As an ERISA attorney an ERISA 3(16) administrator, I\u2019ve been asked by many clients, advisory firms, bundled providers, and third-party administrators. Many advisory firms want their own pooled employer plan (PEP) and I think they should think again.<\/p>\n\n\n\n
As someone with a lot of experience with open multiple employer plans (MEPs), I\u2019ve been down this road before. Like with MEPs, almost everyone will come out with a PEP and 95% of them are going to fail. Why? It\u2019s an asset accumulation game and while a PEP looks great on paper, it\u2019s still a hard sell for many potential adopting employers. I also know that most advisors won\u2019t cannibalize their existing business by shifting single-employer plan clients into the PEP. Without assets, the costs of an audit are going to eat into any potential savings for adopting employers. I work on an association MEP that has been in business for 7 years and it\u2019s finally north of $100 million and audit costs are still an issue.<\/p>\n\n\n\n
Unless you know you can attract $20 million in the first 18 months, think again about your PEP and think of larger PEPs that will able to offer your fund lineup and the opportunity to white-label their plan for your purposes.<\/p>\n\n\n\n
As you know, I\u2019m always here for a call regarding PEP opportunities.<\/p>\n\n\n\n
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