COLLECTED WISDOM™ on Choosing and Monitoring Plan Providers and Advisors
Need help and insight on choosing or monitoring your 401k plan service providers and advisors? This resource will give you much of the information you need to accomplish this important task.
This archive contains not only the most current material on the topic, but also older items that are still relevant, provide background, perspective or are germane to the topic.
If you find a broken link or an items that you feel is outdate, irrelevant or no longer appropriate, please let us know.
This podcast discusses the role of a recordkeeper to a retirement plan benefit, trends in recordkeeping across the industry, and key elements for plan sponsors to focus on when evaluating their recordkeeping relationship.
Source: Francisinvco.com, February 2020
Employers demonstrate a solid understanding of who is involved and what services are being performed, but there tends to be less familiarity with the industry labels assigned to each provider. The purpose of this article is to discuss common 401k providers along with roles each may serve.
Source: 5500audit.com, February 2020
One question that a plan sponsor always asks respondents to an RFP for investment management services is to describe their investment philosophy. Plan sponsor going to the trouble and expense of issuing an RFP deserves an answer to this question from a respondent that is forthright, commonsensical, and well thought-out. A fiduciary should be the leader of the pack in its relationship with a plan sponsor, especially in cases where an RFP calls for the services of a discretionary fiduciary, such as an ERISA section 3(38) investment manager.
Source: Morningstar.com, December 2019
Fiduciaries and their legal counsel need to review both the agreements and fee structures they have with all service providers to ensure they are paying reasonable fees and there are no hidden fees or unexpected costs in the contracts. Regular review of both contracts and fees, as well as confirming payments align with these fees, is only part of the process.
Source: Hallbenefitslaw.com, November 2019
Whether a small plan with only a handful of participants, or a large plan with tens or hundreds of thousands of participants, every 401k plan needs to have certain services performed for it. A plan is just a plan. It is in large part implemented by service providers, who operate pursuant to various agreements. This Q&A identifies several important types of service providers and what to watch out for in their contracts.
Source: Greensfelder.com, October 2019
Whether or not it's by issuing an RFP, sources agree that plan sponsors whose recordkeeper is being acquired or merged with another should do some investigating into the changes that may occur.
Source: Plansponsor.com, August 2019
Even though fiduciary-grade 401k financial advisors are bound by a higher standard of care than non-fiduciaries, their advice often costs less. Check out the latest fee study of fiduciary-grade 401k advisors here.
Source: Employeefiduciary.com, August 2019
It can take almost a lifetime to build a sterling reputation in the retirement plan industry as a plan provider and it can be destroyed in an instant. The retirement plan business is very competitive, and you can't afford any problems that can negatively impact your business. There are dangers every day in the retirement plan business and you owe it to yourself and your employees in avoiding dangers that could lead you to exit the retirement plan business.
Source: Jdsupra.com, July 2019
Plan sponsors have a duty to monitor retirement plan advisers but may be forgetting to request or research certain information. It might take lawsuits for plan sponsors to become aware of their need to stay on top of such information.
Source: Plansponsor.com, June 2019
This article considers how the SEC's new, detailed, and significantly higher standard of conduct rules for brokers may affect plan sponsor fiduciaries. In light of the new (and significantly elevated and detailed) broker standard of conduct rules, the application of the plan fiduciary's duty to monitor "whether the adviser continues to meet applicable federal and state securities law requirements" deserves special attention.
Source: Octoberthree.com, June 2019
When you do decide to change your 401k provider, your new provider should help you through the process. However, as helpful as they might be, you can still get hit by surprises. Namely, expenses and extra work you didn't know were coming your way. Here are the top three surprises to watch out for when you switch 401k providers, and what you can do about them.
Source: Forusall.com, May 2019
There are many reasons why a 401k plan sponsor may want to change a retirement plan provider, but it should be for the right reasons. This article is about avoiding some really bad reasons.
Source: Jdsupra.com, April 2019
While some of the compression can be attributed to vendor consolidation and scale, why would billion-dollar financial services organizations continue to invest in recordkeeping capabilities where profits have traditionally been so thin? The answer is: they believe there is an opportunity to generate additional revenue beyond the recordkeeping fees for servicing retirement plans. Generally, there are five areas where recordkeeping vendors have tried to monetize their relationship with retirement plans.
Source: Multnomahgroup.com, April 2019
Plan sponsors would benefit by consulting ERISA counsel much earlier in the RFP process. Advisers are not fungible and there are issues plan fiduciaries need to focus on in order to hire an investment adviser. When winnowing down the list of investment adviser finalists to make the final choice, these items should be on your checklist.
Source: 401ktv.com, January 2019
One big part of when things aren't going so well is when the financial advisor isn't doing their job competently and doing a disservice to the plan sponsor. This article is about situations where the plan sponsor may have to fire their financial advisor.
Source: Jdsupra.com, January 2019
There are many reasons why you may have to fire a TPA and there are reasons when you have no choice. This article is about when you may have to fire your TPA.
Source: Jdsupra.com, November 2018
The perceived disadvantages of "unbundling" recordkeeping and administrative services generally fall into two areas: 1) the belief that adding more parties adds more cost, and 2) the belief that adding more parties adds more complexities for the employer. This article examines these perceptions and then considers some added benefits of an "unbundled" arrangement.
Source: Consultrms.com, October 2018
Does periodic benchmarking satisfy a plan fiduciary's duty to monitor? Does benchmarking allow you to determine whether investment-related fees, compensation and expenses are fair and reasonable for the services provided? To answer those questions, one must consider the weaknesses of benchmarking.
Source: Theinhub.com, May 2018
Engaging a TPA for plan document design, compliance and government reporting services should include more due diligence. If a TPA makes an error, it can be very expensive for the plan sponsor and investment advisor. Another way of stating this issue: If price is the only criteria for investment advisors and plan sponsors, what else do they have on their due diligence files?
Source: Benefitnews.com, April 2018
The process of procuring defined contribution (DC) plan services is a significant undertaking that may result in a plan sponsor selecting a new recordkeeper as a means to improving service, cost-effectiveness or both. Although DC plan services have become more standardized over the years, the process of moving from one recordkeeper to another is complex.
Source: Segalco.com, March 2018
Monitoring your investment menu managers, your plan providers, and plan fees is an important part of your overall fiduciary responsibility. This white paper looks at best practices and the standards should you be following in your monitoring practices. Throughout the paper, you'll find checklists that may be helpful in building and maintaining your plan monitoring processes.
Source: Arnerichmassena.com, February 2018
When it comes to evaluating plan providers to consider, it's hard to develop a metric that would gauge whether a provider should be hired or not. This article help evaluate how to select plan providers from every Tom, Dick, Harry, and Jane that wants you to select them to be your plan provider.
Source: Jdsupra.com, January 2018
Changing Retirement Plan Administrative Services Providers: Considerations and Pitfalls for Employers
An employer's selection of a third-party administrative services provider for its retirement plan is a fiduciary exercise. This means the process by which the employer reaches its decision must be prudently undertaken. It is therefore imperative that an employer pay close attention to the details of, and thoroughly document, the process it follows in selecting or changing its TPA.
Source: Stevenslee.com, January 2018
Evaluating responses to your plan auditor request for proposals can be done simply and efficiently if you lay out the criteria you consider most critical in advance and assign a weight in terms of importance to each. This approach creates a framework of objectivity before you begin reviewing the proposals.
Source: Fiduciaryplangovernance.com, November 2017
One of a plan sponsors many fiduciary responsibilities is to monitor its service providers. But how do plan sponsors and recordkeepers have productive and positive relationships? This paper reviews how a plan sponsor can be sure that they are getting the most out of their service providers.
Source: Pavilioncorp.com, September 2017
While the DOL has provided guidance on the overall responsibilities of plan sponsors, these guidelines fall short of speaking to best practices when dealing with recordkeepers. This 7-page paper aims to help plan fiduciaries maximize their recordkeeper relationships with the end goal of better retirement outcomes.
Source: Porteval.com, September 2017
The 401k plan marketplace is very dynamic and you are likely to discover some surprises when you conduct a provider review. This article suggests some points to consider in managing your 401k provider reviews.
Source: Lawtonrpc.com, September 2017
Recordkeeping is often described as a commodity, and that might be true for the pure administration of participant accounts, but the 55 providers responding to this survey showcase a wide range of investment, technology and servicing options.
Source: Plansponsor.com, June 2017
There are many plan providers and some of them aren't very good and the not so very good ones cause a lot of headaches and costly bills for the 401k plan sponsors that hire them. This article is about the pitfalls that plan sponsors can avoid in hiring plan providers that could cause liability.
Source: Jdsupra.com, June 2017
Small plans frequently have big service needs, and a special joint NAPA/CIkR task force has developed a template designed to make it easier to obtain a consistent, apples-to-apples comparison of service features from 401k recordkeepers.
Source: Asppa.org, June 2017
The most essential support that advisers should give is detailed oversight of the investment lineup, followed by compliance and fiduciary protection, analysis of fees, provider evaluation, participant education, updates on regulatory and industry developments, and plan metrics/outcomes.
Source: Plansponsor.com, February 2017
One of a plan sponsor's many fiduciary responsibilities is to monitor its service providers. Best practices suggest that you and your committee should review your record keeper on, at least, an annual basis. Some areas for evaluation are reviewed.
Source: Pavilioncorp.com, December 2016
Selecting a recordkeeper is critical for retirement plans. They provide a variety of services, and plan sponsors and advisers should look for the ones most important to them and their participants.
Source: Planadviser.com, December 2016
Unlike many of the excessive fee lawsuits that we have seen over the past few years, a new suit has been filed against the recordkeeper, rather than against the plan sponsor or retirement plan committee. The complaint alleges that Xerox (the recordkeeper for the three Ford plans), as a precondition to making Financial Engines' investment advice tools available on their platform, required FE to overcharge participants and pay Xerox a "kick back" from the fees charged for providing investment advice.
Source: Pension-Consultants.com, November 2016
Access to more options puts you in a better position to find a 401k provider that can handle changing workplaces, stronger oversight from the DOL, and increasingly distinct employee populations. Find an editable PDF here that can be sent to any 401k provider you're evaluating.
Source: Forusall.com, November 2016
Caveat Emptor applies to all manner of purchases, and is part of the spirit behind a piece that appeared in a recent legal newsletter that suggests questions and offers tips on what plans could consider asking service providers before entering into service agreements with them.
Source: Asppa.org, November 2016
Selecting a provider must be done through an actual process where you review potential providers in each area -- administration, financial advisory, ERISA attorney and auditors -- before choosing one and documenting the entire method of selection. This article is about what you should consider in deciding on a retirement plan provider.
Source: Jdsupra.com, October 2016
While your 401k recordkeeper works in the background to support your plan, the role of the recordkeeper is a critical one and supports many building blocks to your plan and gives you and your participants the freedom to access your money easily. For a quick check on whether you have the right recordkeeper for your plan, review the five signs outlined in this article.
Source: Forusall.com, October 2016
For retirement plan sponsors, the risks of choosing the wrong investment advisor or consultant just became a lot greater. Spurred by new DOL guidelines, fiduciaries of plans of all sizes are scrambling to evaluate qualified retirement plan investment advisors/consultants using the request for proposal solicitation method. Typically, the process involves a large number of subjective questions and a small set of objective data. Plan fiduciaries can and should ask three key questions that will go some way toward identifying conflict of interest issues, helping to significantly reduce the confusion and complexity associated with the RFP process.
Source: Linkedin.com, October 2016
Retirement plan advisers may often find themselves in the role of matchmaker: working with a defined contribution client to determine which investments and platforms or providers are the best fit. To be in a top position to guide the client, an adviser must keep abreast of the provider community, so as to stay current on what products and services are available to suit each client's needs.
Source: Planadviser.com, October 2016
Some say that third-party administrator services can surpass what most recordkeepers offer to aid with plan design and that this is broadening the TPA's use in the retirement industry. This is PLANSPONSOR first Third-Party Administrator Survey that provides a detailed snapshot of each TPA respondent, revealing, by its numbers, how it compares with peers in the overall market landscape.
Source: Plansponsor.com, August 2016
There is no such thing as too many questions. Recently Ed Moss, Senior Vice President, Employee Benefits at FirstMerit Corporation (www.firstmerit.com) provided some tips for plan sponsors who are considering changing 401k plan vendors.
Here is an outline to follow in putting together a RFP when you are looking for a bundled 401k provider. Included in this outline are important questions you should be asking.
Several 401k recordkeepers have exited the game, merged or been acquired by larger providers because they haven't been able to keep pace with fees or expanded services that plan sponsors have been demanding. As consolidation takes over the recordkeeper marketplace, employers gain more opportunities to get the same service at a discount price.
Source: Workforce.com, July 2016
Just one among the many difficult aspects of learning to run a retirement plan is coming to appreciate the sometimes subtle, but clearly critical, differences between a recordkeeper and a third-party administrator (TPA), a task made all the harder by the near-constant evolution in business models, technology and client service preferences. Article reviews the differences and why plan sponsors turn to TPAs for help with plan design and administration.
Source: Plansponsor.com, July 2016
The survey includes TPA firms from the very small to the very large: $600,000 in total retirement plan assets to $54 billion in plan assets, respectively; more than one in six have in excess of 500 plans. Survey participants have offices in all but seven U.S. states, and about one in six is a national firm. Article provides details from the survey data.
Source: Plansponsor.com, July 2016
Many external advisers to plans already commit in their contracts with their clients to act as fiduciaries. Some don't, though, particularly those who advise small plans. Executives responsible for overseeing these plans shouldn't just sit back and relax; rather, they should reevaluate their agreements with their advisers, experts say. And there are implications for large plan sponsors as well.
Source: Cfo.com, June 2016
Report found that plan administration fees are the most common reason for switching recordkeepers, and likewise are an important driver of satisfaction and loyalty when client expectations are fulfilled. Importantly, the aspect of providing good value for the money is the leading enhancer to brand consideration this year, reinforcing the point that plan sponsors are seeking value from a provider.
Source: 401khelpcenter.com, May 2016
Competence is attributes you should consider when shopping for a 401k provider. Unfortunately, it’s also a difficult attribute to evaluate due to the highly-technical nature of 401k services. This piece suggests you employ a two-step process.
Source: Employeefiduciary.com, May 2016
NAPA polled its readers on the question of RFPs and evaluating plan designs and plan providers. Nevin Adams shares the results and reader comments here.
Source: Napa-net.org, March 2016
Hiring a 3(38) investment manager is like outsourcing any other HR function. While you have outsourced the work and liability, you cannot step away from the process. You must still monitor the service provider to make sure it is fulfilling its contractual obligations. Article reviews a handful of questions to consider when creating a framework to monitor a 3(38) investment manager.
Source: Captrustadvisors.com, March 2016
For a business relationship that needs to end, there needs to be signs for one party to decide that it's time to say goodbye. This article is about when it's time to end your relationship with your plan provider.
Source: Jdsupra.com, January 2016
Most plan sponsors who partner with a specialized Advisor follow a deliberate selection process before hiring their Advisor. This report offers guidance for plan sponsors interested in hiring a specialized Advisor, and helps them understand the different types of Plan Advisors. Findings are based on focus group discussions with plan sponsors who partner with a Professional Retirement Plan Advisor of some kind.
Source: Dcpicadvisors.com, January 2016
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