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T. Rowe Price Uses Extranets for 401(k)s


T. Rowe Price of Baltimore, Md. is using Extranet technology to provide administrative services and reporting for its 1,000 401(k) plan sponsors.

The WebIntelligence online capability, built for T. Rowe Price by Business Objects of San Jose, Calif., allows plan sponsors to gain access to plan information and create customized reports via the Internet. Plan sponsors can, for example, sign onto T. Rowe Price's internal 401(k) Intranet system to check employees' asset allocations to be sure they are adequately diversifying holdings, or to check accounts to see if annual contribution limits are within permissible limits.

Approximately 100 plan sponsors have already signed on as system users, said Tim Tully, senior vice president of T. Rowe Price's investment technologies division. T. Rowe Price began testing the program with some plan sponsors last fall. The system was made generally available early this year.

Prior to the new system's introduction, 401(k) sponsors who needed information about their plans had to call a T. Rowe Price representative. T. Rowe Price had also previously offered some direct computer access for plan sponsors to retrieve plan information. But often system or equipment incompatibilities between T. Rowe Price and plan sponsors resulted in disrupted connections. Access via a secured Extranet is now circumventing those problems, said Tully.

Unlike a publicly available Internet system, an Intranet is a private electronic network. With an Intranet, only authorized users can gain access to information electronically. Different departments or employees can gain access to information necessary to perform their specific jobs, while being restricted from gaining access to other proprietary or sensitive information. An Extranet system allows pre-designated "outsiders" such as vendors, clients or service providers to share the firm's data or documents.

Eight-hundred employees in various functions within T. Rowe Price's Retirement Plan Services unit, with $55 billion under management, have been using the Intranet system to gain access to the information stored in the company's 401(k) database. And, T. Rowe Price's retirement plan representatives, by telephone, have been answering benefit administrators' questions and conveying information gleaned from the 401(k) data warehouse T. Rowe Price built about three years ago, said Tully. To gain access to the specific information, T. Rowe Price employees logged onto the firm's Intranet.

The new client access reporting system cuts out the telephone representative and allows benefit administrators to obtain the same information directly, when they want it.

"The system gets the data into the hands of the people who own it," said Tully.

While T. Rowe Price still has representatives available to answer sponsors' questions, the new direct access system can provide information more rapidly while allowing T. Rowe Price to slash the costs of servicing its 401(k) customers, said Tully. T. Rowe Price declined to estimate the savings generated.

T. Rowe Price has pre-programmed the service to quickly provide some commonly requested information. The system also provides daily, up-to-date information. Prior to the introduction of this service, data was only available on a monthly basis.

The system gives T. Rowe Price a competitive edge in the breadth of servicing options it can now provide employers within the highly competitive 401(k) marketplace, Tully said. T. Rowe Price is one of the few, if not the only, companies using the technology, he said.

An important benefit of the WebIntelligence system is that mutual fund companies that have already invested heavily in data warehouse technology do not have to rebuild these warehouses to be compatible with the WebIntelligence technology, said Timo Elliott, Director of WebIntelligence Product Marketing at nine-year-old Business Objects. Extranet access can simply be added on to the existing warehouses.

However, Intranet security is a problem. 401(k) providers want to give plan sponsors access to some information while protecting other proprietary information, said Elliott.

"You have to balance self-service with confidentiality," said Elliott. Security was of major concern to T. Rowe Price, said Elliott. Consequently, several steps were taken in building the system to insure information was protected but easily available to authorized users.

From the standpoint of plan sponsors, the system can offer several advantages.

"I like being able to access my own plan," said Dinah Seisman, benefits analyst in charge of the 401(k) plan at Constellation Energy Group, a utility based in Baltimore. The Constellation plan has 10,000 participants. Seisman said the information is relatively easy to gain access to and is especially useful when plan auditors are reviewing the company's books.

But, navigating the system can require some training and getting accustomed to, she said. It can also be a challenge to learn the various codes and terminology peculiar to T. Rowe Price's database, said Seisman.