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Washington, D.C., Oct. 09, 2019 (GLOBE NEWSWIRE) -- Following an intensive assessment of ICMA-RC’s recordkeeping plan participant service model, RetireAware, a third-party entity, awarded the corporation a five-star, near-perfect rating for practices that avoid conflicts of interest. The audit seeks to uncover various recordkeeper practices and conflicts of interest that may negatively impact employer-sponsored retirement plans and plan participants.
ICMA-RC is the first recordkeeper to undergo this rigorous audit covering four categories of analysis: compensation and incentive structures, participant services and data utilization, administrative and regulatory considerations, and products and advisory services. ICMA-RC scored 98 out of 100 points on the RetireAware Index, highlighting the organization’s focus on enhancing results for its plan sponsor clients and their participants.
The audit monitors the risk that recordkeepers will use their relationships with plans to meet self-serving objectives—for instance, aligning compensation to encourage employees to sell higher fee, non-retirement plan products to retirement plan participants. In recent months several prominent educational institutions have faced fiduciary lawsuits alleging that recordkeepers systematically encouraged participants to invest in higher cost proprietary, non-plan related retirement products.
RetireAware was founded in 2017 by Daniel Alexander and Allen Steinberg, two veterans of the retirement services industry, to focus on the problems that can arise from conflicts of interest.
"Recordkeepers and other plan service providers sometimes generate revenue through activities that mask the true cost of administering retirement plans—so they look less expensive than they are—and, more importantly, can jeopardize the health of a retirement plan and the ability of participants to accumulate assets," says Alexander.
RetireAware provides two kinds of audits – Retirement Plan Conflict of Interest Audits for plan sponsors who want to evaluate the service providers they are using and Retirement Service Audits (RSAs), which provide the same analysis for recordkeepers.
Alexander said that one characteristic that stood out in ICMA-RC’s RSA audit was the organization’s extreme transparency. “ICMA-RC disclosures are very consistent, whether they’re disclosing information internally or to clients or regulators,” he explained. “For instance, during their RFP process, they disclose exactly how they compensate their personnel and they deliver exactly that. There is no missing information or misstatements.”
ICMA-RC’s Bruce Corcoran, a managing vice president whose focus is expanding the firm’s reach into the education market, says the audit is designed to uncover issues that plan sponsors may not know they need to monitor. While consulting services to benchmark fees and investment risk proliferate, RetireAware has a unique focus and fully dedicated approach in evaluating conflicts of interest. “It’s important for plan sponsors to focus on the harm that can arise when a recordkeeper is not working in their best interests,” he explains. “Our intent in undergoing this audit was to raise awareness of the issue and to show plan sponsors our commitment to putting their interests first. This has been a very rewarding process and we encourage other providers to evaluate their standard practices and determine if this would be a good fit for them, as well.”
Corcoran adds, “We also want to point out our firm’s best practices in this area and to lead by example in achieving better plan designs and better plan and participant outcomes. Our approach has always been to focus on the retirement plan. We’re not there to cross market other products and services. We’re there to help people retire successfully, and that focus drives everything we do.”
Bob Schultze, president and CEO of ICMA-RC, says he’s not surprised that ICMA-RC scored so high on the Retirement Service Audit, since the organization has always made participants’ needs its highest priority. “We fulfill our client’s needs by focusing on the retirement plan and making sure that every decision we make is for the benefit of our clients and their employees,” he says. “Our five-star rating confirms the depth of that commitment.”
Founded in 1972, ICMA-RC is a non-profit, independent financial services corporation that, with its wholly owned subsidiaries, has approximately $57 billion in assets under management and administration (as of September 30, 2019). ICMA-RC is focused on providing retirement plans and related services for over a million public sector retirement accounts. ICMA-RC’s mission is to help public sector employees build retirement security. The organization’s mission is delivered through its RealizeRetirement® approach in which ICMA-RC representatives actively engage participants in their retirement programs, help them build their asset base, and help them realize their retirement goals through a comprehensive retirement planning strategy. For more information, visit www.icmarc.org, download ICMA-RC's mobile app from the App Store® and Google PlayTM or follow ICMA-RC on Facebook, LinkedIn, and Twitter.
Aprile Pritchet ICMA-RC 202-962-8067 firstname.lastname@example.org