Five reasons to hire a retirement plan advisor for your 401(k) or 403(b) plan

For organizations sponsoring a 401(k) or 403(b) plan, managing the plan involves more than selecting investments. It requires coordinating service providers, monitoring fees, supporting participants, managing fiduciary responsibilities and keeping the plan aligned with organizational goals.

Several stakeholders may contribute to the oversight and success of a retirement plan. Depending on the plan, these can include a recordkeeper, third-party administrator (TPA), independent auditor, trust company or bank, ERISA attorney, actuary, and retirement plan advisor. Each plays a distinct role in supporting the plan.

The retirement plan advisor or consultant can serve as an unbiased, central strategic partner. An advisor can help fiduciaries navigate their responsibilities, evaluate investments, monitor fees and align the retirement program with organizational goals.

Why should an organization hire a 401(k) or 403(b) plan advisor?

A retirement plan advisor can provide expertise that extends beyond investments. Advisors may help support participants, advise on plan design and compliance, assist with vendor management, strengthen fiduciary processes and provide specialized expertise as retirement plans become more complex.

Here are five reasons organizations should consider working with an advisor.

1. A retirement plan advisor can support plan participants

Having an advisor can help an organization manage its investment lineup and maintain reasonable plan fees. Prudence in these areas helps all plan participants.

Advisors also often provide participant education services to help employees understand how their retirement plan works and how to enroll.

Why it matters

An advisor's role can extend beyond plan-level decisions to help employees better understand and use the retirement benefit available to them.

2. Retirement plan advisors can provide more than investment guidance

An advisor's role doesn't have to stop with investments. Many advisors also consult on plan design and provide compliance support as industry experts.

They may also assist with vendor management, including coordinating with the plan's recordkeeper and conducting periodic requests for proposals (RFPs) to evaluate services and fees.

Why it matters

Organizations can gain a strategic resource for several aspects of retirement plan management rather than relying on investment guidance alone.

3. An advisor can help strengthen fiduciary governance

Retirement plan litigation continues to be an important consideration for plan fiduciaries. An advisor can help an organization keep its fiduciary house in order through detailed documentation and regular fiduciary reviews.

These practices can help organizations prepare for questions about how plan decisions were made and whether fiduciary responsibilities were fulfilled.

Why it matters

A documented, repeatable fiduciary process can help plan sponsors demonstrate the process behind their decisions.

4. Hiring an advisor doesn't have to affect the organization's budget

If reasonable, an advisor's fees can be paid from plan assets. Expenses for non-settlor tasks, such as working with an advisor to select and continuously monitor investments, do not have to be paid directly from the organization's pocketbook.

Why it matters

Organizations considering an advisor should evaluate not only the cost of the service but also how to pay eligible advisory expenses.

5. Managing a retirement plan alone can be difficult

Retaining a prudent, independent advisor is an established fiduciary best practice. Outsourcing does not mean an organization's internal team lacks ability. Rather, it recognizes that retirement plans are increasingly complex and can require specialized expertise.

Why it matters

A skilled advisor can complement the internal team to help strengthen fiduciary governance, reduce risk and provide assistance to plan participants.

What does a retirement plan advisor help with?

Depending on the services provided, a retirement plan advisor may assist an organization with:

• evaluating and monitoring plan investments;

• reviewing plan fees;

• participant education;

• plan design consulting;

• compliance support;

• recordkeeper and vendor coordination;

• periodic RFPs to evaluate services and fees; and

• fiduciary documentation and reviews.
  
  

Is a retirement plan advisor right for your organization?

Organizations may operate without an advisor for several reasons, including historical precedent, resource constraints, competing priorities or the belief that the plan can be managed internally. As retirement plans become more complex and fiduciary expectations increase, the benefits of working with an experienced advisor go beyond investment selection. Advisors can help in a variety of ways to keep a participant's plan aligned with organizational goals.

For plan sponsors, the question isn't simply whether the organization can manage the plan internally. It's whether having specialized outside expertise could help strengthen the processes already in place.

If your organization is considering hiring an advisor and wants to learn more, contact TruePlan for a complimentary discussion.