What Retirement Plan Sponsors Need from an Advisor
Retirement plans are looking for more from their advisors than ever before. In particular, many sponsors of smaller defined contribution (DC) plans find it challenging and burdensome to manage their plans, struggling to keep up with the many responsibilities of plan management while at the same time trying to manage their business. While a 2014 Fidelity Investments study shows sponsor satisfaction with their advisor at 66% – up from 57% in 2010 – only 47% felt that their plan was meeting the goals of the company, and one in eight was actively looking to switch advisors. 1 If you serve on a plan committee and are considering adding an advisor or replacing one, you will want to ensure you get the best possible fit for your plan. We recommend that when exploring candidates, you consider a plan advisory firm that: FOCUSES ON RETIREMENT PLANS AS A CORE BUSINESS AND THEREFORE IS A KNOWLEDGEABLE EXPERT IN THE RETIREMENT PLAN SPACE It’s not easy to keep a DC plan running smoothly. There are a lot of fiduciary duties that carry legal responsibilities for plan sponsors, and it’s becoming more important than ever to make sure your advisor has the expertise to help you manage your plan. Don’t forget that it’s actually your fiduciary responsibility to hire competent and qualified parties under the plan. And while that seems elementary, recent research by AB (formerly AllianceBernstein) showed that more than one-third of DC plan sponsors were not even aware they were plan fiduciaries. 2 Many smaller plans are administered by mutual fund companies, insurance companies, payroll companies or Third Party Administrators (TPAs), which is fine. But plan sponsors many times incorrectly assume these parties are also acting as fiduciaries to the plan. It’s critical to know what you are getting in a plan administrator. HELPS TO DEFINE AND DEAL WITH REGULATORY RESPONSIBILITIES Your advisor should be educating you on your obligations under ERISA. Equally important, your advisor should also lay out how he or she is helping you meet those obligations. Is your investment policy updated
1 “Plan Sponsor Attitudes 5th Edition Survey Results: Trends and opportunities in the DC market,” Fidelity Investments (2014). 2 “Inside the Minds of Plan Sponsors,” AB (2015).
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