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February 02, 2024

Fred Reish Quoted by National Association of Plan Advisors on Pooled Employer Plans

Benefits and executive compensation partner Fred Reish spoke to the National Association of Plan Advisors about how, in five to 10 years, pooled employer plans (PEPs) will match single employer plans in new plan adoption. He asked, “What if the retirement plan industry developed PEPs before single-employer plans?”

“If PEPs came first, we’d understand the different models available,” Reish noted. “There are simple ones that are low cost and more complicated ones with more features. We’d know which PEPS are good and which are bad. And it’s not just the recordkeepers that have to learn about them or the broker-dealers, banks, insurance companies, and investment firms that have to worry about them, but tens of thousands of advisors have to figure them out.”

Reish added, “People have to fully understand them. They have to become comfortable with the providers they prefer working with, and they’ve got to have at least a few cases under their belt before they’re fully confident that they understand and can work with that arrangement.”

In conclusion, Reish shared two main reasons advisers should consider embracing PEPs and suggested beginning with the cost and how they’re structured. “That’s part of what needs to happen now; advisors need to get it,” he explained. “Not all PEPs will gain traction because they won’t accumulate enough assets, so I could see in that same five-to-10-year period a roll-up business where some of the bigger PEPs acquire the smaller PEPs that were never able to get enough assets. You can see how it will happen. It’s very transparent in terms of how it will play out.”

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