New firm sees opportunity in PEPs as ‘operational fiduciary’

Jason Roberts and Pete Swisher started Group Plan Systems to let investment managers offer PEPs to clients.

A new company formed by the Pension Resource Institute and Waypoint Fiduciary will serve as a pooled plan provider for registered investment advisers, broker-dealers and banks that want to do business in the PEPs market.

The new entity, Group Plan Systems, will be an “operational fiduciary” in group plans market, which includes pooled employer plans, the companies announced today. That arrangement will allow investment managers to offer PEPs to their clients without working with a pooled plan provider that has discretion to hire or fire 3(38) investment fiduciaries.

Prior to establishing the new business, PRI surveyed its member firms, including RIAs, B-Ds and banks, about their interest in such an arrangement.

“Within that group there is certainly a lot of demand,” PRI Chief Executive Jason Roberts said. “And the demand is to have a PEP solution for the firm in a way where the [pooled plan provider] doesn’t hire the [investment] firm. That was one of the things we needed to establish out of the gate.”

Interest was highest among RIAs and banks, Roberts said. B-Ds had interest in providing access to PEPs but often were less interested in having one with their own branding and fiduciary oversight. Employers participating in the plans would sign separate agreements with Group Plan Systems and the investment fiduciaries, Roberts noted.

“For that model, there is a lot of demand and not a lot of supply,” he said.

Group Plan Systems, which is among more than 60 entities registered with the Department of Labor as a pooled plan provider, will soon announce a PEP aimed specifically at small businesses and startups, Roberts said.

Pete Swisher, former national practices leader at Pentegra Retirement Services, founded Waypoint in 2020 with a focus on helping firms establish group plans after the SECURE Act was passed. Swisher and Roberts are managing partners of the new company.

In addition to PEPs aimed at small employers, the company is also exploring operating PEPs for record keepers and third-party administrators that want to offer those plans without being named as pooled plan providers, Roberts said. The company could also be a named fiduciary for individual plans or consult with other groups on establishing their own PEPs, according to the announcement.

Demand for PEPs is being fueled by plan coverage mandates in states with automatic IRA programs. Employers that don’t want to use the state option and want the tax advantages of 401(k)s could increasingly be driven to use PEPs, Roberts said.

The cost of setting up a plan “is now being underwritten with tax credits,” he said. “The maximum [fiduciary] risk shifting available to an employer is through a PEP.”