The concept of an “open architecture” recordkeeping platform has been trending in the financial industry lately and it’s not hard to see why. For many years, 401(k) providers offered bundled platforms with fixed investment options (consisting of proprietary investments) and provider fees paid through investments (via revenue sharing). This arrangement limited diversification of investments and set the stage for conflict of interest, given that the provider could get paid more by recommending one fund over another. Open architecture platforms offer features that increase investment flexibility and reduce conflict of interest.
A TRUE open architecture platform would offer the following benefits:
- The ability to diversify your investments, with the option to choose from any mutual fund family or ETF (exchange traded fund)
- Freedom to invest in funds that meet your personal objectives, with no proprietary funds
- Lower investment costs, offering an array of mutual funds at the lowest cost share class and no revenue sharing
- Full fee transparency and disclosure
However, with the subjective nature of the open architecture concept, providers often promote open architecture programs that are not in the full spirit of industry reform. When looking for a 401(k) or other company sponsored retirement plan, be sure to look past whether the plan simply checks off the open architecture box. A true open architecture platform, such as the one offered by RPG Consultants, eliminates any potential conflict of interest by being 100% investment agnostic. Investment advisors and plan sponsors have the freedom and flexibility to choose from a large universe of investment options that meet their identified needs and objectives. More importantly, there is no revenue sharing, no proprietary funds and RPG derives no benefit as a result of investment choices.
The TRUE open architecture platform embraced at RPG Consultants will better serve the interests of financial advisors and their clients. When you dig down and review the actual features of many of these so-called “open” platforms, you may find that they are really not very “open” at all.