Goldman Sachs gets into Small Business Retirement Funds

[Docbeans]

Goldman Sachs Setting out to Revolutionize the Retirement Industry:

What do you all think? I am a little skeptical of anything that starts with "Goldman Sachs"... but the idea sounds good, if maybe a little oversimplified but way way better than most people are doing anyway.

 

[litovskyassetmanagement]

Docbeans wrote:

Goldman Sachs Setting out to Revolutionize the Retirement Industry:

What do you all think? I am a little skeptical of anything that starts with “Goldman Sachs”… but the idea sounds good, if maybe a little oversimplified but way way better than most people are doing anyway.

 

Click to expand...

The keyword here is 'simple' solution.  Retirement plans for doctors and dentist are anything BUT simple.  That's the problem.  They may provide cookie-cutter Safe Harbor plans, but none of these companies are equipped to deal with custom-designed ones, as well as have the ability to address multiple problems with existing doctor/dentist plans.  There is just no way to offer a one size fits all approach without cutting corners.  And at the end of the day, you'll still be 100% responsible for the plan because there is no 'fiduciary' in sight to provide you with advice.  There is zero advice on plan investments, design, architecture or legal issues, and that's where all of the value is once record-keeping becomes a commodity with better/more efficient platforms.  Even with such platforms, doctor/dentist plans will need quality advice more than ever, which is not available without working with a quality TPA and adviser. I welcome such platforms, except that they are not true open architecture - they are bundled, so one would have no ability to customize them to make improvements, which is a big turnoff for advisers that are trying to bring low cost solutions to their clients.

This company is probably taking losses, and the only way it will ever make money is if it will sign up millions and millions of participants, but there is just too much competition in this space for it to realize this size.  Also, GS buying it means that it might do something to make it more profitable (read: sell stuff that costs more to offset the losses from operating this platform, or cross-sell services via GS advisers, etc).

Things are getting more competitive though - I see new open-architecture record-keepers popping up that are extremely competitively priced, and that's always good news.

[Docbeans]

Thank you for weighing in, Kon and laying it out clearly for us to understand.