ePlan Services Takes New Path on Concessions
401kWire.com -- November 13, 2006 -- Typically, recordkeepers implement concession crediting on a pro rata basis, with the credits either spread equally among all participants or weighted based on account balances. But this can be problematic because even participants who do not hold concession-generating investments would end up getting a share of concessions that were generated by other participants.
Wanting to avoid this scenario, a Denver-based provider has come up with a way that enables each participant to be credited based on his or her specific holdings.
"We are able to track concessions by type and credit the specific concession back to the participant," said Mark Gutrich, founder and CEO of ePlan Services.
The firm began developing the system in April and rolled it out in June. "The feedback has been great," Gutrich said, adding that the first to adopt the system is Wealth Enhancement Group, an advisory firm based out of Minneapolis.
PlanServices is not the first to come out with such a system for processing concession credits. Wachovia has a similar one, according to Gutrich.
The idea of crediting concessions back to the participant's account was pioneered by Persumma Financial, a MassMutual-owned startup in 2000. That effort ended in failure, but it may have just been an idea ahead of its time.
Since 2000 fees are coming under added scrutiny from all sides thanks to regulators and litigators. There are also market pressures from competitors educating plan sponsors about the fairness of fees embedded in plans.
ePlan Services itself missed the earlier debate (it was founded in 1999), with 1,950 plans covering 36,000 participants, it is also aiming at a micro market where Persumma was gunning for the Fortune 1000.
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