Don’t be the Blockbuster of Retirement Plan Providers

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In 1994. H. Wayne Huzienga sold Blockbuster Video to Viacom for $8.4 billion. At its peak, there were 9,000 stores. Dish Network who bought Blockbuster a few years ago for $320 million, just announced the closing of the last 300 stores in the United States.

Why did 9,000 stores and billions of equity go away. Blockbuster became a fat cat on video rentals and late fees, yet they never saw the future of DVD rentals by mail and no late fees (Netflix) or online streaming. Blockbuster could never adapt to a changing environment.

If you’re a retirement plan provider, don’t be like Blockbuster. Keep and eye on the present, but also an eye on the future. With the effects of fee disclosure regulation to take time to play out, I’m sure that there are quite a few retirement plan providers who weren’t so forward thinking with fee transparency that fee disclosure may be their death knell.

If you’re a broker and you never see your retirement plan sponsor clients in quite some time, your days are numbered. If you are a third party administrator and you live and die by revenue sharing, the jig is probably going to be up. If your bread and butter has been working on money purchase plans or paired plans, it’s been slim picking for the past 11 years.

Regardless of your place in the retirement plan business, whether you have a billion under assets or one plan to your name, you will always need to be behind the curve. Otherwise, you may be in the same position as Blockbuster.

 


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ary Rosenbaum, The Rosenbaum Law Firm P.C. | Attorney Advertising

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