Press Release

Former, Current Employees Benefit from Technology

By Lisa Higgins, Contributing Editor, Best Practices in Compensation & Benefits - June 2003

RolloverSystems Inc., wants to make life easier for your former employees. Don't worry, no one's going to ask you to take him or her to dinner or anything. In fact, RolloverSystems's product can make life easier for you, too, by solving problems you may not even realize you have.

RolloverSystems offers what it calls "the first true one-stop solution for the 401(k)-to-IRA rollover process," according to Reginald Bowser, founder, president, and CEO of the company. "Our platform is the only one of its kind that really matches 401(k) plan participants with a network of financial institutions that compete for that person's IRA rollover."

The system, which Bowser hopes will soon be available within all the major payroll- and HRIS-platforms, will show up on company intranets as a menu item. "An individual who uses our software fills out one form. It takes two kinds of information from the individual. First is basic demographic data about the employee. Then we ask a battery of questions designed to create a profile of that individual's investment needs. For example, what is the individual's risk tolerance? How much are they rolling over? Do they want access to a financial planner?"

Choose among multiple offers

"We send that information to the financial institutions in our network," Bowser continues, "and the financial institutions can present offers for the rollover IRA to that individual. Eventually what will happen is that a person will be able to fill out one form, and they'll receive multiple offers back from competing financial institutions. They choose one, answer any additional questions the financial institution requires, print, sign, and mail in their documentation. Using our system, the person can complete the entire rollover process in about 20 to 25 minutes. And that's a process that usually takes six to eight weeks."

If the process sounds vaguely familiar, it may be because you've heard something similar before. Bowser was a founding team member at LendingTree, Inc., a mortgage broker using a similar concept. "But, one of the main differences between what we do and what LendingTree does," he says, "is they attract customers via mass advertising. That's really not our strategy; our strategy is to integrate our software into pre-existing HR technology platforms that reside within the corporate environment." RolloverSystems is working with Exult, a provider of outsourced HR solutions, to make that happen. "We are going through the integration process right now," says Bowser. It should be available by the time you read this.

Until the time comes when RolloverSystems is available through all HR platforms, though, employees can access it through the company's website, http://www.rollovermarket.com. That's also where you can obtain information about attaching it to your own company intranet. "We don't target (marketing) at individual companies," says Bowser, "but we would love to talk to them."

Facilitate the process

Why would you want to facilitate the process for someone who's leaving your employer? There are several reasons, says Bowser. First, "employers who offer 401(k) plans have been searching for more and better ways to provide tools to employees in an effort to assist them with important decisions about their retirement." Add to that the issue of cost. "When an individual leaves a company, typically the company would like that individual to divest their assets from the 401(k) plan," says Bowser, "primarily because the company has to continue to pay plan administration costs" related to that account. "The Economic Growth & Tax Relief Reconciliation Act of 2001 (EGTRRA) says that any employer offering a 401(k) plan will be required to allow [participants the option] of rolling their assets to an IRA. So our software helps employers comply with the law, helping them reduce plan administration costs."

New employees can also access the system to help them facilitate a rollover from their former employer's 401(k). "It's a value-added service that employers can offer," Bowser says. "There are 14 million people per year switching jobs. Sixty-six percent of those people between 30 and 39 make what's probably a bad decision for them - they decide to cash out rather than roll over assets from their 401(k) plan. Many people do that not because they want to, but because they don't know what else to do. What we provide employers is a way to offer an objective tool that employees can use to make sound decisions regarding their retirement future."