Fiduciary relief, not fee savings, should lead PEP pitch

The pooled employer plan pitch has usually started in the same place, the fee comparison, and Mike Ziccardi, executive vice president of CBIZ's Retirement & Investment Solutions practice in the US, told InvestmentNews that advisors who open there are already missing the point. "Many advisors lead with cost savings, but that can oversimplify the value proposition," Ziccardi said. "Cost should not be the primary lens through which a PEP is evaluated."

Fee reasonableness still belongs on the list of issues Ziccardi says should occupy the room, not as the opening bid. The distinction is one of emphasis: a pitch that begins with cost reduction tells an employer that a PEP is a commodity, while a pitch that begins with fiduciary and administrative relief tells the employer what the structure is actually for.

Pooled employer plans came out of the SECURE Act of 2019 with a specific assignment: let unrelated employers share one professionally managed 401(k) under a single pooled plan provider, and remove the two things that had kept smaller companies from offering competitive benefits — administrative burden and fiduciary exposure. In the arrangement Ziccardi is describing, the pooled plan provider is the named fiduciary responsible for choosing and monitoring the service providers inside the plan.

Adoption has not yet kept up with that policy ambition. The Department of Labor's 2025 pooled employer plan bulletin counted 190 PEPs in operation in statistical year 2022, a 135% increase from the year before, with roughly 618,000 participants enrolled, and the same bulletin records 142 pooled plan providers registered with the department as of the end of 2023.

Ziccardi reads the curve as familiar in employee-benefits innovation: large employers move first, and the middle market waits to see how a new structure behaves. The economics do not force the decision, because employer contributions — typically the largest single plan expense — are the same whether the employer keeps its own plan or joins a PEP, which leaves the most visible number on the sponsor's budget unchanged.

That means the sales conversation has to happen somewhere other than the budget line, and Ziccardi says it is already moving there. "The conversation has evolved well beyond investments," he said. "Historically, many employers viewed retirement plan advisors primarily through the lens of investment oversight. Today, fiduciary risk management, governance, cybersecurity, participant outcomes, fee reasonableness, and operational compliance are often taking center stage."

That inventory might sound like administrative burden, but Ziccardi's case is that it is the actual product: an employer moving into a PEP is buying, first, a named fiduciary and a professional chain of oversight. If the sale never reaches that layer, the employer is left comparing two structures as if price were the only difference between them.

Diligence starts with the fiduciary, and Ziccardi calls it a key red flag when a pooled plan provider occupies multiple roles in the arrangement. If the provider is also the advisor or recordkeeper, employers should carefully evaluate how potential conflicts of interest are being managed. "Effective oversight requires independence," he said. That test is the practical way to tell a true fiduciary arrangement from a bundled product with a fiduciary label.

The point carries beyond PEP sales, because Ziccardi says generalists are losing ground to specialists who can speak fluently about fiduciary risk and regulatory compliance. A fee-first PEP pitch has the shape of a generalist habit: it reaches for the number that is easiest to model and leaves the harder conversation about conflicts, controls, and independence to someone else.

The tendency to fixate on the wrong number is not confined to this product: the Boston College brief we covered in August says small employers misjudge the cost and value of retirement plans, overestimating what a plan costs and underestimating what it does for recruitment and retention. A fee-first PEP presentation feeds that same blind spot by letting the price stand in for the product.

Put fees later in the pitch, and start with who the pooled plan provider is, what roles it does not also occupy, and how the plan polices the people working for it. The 190 plans and 618,000 participants in the DOL bulletin are a start, not a verdict; the next wave will be sold in whichever order the industry chooses. If the next numbers show middle-market employers moving because they understand the fiduciary structure, the fee-first chapter will have closed on its own.