Sponsors and participants will expect you to deliver accurate, useful and understandable messages regarding some of the most pressing provisions including automatic enrollment and escalation, optional student loan matching and ESAs, and catch-up contribution rules.

That said… Compliance is one thing. Effectiveness is another. And in your quest to perfectly align messaging with requirements, there’s always a risk of getting a bit too dry or too technical.

Saving for retirement is stressful enough for the average participant. Automatic enrollment could come as a shock to a new employee. And choosing the right mix of funds could feel more like a trip to the racetrack than a true investment.

For providers—and the sponsors they serve—the most important consideration here is balance.

• Balance between what has to be said and what is useful.

• Balance between readability and condescension.

• Balance between customized messaging and time-consuming customization.

• And balance between simplicity and understanding.

To deliver, providers need to give plan sponsors messaging options—with guardrails. Communication support can go a long way, and delivering personalized, understandable options regarding automatic enrollment, escalation, options, milestones, and the like can make life easier for all those involved.

Handling the Increased Operational Strain

SECURE 2.0 asks a lot out of plan sponsors—and even more out of those who support them. Unfortunately, many key players in the retirement services ecosystem lack the bandwidth needed to handle the evolving complexities created by it. But this is nothing new. Providers have felt the pressure for years—and SECURE 2.0 just makes it a bit more complicated.

Whether it’s in the form of new programs, new communications needs, or simply the large number of new inquiries from sponsors or participants, providers’ workloads are destined to grow. And without the right plan or thought process, it’s easy to find yourself buried in work.

Such is life for anyone in the retirement services community—administrator, broker, or whomever you may be. Budgets are tight. Margins are low. And every year, you seemingly put off an upgrade, a hire, or some other improvement. But even if it might seem like a risk… the cost of doing nothing could be a whole lot worse. Elbow grease only gets you so far.

To adjust to the increased operational demand, providers need to minimize the human effort involved in coordinating and communicating a benefits offering. Technology could be the cure… but more often than not, technology (or lack thereof) is the problem.

Addressing Technology Gaps

With SECURE 2.0 requiring plan providers and sponsors to rethink both plans and the way they communicate them, it may also be a reasonable time to address technologies and partnerships to deliver it.

All too often, providers are working with what they have—rather than what they need. Instead of simplicity, there is chaos. Instead of automation, there’s manual entry. Instead of integration, there are emails and duplicate entries.

Yes, that system was great twenty years ago. Yes, you’ve made some updates to reflect formula changes and major legislation. Probably added a few technologies to make things easier. After years or decades of cobbling together a technological “frankenstack,” your employees have probably gotten used to the processes.

But there’s a difference between familiar and effective. A ‘familiar’ data silo is still a data silo. Duplicated work is still work that could better be spent elsewhere. And manual entry is still error-prone—no matter how familiar it might be.

For those in the retirement services ecosystem, technology gaps are at best an inconvenience and at worst, a risk. After all, your technological deficiency is a challenge that you will need to address—because things will only get tougher. Laws will only get more complex. Data generation will only accelerate. Expectations will only get higher.

And competition will only get more intense.

Standing Out in a Crowded, Competitive Market

Retirement plan providers may be all about stability, but they can’t remain stagnant. Providers and the plans they offer need to evolve with the times if they hope to stand out. It might be a long-term, relationship-driven business… but simply checking a few boxes every year only goes so far.

SECURE 2.0 encouraged change. And it might encourage plan sponsors to reevaluate their partnerships. And even though the process for changing might differ between a recordkeeper, broker, TPA, and advisor, the players who can stand out are those who can prove they can make life easier.

Brokers and advisors might offer better plans and strategies. TPAs and recordkeepers might promise to save a few hours. The market is already competitive, so it pays to keep your clients and stand out with new ones.

Compliant Communication Delivered with Ease: Template Management by Sepire

The overwhelming complexity of SECURE 2.0 can make life more confusing for everyone including you. But whichever role you play, it pays to simplify your own life—so that you can focus on simplifying the lives of others.

There are many ways to do this—some easier than others. A technological investment could take thousands of dollars you might not have. But a simple change in communications provider and thought process might do even more to create powerful, meaningful connections with fewer headaches. Template management by Sepire can deliver.

Built to help you take control of the template beast, our flexible, secure, and automated solution helps you to deliver the right information to the right person at the right time. It helps you to make changes in minutes instead of days. And it helps you to put more focus into delivering the services you promise than into making necessary-yet-time-consuming changes. From simple personalization to complex differentiations like co-branding or block-by-block customization, we give you the flexibility to change what you need in a few clicks.

And as a leader—both in financial services and retirement—we’re proud and primed to help you get more from your omnichannel communications. Get to know more about us, our expertise, and our extremely satisfied client base. And when you’re ready to learn more, feel free to drop us a line.