American Funds Distributors
is rationalizing its relationships with recordkeepers and third-party administrators. The Los Angeles-based fund company is evaluating its relationships with the more than 100 TPA's and recordkeepers that it uses for its 401(k) business. However, a spokesperson for Capital Research & Management (the investment management arm of the company) said that these changes will not effect its primary relations with BISYS Plan Services. BISYS is the largest retirement plan recordkeeper used by American Funds and accounts for about 15% of its business.
"BISYS has about 15% of our business and we expect BISYS to handle as much business in the next four to five years," the spokesperson told the MFWire.com. He explained that the changes are being made to narrow the field of administrators down. American Funds will continue to use four to five administrators in addition to BISYS for clients with special needs.
In cases in which a client wants an administrator in its region, or if it needs to use features such as a brokerage option that BISYS does not administer for American Funds, they will recommend an alternative administrator. The number of funds American Funds can offer clients through the BISYS relationship is also limited, the spokesperson said, so in those cases in which plans want a large number of investment options they will be provided an alternative vendor.
The spokesperson would not confirm which other administrators American Funds is considering for these relationships. The multitude of existing relationships grew in part out of pre-existing relationships that banks and broker-dealers had with various TPA firms.
The bulk of the American Funds retirement plan and 401(k) business is broker sold and in the small plan market.
Stay ahead of the news ... Sign up for our email alerts now