1. Why Are Banks Abandoning Individual Accounts?

Managing individual accounts for pension affiliates is costly and complex for banks. Each account requires distinct administrative processes, specific tracking, and strict compliance with ever-evolving regulations. This individualized approach can quickly become overwhelming, particularly when dealing with large numbers of affiliates.

By moving to collective accounts, banks can reduce operational costs, simplify management, and minimize the risk of errors. Centralizing financial flows also facilitates transaction tracking and reduces processing times.

2. The Benefits of Collective Accounts for Pension Institutions

Transitioning to collective accounts offers several key advantages for pension institutions:

• Reduced Management Costs: The administrative costs associated with individual accounts are significantly lowered, allowing institutions to reallocate these resources to other areas of pension management.

• Simplified Administrative Processes: With a collective account, contributions and withdrawals can be managed centrally. Operations are grouped, reducing repetitive tasks and the risk of human error.

• Streamlined Compliance: Centralized funds make it easier to adhere to compliance standards, especially in areas like anti-money laundering (AML) and data protection (GDPR).

• Improved Transparency and Traceability: Transactions are easier to track and audit, providing greater transparency for affiliates and regulatory bodies.

3. Enhanced Efficiency for Wealth Managers

One of the most significant advantages of collective accounts is the streamlined management process it offers to wealth managers. By consolidating assets at the foundation level, wealth managers can administer the foundation’s entire portfolio without the need for manual management of each individual account. This shift provides several benefits:

• Global Portfolio Administration: Wealth managers can manage and monitor assets collectively, allowing for a more efficient and strategic approach to asset management.

• Reduced Operational Complexity: With a collective structure, wealth managers avoid the time-intensive and error-prone task of manually managing each individual account, enabling them to focus on portfolio performance and strategic growth.

• Improved Responsiveness: The global view offered by collective accounts enables faster decision-making and more responsive portfolio adjustments, improving outcomes for the foundation and its affiliates.

4. Implications for Affiliates: Toward Increased Autonomy

While the shift away from individual accounts might seem limiting, it can actually offer affiliates greater autonomy and transparency:

• Centralized Access to Pension Information: Instead of managing multiple accounts, affiliates can access all their pension-related information on a single platform, making it easier to track their funds’ progress.

• Lower Fees: Reduced management costs can mean lower fees for affiliates, making pension management more economical.

• An Active Role in Fund Management: With modern platforms, affiliates can now monitor their investments and access their documents independently, without requiring extensive interactions with banks.

• Enhanced Security: Thanks to new technologies and digital wallets, affiliates can better control their data, deciding which parties can access it and when.

  
  

5. The Role of Digital Solutions in This Transition

The transition to collective accounts is greatly facilitated by technological advancements. Digital solutions like those offered by heLPP enable pension institutions to maintain individualized tracking for each affiliate within a collective framework. Through these tools, institutions can provide a modern, compliant, and secure user experience.

Digital platforms also automate the management of individual transitions, such as retirements, withdrawals, or beneficiary changes. This reduces the administrative workload while improving operational efficiency.

6. The Future of Pension Account Management: A Hybrid Approach?

While collective accounts are growing in popularity, some institutions may adopt a hybrid approach that combines the benefits of centralization with options for individualized tracking via digital tools. This hybrid model could address the specific needs of some affiliates while benefiting from the cost savings and efficiency of centralization.

Conclusion

The shift away from individual accounts marks a new era in pension management. By adopting collective accounts and leveraging advanced digital solutions, pension institutions can lower costs, simplify management, and offer a better experience to affiliates. Wealth managers, in particular, benefit from the ability to manage assets at a global level, reducing the need for manual, account-by-account administration and enabling a more strategic approach to portfolio management. This transition represents an opportunity for institutions to rethink their processes and adapt to the demands of an ever-evolving environment.

At heLPP, we support institutions through this transformation by offering digital solutions designed to optimize collective account management and enhance the affiliate experience. Contact us to learn how our expertise can help your institution navigate this new landscape.