DISRUPTION: Milliman Upends Retirement Plans Sales and Service Structure in War for Scale

Milliman announced late last week that it is “bringing together” all defined contribution (DC) and defined benefit (DB) plan administration services nationwide under a unified organizational structure and executive team, dubbed the Employee Benefit Administration Practice (EBAP).

The firm hopes the new structure will empower a skilled team of retirement principals and staff to “better serve existing clients and continue to expand services to a broader array of employers.” In announcing the new approach, Milliman joins a growing chorus of retirement plan advice, brokerage and recordkeeping providers to make fundamental changes to their business models in the face of a rapidly evolving competitive landscape. 

The Milliman EBAP leadership team is comprised of Janet McCune, who will oversee all sales and marketing, while Kyle Hughes will lead adviser relationships and sales. Gerald Erickson will lead the multiemployer channel and Brad Kuebler will lead services for association-type plans. The firm pledges that current service teams will remain in place serving existing clients, but that the new organizational structure represents a fundamental internal change.

In an interview with PLANADVISER, McCune said there are “imminent new product initiatives and service enhancements in the works,” but she could not share much detail at this early stage. Ultimately, she said, the firm wants to provide “a more consistent experience for both advisers and prospective clients regardless of market size, location or organizational structure of the plan sponsor.”

McCune had a lot more to say to contextualize this strategy shift within Milliman, but her comments about the firm’s hopes for reinvigorated growth are particularly enlightening when held in the light of the latest PLANSPONSOR Administration and Recordkeeping Guide. The provider rankings section of that research shows Milliman is still very much a mid-tier recordkeeping provider by scale, ranking 53rd in terms of the total number of plan served and 27th in total assets in custody. In terms of total participants served, the firm ranks 30th.

In other industries, these relative scale measures may not mean very much for the future of a given provider, but in DC plan recordkeeping, scale is quickly become a crucial commodity. In fact, the Top 10 recordkeepers by assets in custody have control of 71% of the total industry assets and 63% of participants. Even more notable, the Top 20 recordkeepers by assets control 90% of the money invested in DC plans and 84% of participants. 

According to the PLANSPONSOR survey, fully 95% of Milliman’s DC plan business is intermediary sold, highlighting the critical role that the adviser and consultant communities will play in Milliman’s growth aspirations. One other relevant finding, they survey shows Milliman failed to crack the Top 10 last year in terms of total DC plans added.

Talking through these numbers and the shifting industry landscape, McCune sounded an optimistic note and said the firm does not necessarily measure its success by comparing total assets or participants to the largest providers. But she agreed that scale is becoming ever-more-important for providers in this competitive industry.

“This move comes out of our history and our roots as a consulting firm—we have a lot of deep DC and DB plan expertise and entrepreneurial thinking, and we want to bring that to the fore,” McCune said. “A lot of our most successful products and service enhancements over the years have come from the ground level, close to our plan sponsor clients and consultants. We want the new sales and service structure to recognize this fact. So this is an attempt to change our positioning so that we can leverage the collective and collaborative thinking going forward—it’s about building a total retirement team and a total retirement approach.”

McCune noted that the firm will be relaunching its client-facing website in the near future.

“The new site will really demonstrate our new approach,” she suggested. “We took a big step back and we are going to be looking at everything far more holistically to create a really engaging and powerful experience for participants. The new website will make clear everything the employer is doing to help participants, and everything the participants need to do to create financial wellness and build a realistic retirement plan.”

So far, the firm’s key retirement plan consultants, McCune said, are providing strong feedback.

“They are really excited to gain access to new resources and additional expertise to deliver to their clients, and many of them say they expect to be able to win new plans and offer prospective clients a really compelling total retirement picture,” McCune suggested. “We are going to be providing easier access to case studies and real life examples that our consultants and their clients can leverage and learn from, as well.”

One other point highlighted by McCune was the fact that the firm is also making a stronger push into the multiemployer pension plan market, as well as the association-type plan market.

“We have had some great success in these markets recently, so we are very excited to have channels totally focused on these areas,” McCune concluded.