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.
There are so many varieties of financial advisors that it can be confusing what you should be looking for. This article is intended to act as a guide for you as you select a financial advisor for your retirement plan or review the current advisor as part of your fiduciary responsibility.
Source: Jdsupra.com, November 2022
Change for the sake of change is a bad idea, you need a reason for it. There are certain plan errors where 401k plan sponsors should consider change and that change is a change of their plan providers. Here is a list of 401k errors that should get the plan sponsor to consider making such a change.
Source: Jdsupra.com, October 2022
Looking for a 401k for your startup? This article will help you understand everything you need to know about selecting a 401k provider designed to meet a startup's needs.
Source: Forusall.com, October 2022
As a small nonprofit, there are just some things that you struggle to find the time, resources, or staff to do. Looking for a 403b provider is one of those things. As a result, many nonprofits just default to one of the larger providers. Here is a comparison chart of the larger providers.
Source: Forusall.com, September 2022
Moving your 401k plan between providers can seem daunting. This article breaks down the services you might be switching and explains how you can prepare for the transition of each one.
Source: Benefitnews.com, September 2022
The Oshkosh decision appears to create a favorable precedent for plan sponsors in the 7th Circuit since it narrowly applies the holding in Hughes. From the 6th and 7th Circuit, it appears that allegations have to compare the fees being charged with the quality and/or type of services being provided. Plan sponsors should review their investment lineup, compare investments under this standard, and maintain minutes of the deliberation process. Having a process-driven policy should mitigate fiduciary risk. Plan sponsors should also review their service agreements with their recordkeepers to fully understand how recordkeepers are compensated.
Source: Foxrothschild.com, September 2022
Like Rodney Dangerfield, retirement plan providers don't think they get respect. They probably think that way with some of the 401k plan sponsors who use and abuse them. This article is all about the behaviors you should avoid as a 401k plan sponsor in dealing with plan providers, whether they work for you or not.
Source: Jdsupra.com, September 2022
Plan providers are making sizable investments in technology to enhance their suite of online resources to improve digital participant experiences and better connect with a younger generation entering the workforce, according to the latest Cerulli Edge -- U.S. Retirement Edition. From education-oriented designs to targeted communications, plan providers are leveraging the latest advances in digital technologies to complement or enhance human-provided services.
Source: Cerulli.com, August 2022
Lawsuits and the threat of regulatory action mean plan sponsors must take special care in choosing a recordkeeper, the entity that manages and accounts for employee investments. Here are some best practices in choosing one and evaluating the incumbent provider.
Source: Hubinternational.com, July 2022
Many great plan providers eventually go bad and are headed for a long-term goodbye. The problem is there are certain characteristics that you can see a mile away, but they can't. These are some of the ways where a good plan provider stumbles and becomes a bad provider.
Source: Jdsupra.com, June 2022
Selecting competent plan providers is part of your fiduciary duty as a plan sponsor. So selecting a provider must be through an actual process where you review potential providers in each area (administration, financial advisory, ERISA attorney, and auditors) before selecting one and documenting the entire method of selection. This article is about what you should consider in selecting a retirement plan provider.
Source: Jdsupra.com, June 2022
Plan sponsors have the tremendous responsibility of being stewards of DC plan assets on behalf of their participants. Adding to the level of responsibility is the increased fiduciary scrutiny of legislators and regulators, as well as the ongoing evolution of the retirement landscape. It is no wonder that nearly 59% of plan sponsors use an advisor. This article offers a series of themes to help committees assess a DC plan consultant partner and select one that will enhance your plan's oversight activities.
Source: Planpilot.com, May 2022
401k conflicts of interest misalign the interests of employers and 401k providers. While employers have a fiduciary responsibility to choose a 401k provider with "reasonable" administration fees and cost-efficient investments to make retirement as affordable as possible for plan participants, conflicted 401k providers have a financial incentive to push overpriced administration services and investments when lower-priced - but otherwise comparable - alternatives are available. How do employers avoid this trap? Here are four ways a 401k provider can profit unduly at the expense of plan participants.
Source: Employeefiduciary.com, April 2022
Businesses that provide recordkeeping services to defined contribution retirement plans are merging at a dizzying rate. What considerations should plan sponsors resolve when a competitor or aggregator acquires their recordkeeper or third-party administration firm?
Source: Rolandcriss.com, April 2022
When Providers Use Plan Participant Data for Purposes Unrelated to a Plan: What Employers Need to Know
There is a growing trend of using participant data to cross-sell financial products unrelated to plan recordkeeping by large recordkeepers and asset custodians of employer-sponsored retirement plans. In light of the fact that plan fiduciaries are ultimately legally responsible for the management and mismanagement of a retirement plan, this trend to use participant data may raise issues for employers in their role as plan sponsors and fiduciaries.
Source: Ogletree.com, April 2022
A Covered Service Provider must provide a 408(b)(2) disclosure to the retirement plan fiduciaries. This article describes what is in a 408(b)(2) disclosure, why is this disclosure necessary, and some 408(b)(2) best practices.
Source: Multnomahgroup.com, February 2022
To perhaps state the obvious, all third-party administrators are not alike. Those differences can make or break a good working relationship, with you, and your plan sponsor clients. Here are some checkpoints.
Source: Napa-net.org, January 2022
From our annual survey of approximately 3,000 defined contribution plan sponsors, DC plan providers are measured and evaluated according to feedback from their clients. Major DC plan providers are rated in the various client categories they serve, and benchmark information is collected for plan sponsors to gauge their plans against their peers.
Source: Plansponsor.com, January 2022
Organizations that sponsor employee benefit plans are generally responsible for ensuring that their plans comply with federal law, including ERISA. Many sponsors rely on service providers to advise and assist them with their employee benefit plan duties. But service providers to retirement plans are changing their stripes. That makes the job of selecting and monitoring them more challenging than ever.
Source: Rolandcriss.com, January 2022
A panel discussion at the virtual 2021 PLANSPONSOR Best Practices Conference focused on the critical topic of fiduciary outsourcing and what plan sponsors can expect from service providers. Experts discussed the types of outsourcing available to plan sponsors, from basic 3(16) administration services to full discretionary 3(38) investment management.
Source: Plansponsor.com, November 2021
Considering the consolidating market for recordkeepers, one might wonder whether looking to move a retirement plan to a new service provider is worth the effort. Yet, shopping around by soliciting requests for proposals, for instance, can yield important intelligence regarding the state of pricing and the level of services being offered. For example, employers with DC retirement plans, DB pension plans, and stock-compensation plans could find opportunities to save time and money by consolidating the administration of all of those plans with one provider.
Source: Shrm.org, November 2021
The average defined contribution investment-only provider's assets under management rose 30% over the 12 months leading up to June 30, aided by market gains of around 10% in just the first half of 2021, according to a new Sway Research survey. The analysis is based on surveys and interviews with 21 DCIO sales leaders and DC plan intermediaries. It shows that not all the AUM growth is the result of increasing stock prices, as two-thirds of the managers captured positive net sales during the first half of this year.
Source: Planadviser.com, October 2021
Nearly one-third (31%) of retirement plan recordkeepers expect to increase their cybersecurity staff, according to a Cerulli report. Industry stakeholders suggest the threat of retirement account fraud has increased in recent years, particularly during the remote work environment, Cerulli Associates says. And, even though the majority of recordkeepers act in a non-fiduciary capacity, Cerulli points out that courts have suggested that cybersecurity is a shared responsibility.
Source: Planadviser.com, October 2021
Fiduciaries are required by ERISA to monitor service providers to the plan. That includes monitoring for any conflicts of interest. This 7-page paper identifies five areas where recordkeeping vendors have tried to monetize their relationship with retirement plans: Proprietary investment management, managed accounts, IRA rollovers, annuitization, and cross-selling retail financial products. These don't constitute a conflict of interest, but whenever a recordkeeper stands to be compensated by choices made by the plan fiduciaries or plan participants, extra care should be taken.
Source: Multnomahgroup.com, October 2021
Hiring a 401k plan provider isn't an easy process and there are so many mistakes that plan sponsors like you have been made. It's not like making any other decision of your own in life, because it's a fiduciary decision. As a plan fiduciary, you are responsible for the retirement assets of your employees. This article is about the rules of engagement in hiring 401k plan providers.
Source: Jdsupra.com, September 2021
401k plan recordkeeper consolidation is proceeding at a rapid pace as a response to shrinking profit margins. If your recordkeeper is acquired, passivity is not an option for fiduciaries who are not already familiar with the buyer's business and fee structure. Fiduciaries have a legal responsibility to make sure that their plans have obtained competent services at a reasonable cost, which means that they need to take steps to determine whether staying put or finding a new record keeper is in the interest of plan participants.
Source: Rpaconvergence.com, September 2021
Although DC plan services have become more standardized over the years, the process of moving from one recordkeeper to another is complex. Risks associated with a conversion include the potential for unexpected disruption to participant accounts, lengthy blackout periods, lost data, costly reconciliations, and misunderstood communications. This paper covers steps for successful implementation and management of risks, three critical components of painless recordkeeper transition, and common transition challenges.
Source: Segalco.com, August 2021
The annual PLANSPONSOR Recordkeeping Survey is compiled from self-reported data submitted by recordkeepers of defined contribution plans. This year's results represent nearly $9 trillion in DC assets and are estimated to account for over 90% of the total DC market, according to internal analysis based on the "2021 Investment Company [Institute] Fact Book."
Source: Plansponsor.com, July 2021
Fifty-eight percent of sponsors surveyed for the 2021 PLANSPONSOR Plan Benchmarking Report said their organization has been using its DC plan recordkeeper for more than seven years, and another 12.3% said it has been more than five years but less than seven. So the timing may be right for these sponsors to take a fresh look at the dynamic recordkeeping marketplace and how it has changed since they last did a request for proposals. Four plan advisers give their insights, and recommendations, as to five key preliminary steps when preparing to conduct an RFP.
Source: Plansponsor.com, July 2021
Retirement plan sponsors and committees that are fiduciaries often ask for guidance when hiring investment professionals. The best practice is to do a formal request for proposals that target likely candidates for the job. The RFP will identify the most qualified candidates, but other, less objective factors will differentiate them.
Source: Rpaconvergence.com, July 2021
Given that the majority of plan sponsors and fiduciaries likely already have existing service providers that aid in the administration of their benefit plans, plan sponsors and fiduciaries may consider amending the applicable service agreement to include some or all of the provisions recommended here to the extent there is not sufficient contractual protection under the existing agreement.
Source: Frostbrowntodd.com, May 2021
While plan sponsors now know the price of plan administration, one problem remains. The problem is the plan provider contract, and so many disputes surround the contract. Without some guidance, 401k plan sponsors may be forced to turn over plan assets or money from their pocket needlessly to a soon-to-be former plan provider because they don't have the knowledge to contest. The problem with paying plan assets needlessly to a former plan provider is that it is a breach of fiduciary duty. This article is all about plan provider contracts and what you need to know to avoid a mess.
Source: Jdsupra.com, May 2021
The DOL has issued guidance for plan sponsors, plan fiduciaries, plan service providers, and plan participants on best practices for maintaining cybersecurity and protecting retirement plan assets. The guidance does not focus on the cybersecurity of the plan sponsor or the plan fiduciary, but rather the duty of plan fiduciaries for the cybersecurity of plan service providers retained by the plan fiduciaries.
Source: Troutman.com, April 2021
The DOL has prepared these best practices for use by recordkeepers and other service providers responsible for retirement plan-related IT systems and data, and for plan fiduciaries making prudent decisions on the service providers they should hire.
Source: Dol.gov, April 2021
Are you ready for a change to your 401k plan, but concerned that moving from one service provider to another may be too daunting a task to take on? Working with a knowledgeable advisor and vendors who have well-defined onboarding processes can reward plan sponsors and participants with a better retirement plan. The points reviewed here can help you better understand the conversion process to determine whether a prospective provider is up to the task of smoothly onboarding your plan.
Source: Alliant401k.com, April 2021
There are two types of trouble: trouble is where you get entangled in a dispute for what is right, and trouble for doing something wrong. This article is all about the second kind of trouble and the stuff you could do to avoid it and therefore sidestep harming your business.
Source: Jdsupra.com, April 2021
The author discusses 10 of the most common areas that should be scrutinized and negotiated (with the help of your legal advisor) before you sign that "standard" service agreement with your retirement plan vendor.
Source: Boutwellfay.com, February 2021
Fiduciaries are required by ERISA to monitor the services providers to their plan. This includes monitoring any conflicts of interest. This retirement plan vendor conflict resource will help you identify, monitor, and avoid any conflicts with your plan's service providers, plus a worksheet to assist in asking the right questions about potential conflicts.
Source: Multnomahgroup.com, February 2021
One of the most important responsibilities of plan fiduciaries is hiring the right service providers. These providers must do competent-hopefully, superior- work for a fee that is reasonable to the services provided. The best way to fulfill this responsibility is by doing an RFP. Engaging in RFPs can help fiduciaries demonstrate that they haven't hired inappropriate or overly expensive plan providers if their choices are challenged.
Source: Cohenbuckmann.com, February 2021
This article is all about the TPA change, which involves a conversion process that can start a whole host of problems for you as a plan sponsor.
Source: Jdsupra.com, January 2021
For most 401k plan sponsors, it's the financial advisor that serves as their ombudsman. When things aren't going so well it is often the result of the financial advisor not doing their job competently. This article is about situations where, as a plan sponsor, you may have to fire your financial advisor.
Source: Jdsupra.com, January 2021
In a year unlike any in recent memory, advisors were asked to identify their primary considerations in recommending a recordkeeping partner get hired, or fired. And no, it was not fees. As a primary factor, fees drew only half as much consideration, and that was only slightly ahead of participant engagement.
Source: Napa-net.org, November 2020
Recordkeepers are a critical partner in a successful retirement plan and monitoring their services and fees is one of the most important duties of a fiduciary. Periodic benchmarking can help keep a plan's fees in line with the marketplace but is not a replacement for a full vendor search process, especially in light of the recent findings in the Banner Health case. This webinar covers the benefits of running a vendor search, the timeline for running a search, and best practices.
Source: Multnomahgroup.com, September 2020
Selecting a defined contribution plan recordkeeper, financial adviser, or another service provider through a request for proposals process can ensure it is best suited to the plan. When conducting a service provider request for proposals, being specific can help ensure the plan and participant needs are met, as well as compliance with fiduciary duties.
Source: Plansponsor.com, September 2020
Your fiduciary responsibility to your plan participants includes periodically evaluating your plan's recordkeeper to ensure their processes facilitate the correct execution and reporting of transactions, adherence to federal and state regulations, in addition to the reasonableness of fees in relation with the quality of services provided. Learn more in this piece about the role a plan recordkeeper plays and some of the factors plan sponsors should consider when choosing and evaluating a recordkeeper.
Source: Planpilot.com, May 2020
401k provider services and investments can vary dramatically in terms of breadth, depth, and price. Benchmarking 401k fees on an all-in basis helps normalize these differences, putting the onus on a 401k provider to justify higher fees. This article provides a 3-step process you can use to compare fees, including where to find the administration and investment fees for ten leading 401k providers. In short, a "Rosetta Stone" for finding 401k fees.
Source: Employeefiduciary.com, April 2020
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
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