How do Conversions work? In extremely granular detail.

We just finished a brutal plan conversion. The plan was on Guideline and went to accrue during our blackout. 

All of the conversion assets were sitting in cash for 31 days, which is absolutely unacceptable to me.

For those who are more familiar with the recordkeeping side, could you help me understand how this could happen? The RK said they didn't have all the conversion files, blah blah blah.

1) How many plans are converted in kind vs sold ->Wire->Reinvest?

-And why aren't all plans in kind?

2) What can I do in the future to prevent this from happening? Just send the RK daily emails asking for updates when money is in motion?

What is your guys process?

Onboarding a plan requires attention to extremely granular detail that is customized to the plan provisions, the deconversion processes of the existing service providers including potentially the recordkeeper, TPA and investment firms, the client's internal administrative support including payroll, HR systems, and funding procedures, and to the you as the new service provider including everything needed to provide continuity of the rights and privileges of all of the plan participants.

Coordinating all of this commonly takes 10-12 weeks, and starts with working out a detailed work plan in the first few weeks with all of the parties involved.  The time for asking your questions is at the beginning of the conversion process and the people you need to ask are the client and the existing service providers.

Just to add to what Paul said - you will never get an in-kind transfer from one RK to another. All the shares are held in omnibus accounts. 

The time to negotiate provisions about a recordkeeper’s conversion-out is before the plan’s responsible plan fiduciary makes a service agreement with the recordkeeper the plan later might want to leave.

The time to negotiate provisions about a recordkeeper’s conversion-in is before the plan’s responsible plan fiduciary makes the service agreement with the recordkeeper that would, if engaged, process the conversion-in.

For many plans, either observation is impractical because a plan might lack bargaining power.

Beyond whatever service obligations a plan might get, a transition from one recordkeeper to another calls for not only caring work from every service provider but also strong and sustained oversight and supervision from the plan’s responsible plan fiduciary.

Each recordkeeper might, to supplement the plan fiduciary’s attention, appeal to the other recordkeeper’s sense of business decency and fair dealing.

A mature recordkeeper might work to get and keep a good reputation as both a graceful loser and an accommodating winner.

Bill Presson is right that—at least regarding mutual fund shares, collective trust fund units, and insurance company separate account units (forms of investment designed for redemptions)—a transfer of property other than a payment of money is unusual.

As someone who's primary job is to process conversions (money only, not addressing plan provisions or payroll), I can tell you that an in-kind transfer is much more difficult than a liquidation and wire.  To speak to the comments above, if the money is insurance company separate accounts or omnibus accounts, an in-kind transfer is not possible. You would really only be able to move from one custodian to another where the funds are invested at the plan level.  Arranging for an in-kind transfer as of a specific date takes a lot of coordination and agreement between the custodians, recordkeepers and the funds themselves and all must agree to the same schedule, and there will be lots of paperwork involved.

Do you have a copy of the conversion records that Guideline originally sent over?  You may want to look at those records to see for yourself if they had the information necessary.  For example, did the records include the full name, Social Security Number and amount by source and fund by participant that was transferred?   Also, did Guideline provide a report by participant with a beginning balance for the year, contributions, distributions, earnings, fees, loan data, and transfer out, etc.?  Did they provide any census data?  Did you map over the funds, or did they invest as per new enrollment allocations (or QDIA)?  Mapping adds another layer of complexity, especially if fund data was not provided at the participant level.

There are some recordkeepers who use their own identifiers and don't provide Social Security Numbers, which can make the conversion process difficult.  Also, receiving the data for the current year doesn't always happen.  I often have to make several requests to get current year data or end up getting several files with pieces of data and have to try to rebuild the year with what data I did receive (which I prefer NOT to do).

If you ever do a conversion again, I would ask for sample copies of the records that are going to be sent over and ask to be cc:d in any communications between the recordkeepers so you can see what information is and is not being provided and when.  Ultimately, if you are the Plan Fiduciary, all responsibility lands on you, so being very involved it the conversion process would be advisable.