Vanguard plan sponsor

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Infosys will assume day-to-day operations for Vanguard’s defined contribution (DC) plan recordkeeping business, including software platforms, administration and associated processes, the firms announced.

Through a strategic partnership, Infosys and Vanguard will provide a cloud-based recordkeeping platform, which they say will provide greater insights and unprecedented personalization to help deliver better outcomes for nearly 5 million participants and 1,500 plan sponsors. “We have both an obligation and an opportunity to give our millions of participants the best chance for retirement success,” Vanguard tells PLANSPONSOR.

Plan sponsors will continue to be served by Vanguard’s relationship management teams and plan design and communication experts. In addition, Vanguard will oversee all aspects of its investment management and guidance for both sponsors and participants, including ongoing development of its holistic, personal advice services. Participant phone calls will be serviced by both Vanguard and Infosys. Vanguard says advisers and consultants will continue to work directly with same Vanguard relationship management and consultant relations teams.

“Importantly, this partnership enables Vanguard to both modernize our core recordkeeping platform and move faster as it redesigns its participant experience, unlocking deeper client insights and integrating advice,” Vanguard says. “Sponsors and participants will receive a state-of the-art recordkeeping experience fueled by scalable, flexible cloud technology and leading-edge software and hardware architecture. Clients will benefit from streamlined transaction processing, ‘anywhere, anytime, any device’ multichannel support, and better data and insights, through AI [artificial intelligence]-enabled analytics and reporting, among other capabilities.”

A page dedicated to the transition on Vanguard’s website says the firms expect to accomplish the transition with no freeze or conversion. Operations and information technology (IT) crews from Vanguard, including several of the division’s most senior leaders, will move to Infosys to ensure continuity of service. Vanguard says retirement plan participants will experience a seamless transition.

In 2011, Vanguard moved to offer bundled 401(k) plan services for small companies that combined its investment options with the small-plan expertise of Ascensus. Vanguard tells PLANSPONSOR, “Vanguard Retirement Plan Access (VRPA) is a separate group within Vanguard Institutional Investor Group and VRPA clients will continue to be served by Ascensus.” According to Vanguard, VRPA now serves small business retirement plans with $50 million or less in assets. VRPA offers small-business recordkeeping services that are comparable to those available to larger retirement plans. “The new asset threshold applies to new plans only, and enables us to provide these services to more plans for a lower price,” Vanguard says.

People Moves

Approximately 1,300 Vanguard roles currently supporting the full-service recordkeeping client administration, operations and technology functions will transition to Infosys. All Vanguard employees currently performing these roles will be offered comparable positions at Infosys in close proximity to Vanguard’s offices in Malvern, Pennsylvania; Charlotte, North Carolina; and Scottsdale, Arizona. Transitioning employees will receive the same salary and comparable benefits for a transition period of 12 months, plus meaningful incentive opportunities.

“Vanguard’s success is inseparable from the talented, mission-driven people who work tirelessly to serve our clients. The crew and roles that will transition to Infosys are critical to this effort, and both Vanguard and Infosys are committed to keeping transitioning crew local, enabling valuable collaboration and a seamless experience for clients,” Vanguard says.

Martha King, who has served as managing director of Vanguard Institutional Investor Group since 2015, will transition to Infosys to head its new Mid-Atlantic Center of Excellence and serve as chief client officer. The center will be Infosys’s global retirement services hub, with Vanguard as its anchor client.

Vanguard also announced that John James, a 12-year Vanguard veteran, will move from his current role as chief human resources (HR) officer to lead the Institutional Investor Group, which serves the investment and financial advice needs of employers offering company-sponsored retirement plans, as well as organizations such as endowments and foundations. James has held leadership roles in the firm’s Financial Advisor Services division and previously headed its Australian, U.K. and European operations, including the institutional and retirement businesses for those respective markets.

In addition, Lauren Valente has been appointed to Vanguard’s senior leadership team as chief human resources officer and managing director. Valente joined Vanguard in 2003 and has held a range of leadership roles across the firm’s Corporate, Institutional, Retail and Information Technology divisions. Over the past five years, she has worked with DC plan clients, overseeing Vanguard Retirement Plan Experience and, most recently, leading Participant Services and Operations.


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Should You Let Your 401(k) Be Managed by Vanguard?

In 2018, the Vanguard Group, the behemoth Malvern, Pa.-based registered investment advisor, finally surpassed Fidelity Investments as the leader in 401(k) assets under management (AUM), with a staggering $6.2 trillion under its watch. Vanguard’s success is largely attributed to the popularity of its low-cost index funds, coupled with its full-service 401(k) management desk.

Indeed, according to a book by John Bogle—who created the first indexed mutual fund in 1975 after he established the Vanguard Group and who died In January 2019 at age 89—, the success of index funds will likely result in just a handful of money management firms controlling half of all U.S. stocks. In Vanguard’s case, its one-stop shopping has attracted retirement plan sponsors in droves.

Key Takeaways

  • The Vanguard Group is the top investment manager in terms of assets under management, with $5.3 trillion under its banner.
  • Vanguard is primarily known for its vast selection of low-cost index funds.
  • According to a survey, plan sponsors gave Vanguard top marks in the areas of investment performance, website and online services, fund transaction fees, problem resolution, investment options, and fee transparency.

Vanguard 401(k) Plan Services

Through its Institutional Investor Group, Vanguard offers an array of 401(k) management services, ranging from plan design and analytics to investment management oversight. Plan sponsors are assigned a client relationship manager, who provides day-to-day support on all aspects of plan management.

Furthermore, Employment Retirement Income Security Act (ERISA) consultants are readily available to handle regulatory and compliance issues that may arise. Finally, Vanguard’s portfolio review department works closely with plan sponsors to vet and continuously monitor external fund managers.

Vanguard has invested heavily in its back-office systems to provide cutting-edge plan administration and record-keeping services. As a result, clients greatly benefit from more streamlined procedures that lower their costs and pinpoint areas for potential plan participation improvement.

In a study by marketing consultancy Cogent Reports, plan participants rated Vanguard highest in overall satisfaction.

How Is Vanguard Doing in 401(k) Management Services?

According to a study by marketing consultancy Cogent Reports, plan participants rated Vanguard the highest in overall satisfaction and specifically ranked it first in the following categories:

  • Investment performance
  • Website and online services
  • Fund transaction fees
  • Problem resolution
  • Breadth of investment options
  • Fee transparency
  • Enrollment meetings

When plan sponsors were asked to assess their overall satisfaction with their plan provider, 83% of Vanguard clients expressed the highest contentment with their services. Meanwhile, the average plan provider satisfaction rate was just 62%. The survey also found that Vanguard ranked first in the following areas:

  • Accuracy and timeliness of the transaction process
  • Plan administration support
  • Form 550 filing support
  • Quality of investment options
  • Fund expense ratios
  • Quality and clarity of fee disclosure information
  • Transparency of fees
  • Plan administration fees

Plan sponsors hold the fiduciary responsibility of ensuring that investment management fees are reasonable, based on the services provided. According to NerdWallet’s survey of Best IRA Accounts for 2020, Vanguard ranked among the highest for value in terms of cost by full-service-plan sponsors.

How Vanguard protects your assets

Vanguard delivers a smart, efficient 403(b) plan

footnote*Retirement plan recordkeeping and administrative services are provided by The Vanguard Group, Inc. (VGI). VGI has entered into an agreement with Newport Group, Inc., to provide certain plan recordkeeping and administrative services on its behalf. Custodial services are provided by Newport Trust Company, a wholly owned subsidiary of Newport Group, Inc. Newport Group, Inc., and Newport Trust Company are not affiliated with The Vanguard Group, Inc., or any of its affiliates.

footnote**Vanguard average expense ratio: 0.09%. Industry average expense ratio: 0.54%. All averages are asset-weighted. Industry averages exclude Vanguard. Sources: Vanguard and Morningstar, Inc., as of December 31, 2020.

All investing is subject to risk, including the possible loss of the money you invest.

Investment management services provided by Vanguard to the Vanguard funds and ETFs are at cost.


Plan sponsor vanguard

Vanguard says it plans to introduce an auto portability service for 401(k) sponsor clients and their participants.

The firm has engaged Retirement Clearinghouse, LLC (RCH)—a provider of consolidation services for defined contribution (DC) plans and an RLJ Companies’ majority owned company—to provide plan sponsors with a new portability solution to simplify small-balance 401(k) rollovers, help more employees preserve their retirement savings and improve their chances of investment success. The service is expected to launch in mid-2022.

Research shows 401(k) participants with smaller balances often do not roll over retirement savings into their new plans or tax-advantaged vehicles after changing jobs, Vanguard says in the announcement. When a participant leaves a job with less than $5,000 in their 401(k), employers can transfer those accounts out of the plan and into a safe harbor individual retirement account (IRA), where fees can be higher. This can result in a proliferation of stranded safe harbor IRAs, participant cash-outs and forfeiture of future savings and returns, Vanguard adds.

To reduce the number of participant cash-outs or abandoned savings, the RCH Auto Portability program automates the movement of an employee’s 401(k) savings account from their former employer’s plan into an active account with their current employer’s plan. The service can also help simplify plan administration and improve plan compliance by reducing the instances of abandoned accounts and uncashed checks.

“Our partnership with Vanguard represents a giant leap forward in the campaign to make auto portability for small accounts the new 401(k) plan default process when participants change jobs,” says Spencer Williams, founder, president, and CEO of Retirement Clearinghouse, LLC. “By working with us to expand the nationwide, electronic network connecting employer-sponsored plans, Vanguard is helping simplify the 401(k) rollover process and giving more Americans the opportunity to strengthen their outcomes in retirement.”

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