The retirement plan industry has been undergoing a tremendous amount of change over the past 5-10 years and one of the most remarkable stores you haven’t heard about is 401(k) Reboot.
Not only are they the very first advertiser for this site, they are a full scope outsourcing program for plan sponsors. It was a pleasure to interview former broker turned full fledge fiduciary, Dan Venturi.
Q: How did you start in the retirement plan business?
A: I was born into it, my dad was a career agent with NY Life and in the 80s they had a healthcare product that my dad’s practice would broker for Italian companies with US subsidiaries. After I graduated Fordham, I joined the business and started developing the retirement side of the practice.
Q: What is 401(k) Reboot?
A: Candidly,… I think it’s the future of our industry. We are, to my knowledge, the only fully integrated full scope 3(16) administrative outsourcing and fiduciary manager in the marketplace today. I say that because I don’t know of any other competitors including some of the traditional heavy weights of the benefits consulting space that will be entering the business in the coming year which scrubs each line of payroll contributions. We keep plans clean, serve the best interests of plan participants and help plan sponsors stay out of trouble with regulators as well as plaintiff attorneys. We take the headache out of offering a retirement plan and allow plan sponsors to focus on revenue generating aspects of their businesses. We assume nearly every non-investment related operational function of the plan sponsor and all the corresponding liability. It’s a reset of how retirement programs have traditionally been operated…a Reboot is you will.
Q: How did you come up with the idea of a full scope outsourcing program for plan sponsors?
A: After performing a few hundred transactional due diligence reviews for our private equity clients as a retirement consultant I realized two things, first very few plans are free of operational deficiencies and second post transaction close hr departments are lean and generally new to certain administrative and fiduciary roles. We originally envisioned Reboot would help address these problems by creating an open MEP administrator for our private equity owned portfolio companies, but after the May 2012 DOL letter essentially killing the open MEP industry, we pivoted to the model we employ today. We team up with select advisors to complete a plan sponsor’s fiduciary portfolio.
Q: Do you see more interest from plan sponsors regarding outsourcing options for their 401(k) plan?
A: Yes, absolutely – I believe in 2016 alone, there were at least a dozen cases that were initiated or settled involving some sort of fiduciary breach. Although most of these suits involved fortune 500 companies, some recently breached into the middle market. This along with the fact that many boomers will fall considerably short of achieving their retirement goals will increase the scrutiny plan sponsors will face in the future. Public outcry generally leads to more regulations, more complexity, which will force many companies especially in the small to middle market to outsource the administration of their programs. Years ago, payroll was an internal corporate function, today nearly everyone outsources. We feel we are at a crossroad and expect that going forward plan sponsors will no longer have the appetite to directly administer their programs, but rather employ the services of a full scope 3(16) administrator like 401kReboot.
Q: As someone who is a broker, how do you think the new fiduciary rule will impact the broker side of the business?
A: As a former broker and assuming the rule stays as presently written, I think it will likely create considerable contraction. This may force out those folks that my old philosophy professor would refer to as dilatants, those part time practioners. I think plan sponsors are going to demand their service providers become a greater stake holder and absorb a fiduciary role. This thinning of the herd, so to speak will leave behind only those advisors who are dedicated to servicing this space.
Q: Do you think the fiduciary rule will spur more interest in 401(k) Reboot services?
A: Yes, again for the same reasons I mentioned above. I don’t believe the problems the rule was intend to eliminate have been resolved. If anything I would not be surprised if more legislation would pass in the future.
Q: As part of 401(k) Reboot, what is your process for handling the nuts and bolts of a client’s 401(k) plan?
A: Operationally, we service both Plan Sponsor and Plan Participants with requests from either typically turned around within 24-48hrs. As I mentioned earlier, I believe our service model is unique in the industry. We assume complete control of all plan related non-investment functions. Each payroll typically received through a direct fed from the plan sponsors payroll provider prior to submission to the record keeper is thoroughly review for any anomalies, inconsistencies, or omissions. True to the term, fully integrated, we provide to each client on a per payroll basis a feedback with all plan related payroll changes or have those changes submitted directly to the payroll provider. Our service teams are in almost daily contact with our clients, and by maintaining essentially total control of plan operations we are able to be written in our clients plan documents and SPDS as the plan administrator and 3(16) fiduciary.
Q: Do you think the fiduciary rule will end revenue sharing and different levels of compensation in the retirement plan marketplace?
A: Yes, I think we have already started to see those changes with institutionally priced funds currently available to almost every size plan. This allows transparency as both plan sponsor and plan participant can clearly see what each provided service costs whether its investment management, record keeping, or the professional services provided by TPAs, advisors, and professional fiduciaries. 95% of the plans reboot administers offer institutional share classes with record keeping and asset charges as separate line items
Q: How can people find out more about 401(k) Reboot?
A: We can be reach directly via 888-316-reboot (888-316-7326) or as the official 3(16) of this site through the providers tab. We’re in the process of redesigning our site which we anticipate being back online at the start of the new year at www.401kreboot.com . Additionally we will be launching our Reboot Referral Program under which we’ll look to partner with select advisors to help their clients ease their operational and fiduciary concerns. We’ll have more exciting details to follow shortly.