In the ever-changing environment of retirement advice, it is important to recognize the fiduciary liability that is attached to offering a retirement program for your employees. Having a plan in place is only half the battle. The other half comes once the plan is up and running and you, the Plan Sponsor, have to comply with all of the fiduciary responsibilities that come with it. For this reason, and for your company, you may want to acknowledge the need to hire a 3(21) or a 3(38) advisor to help look after your plan and mitigate those responsibilities and risks.
Hiring an advisor typically means that they will assist with some of the important next plan steps:
Create an Investment Policy Statement (IPS)
Select funds that have low expense ratios
Monitor the funds to make sure they are suitable for your retirement plan
Provide education to your employees
Document the process for selecting funds
Share analytics/reports that show how the investments are performing on a quarterly basis
Now that your advisor has helped with the basic construction of the plan, have you considered whether or not the plan design might be hindering the outcomes of your participants?
There are many different retirement plan advisors in the marketplace today, but it’s always a great idea to make sure Plan Sponsors understand which one will be best for the corporate culture. The key word in this search is “expertise”. Having a holistic approach to any benefit offering will allow Plan Sponsors to better see the full landscape of the participants’ financial well-being.
Some examples of these design tactics might include implenting:
Auto-enroll and/or auto-escalation
Employer contribution strategies like profit sharing or matching
Plan design changes to help with testing and compliance (i.e. new comparability formulas)
...And the list goes on.
I urge Plan Sponsors to strongly consider the depth of an advisor's overall plan expertise when choosing the right partner for their organization. Advisors who take a holistic approach when looking at the “success” of a retirement plan are able to think outside of share classes and take a deeper dive into the nuts and bolts of the plan itself. When it comes to providing a robust benefits package to your employees, make sure your advisor can address your questions and concerns, and help you create the best retirement benefit possible.
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