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10 Attributes of Open Investment Architecture   


Investment architecture recordkeeping platforms

In today’s retirement plan market space we have the freedom of vendor selection. With the choice of vendors comes a myriad of options – third party administrators (TPAs), recordkeepers, asset managers, custodians, insurance companies, mutual fund companies, and fiduciaries.


Historically, we found ourselves going with one-stop shops (insurance and mutual fund companies) that combine these options into a single solution solely for the purpose of enhanced revenue, which is not always best for the end user – the participant and their retirement savings. With one-stop vendors we often find these service offerings with limited investment options, fund selection requirements, limited share classes, and lack of transparency on who is receiving compensation.

Taking a look up market, with large retirement plans having the resources to set the stage for optimal investment, recordkeeping services, and fee architecture, what we now see is that this cost effective and investment flexible model has pushed its way down market to small retirement plans allowing these features to be available to all.


Below are 10 attributes of open investment architecture recordkeeping platforms. Having knowledge of these features allows the advisor and/or TPA to become more consultative, to pass through cost savings to clients, and to add value with fund selection based on the client’s unique needs:

  • Utmost Investment Choice and Flexibility – The sky is the limit. Many open architecture recordkeepers partner with custodians that offer thousands of investment options including: mutual funds, ETFs, risk based funds, target/risk based funds, target/risk based models, employer stock, and self directed brokerage accounts. You won’t be boxed in!
  • Dynamic Advisor Model Management – For investment advisory firms or advisors who choose to create asset allocation strategies for their retirement plan or wealth management clients, custodial partners have created sophisticated tools that allow investment firms to manage models across their book of business. This includes striking daily unit values, reporting, online management, compliance with fee disclosure and reporting rules, and the availability of fund profiles. Models can be easily explained to participants and provide a means to diversification.
  • Flexible Advisor Compensation Options – Whether you’re a commission based or fee based advisor, open architecture recordkeepers allow you to charge and manage your compensation as you see fit.
  • Supports Fiduciary Regulation Changes – With the recent fiduciary regulations and with open architecture recordkeepers, you can easily stay in compliance with the new fiduciary rules with fee structures and fee disclosures.
  • Transparent Fees and Revenue Sharing – Open architecture recordkeepers are transparent with how they are compensated. More advanced recordkeeping firms have removed or will remove asset based pricing and include a base and/or per participant fee which is easily explained. With that, if revenue sharing is generated from the investments, it is rebated back to plan and participant accounts.
  • Custodial Platform Options – Custodians have become more competitive with pricing and services. Their wide range of services include: prospecting tools, investment research resources, reporting, trustee services, asset allocation model tools and management, fiduciary 3(21) and 3(38) offerings, and ongoing advisor education.
  • Flexible Investment Fiduciary Options – To support advisors who are new to the retirement plan industry or who prefer to solicit an outside fiduciary, there are a variety of 3(21) and 3(38) support models with open architecture recordkeepers. Some fiduciaries support advisors in an active/hands on model while others provide periodic reporting in a more passive approach. The pricing of these services does vary depending on level of engagement.
  • Low Total Plan Cost – Now that advisors are beginning to select their service models wisely, and with the full understanding of provider fees, fund expenses, compensation, and revenue sharing, they are beginning to put together service models with open investment architecture firms that have preferred investment choices and overall lower total plan costs to the participants. Long term—more retirement savings!
  • Easy Replacement of Underperforming Vendors – When the best-in-class, multiple vendor approach is utilized, if one of the puzzle pieces does not perform up to standards, that piece is simply replaced. When making tweaks and changes to retirement plans, it’s nice to have the ability for a smooth transition and minimal participant disruption.

To learn more about how open investment architecture can help you or your clients, please contact your JULY Sales Consultant at 888.333.5859.


Written by Michelle LeCates

Vice President, Institutional Sales & Relationship Management, July Business Services