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Are You Getting A+ Value From Your 401(k) Fiduciary Advisor?

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You started a 401(k) plan for your business, but you’re continuously wracking your brain with the extra administrative work it requires. From running the program and choosing investments to keeping costs low and maximizing participation, the responsibilities on your shoulders are endless. What started as doing the right thing turns into one big headache. 

If you’re constantly thinking, “I wish I had a 401(k) advisor that did it all for me,” chances are you’re currently paying for more value than you’re getting.

So, how do you know you’re getting a competitive plan and an A+ value from your current advisor?  

Do you have the best plan design that fits your company’s needs?

To start off, there’s no such thing as a “one size fits all” 401(k) plan. Exceptional plan design can help a business minimize expenses, increase employee participation, and avoid compliance test failures. Furthermore, an exceptional plan design should match the individual employer’s goals and operate according to employees’ demographics. 

Getting plan design right is crucial – it determines which employees are eligible, annual compliance testing requirements, and how much employee contributions the company makes to the employees’ retirement accounts. 

A high-value 401(k) fiduciary advisor should be tailoring your plan design with features specific to your individual company. 

In the process of plan design, they should be asking questions like:

  • Is your aim to retain employees or reward them for staying on?
  • Do you want highly compensated employees to be able to maximize their contributions, without having to make unexpected corrective contributions?

A high-value 401(k) fiduciary advisor will inform you of the different plans, contributions, compensations, eligibility requirements, vesting schedules, and distribution options. 

This will allow you to make educated decisions in the process so you know what to expect later on when the plan is underway. 

Do you receive full assistance with record-keeping and reporting?

Secondly, a 401(k) record keeper is essentially the bookkeeper of the entire 401(k) plan, simply put. The job of the record keeper is to track who’s in the plan, what investments they own, and what money is going in or out. Moreover, they may also maintain a website for employees to access accounts and make transfers, print and mail statements, or maintain customer service outlets.

A high-value 401(k) fiduciary advisor takes care of your record-keeping and reporting completely, ultimately reducing your administrative overhead.

Leave the paperwork and paper cuts up to them. 

The role of the 401(k) record keeper is too important to undervalue.

  • It serves as the source of truth for all employee activity in your company’s 401(k) plan
  • It houses all plan documents
  • It tracks employee eligibility

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Do you have an employee education plan and high participation rates?

Next, lack of employee guidance and education is a leading factor in low levels of engagement, low levels of participation, and employee complaints. Just because there’s an option to take advantage of a 401(k) plan doesn’t mean your employees will automatically participate. 

A high-value 401(k) fiduciary advisor will work to educate employees about the long-term plan benefits, how they can make the best use of it, and help them establish their retirement goals. 

  • Do your employees know if they have enough money to retire?
  • Do your employees know their contributions are tax-deductible?
  • Do your employees participate regularly in educational sessions?
  • Does your average employee contribution meet or exceed the national average? 

With efficient guidance, employees will feel confident making their own decisions regarding how much they should save and contribute to the plan. Equally important, being aware of the long-term retirement benefits gives participants more incentive to contribute at healthy rates.

A high-value 401(k) fiduciary advisor will prioritize your employees’ financial wellness by having a variety of tools, resources, and learning opportunities that extend beyond the 401(k) plan.

Helping participants achieve financial, retirement readiness is really what 401(k) plans are all about. Similarly, providing financial and 401(k) education across a variety of platforms various will ensure that employees can gain knowledge in any way that best works for them. This includes employee education webinars, live sessions, enrollment videos, guides, success tips, blogs, and more. 

Do you receive full support for compliance and audits?

One of the most important tasks 401(k) plan sponsors are faced with every year is passing compliance testing and dealing with IRS audits. Traditionally, compliance testing can be a daunting process for employers. Testing conjures up unpleasant images of the IRS, plan corrections, and paperwork upon paperwork.

Maintaining compliance can be difficult, and if you’re the only fiduciary of your 401(k) plan, you are held to the industry expert standard. Also, non-compliance penalties can get extremely costly and be a nuisance to fix.

A high-value 401(k) fiduciary advisor will be your go-to consultant when you have questions about passing compliance tests and IRS audits. 

They will provide clear, helpful answers and provide your plan documents in a timely manner.

Additionally, your advisor should educate you on alternatives to some compliance testing, such as utilizing a Safe Harbor plan. It’s important to make sure that 401(k) plans are used equally to benefit employees and business owners alike when it comes to saving for retirement.

Are you satisfied with investment selection, management, and performance?

Lastly, if your investments have been performing poorly then it’s probably time to switch advisors or stop managing the investments yourself. It’s important to know if you have a provider that is an ERISA 3(38) investment advisor, how the provider manages your fund selections, and how you are charged for investment services.

A high-value 401(k) fiduciary advisor will continuously use your company’s goals to monitor investment performance.

Unless you have expert financial and investment background, this is a difficult position for a sponsor to sit in for. Leave it to a professional. 

A high-value 401(k) fiduciary advisor will offer expert investment oversight selection and develop a high-quality asset allocation that generates wealth long-term. 

Your fiduciary advisor has an obligation to operate the plan for the benefit of your employees, so this isn’t about what you or a handful of managers want from an investment perspective.

Trust the process because it’s about what would serve the best interests of the majority of your employees.

Bottom Line

In conclusion, companies change 401(k) providers all the time when they feel like they aren’t getting the most out of their plan. Maybe you’re unhappy with the amount of work on your shoulders compared to your advisor, or you’ve discovered a bunch of hidden fees. You might have a lack of employee education leading to complaints and low contributions rates, or you’re tired of failing IRS audits due to faulty records. 

Whatever the reason is, it will be in your best interest to periodically review your plan to make sure you’re getting the best value for your money. 

Even if there are no specific downfalls with your current provider, it’s best practice to regularly review your plan provider in comparison to the competition.  

Be confident your plan is keeping up with industry best practices, and that you and your employees are getting the best value for your money. Switching to a high-value 401(k) fiduciary advisor will maximize what you like about your current plan, identify the weaknesses of your current plan, and ensure you’re not paying more for better service.

Need help with your 401(k) benchmark?

401(k) fee benchmarking should be done at least every 1 to 2 years. We’ll help you calculate the “all-in” fee for your plan, then compare this fee to the all-in fee of 3+ other 401(k) providers.

Get in touch to start the conversation today!

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As your Fiduciary Registered Investment Advisory firm, we’re bound by law to put your interests above our own. We’re committed to maximizing your wealth within the constraints of your values and your life goals.

Our team of qualified and experienced experts is dedicated to building a positive, long-term relationship with you.

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