Why Plan Sponsors Should Hire a Retirement Plan Consultant
Every company has different goals and needs when it comes to their retirement plan and their participants. A retirement plan consultant can work with a plan sponsor to establish and maintain a plan that meets their unique goals. Fidelity’s 2019 annual Plan Sponsor Attitudes survey reported more plan sponsors are seeing the value of working with consultants. The percentage of sponsors working with consultants has reached an all-time high of 93%, up from 68% in 2008. We are not surprised by this statistic. We believe there are three reasons for this.
Fiduciaries: When plan sponsors work with retirement plan consultants who are fiduciaries, they gain valuable assistance in meeting their fiduciary requirements of ensuring the plan 1) is properly administered, 2) maintains qualified regulatory status and 3) puts plan participants’ interest ahead of their own. Consultants who are fiduciaries are independent, thereby they evaluate funds and providers objectively, without conflicts of interest, ensuring proper adherence to ERISA or Department of Labor regulations.
Experience: Knowledgeable financial consultants with a fiduciary role can help employers make the most of their retirement plan – determining how well the plan is working and how to improve it. Consultants also assist in educating employees about retirement saving, investment options, potential benefits, and how to make changes.
Managers of the Complexity: It’s difficult for plan sponsors to develop and maintain a retirement plan in a constantly evolving legal and regulatory environment. Retirement plan consultants help plan sponsors understand the increasingly complicated process of managing retirement plans. This allows companies to focus on their core business objectives.
Tips on Finding the Right Retirement Plan Consultant
No two plans are alike, and the same can be said of retirement plan consultants. Plan sponsors must perform their due diligence before meeting with potential consultants. The first step is to develop a list of questions that addresses the particular needs of an organization prior to any face-to-face interaction. Some questions to include are:
Do they act as a fiduciary?
How do they handle employee account rollovers? Do they go after employees who are terminated, either by choice or otherwise, for their retirement plan to be rolled into an IRA?
Do they receive any compensation from fund provider firms and/or recordkeeping companies?
What is their process for disclosing fees and plan policies to employees?
Plan sponsors can get answers to these questions and more via a request for information or a more formal and comprehensive request for proposal. After evaluating potential consultants’ information and answers provided, plan sponsors should meet with qualified candidates to conduct a more in-depth review.
Once a plan sponsor has found a suitable consultant, they should include in the written contract the exact nature and fiduciary responsibility of the consultant towards the plan sponsor. This is a commonly overlooked task during the process, and it is important to ensure the consultant and plan sponsor are on the same page and can develop a strong business partnership that will best suit the needs of all parties involved.
Enlisting the expertise of a qualified retirement plan consultant is beneficial to plan sponsors and their plan participants. When designed properly, a retirement plan can
accomplish a variety of objectives such as encouraging employees to save for retirement, maximizing contributions and benefits for owners and key executives, recruiting and retaining top talent, and educating employees about retirement planning, investing, and other financial concepts.
As an independent Registered Investment Consultant, Toroso Advisors is not tied to any investment fund or record-keeper. We offer clients unbiased advice and assistance to control their retirement plan risks and deliver benefits effectively. Plan sponsors also rely on us to review fund lineups and provide scorecards of investments, highlighting any changes recommended. Feel free to contact us at (312) 445-6421 if you would like to learn how Toroso Advisors can help with your retirement plan and plan participants.
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