October 08, 2019Institutional Investment ConsultingRetirement PlansParticipant Financial Wellness Services

After working over 25 years in the retirement plan industry, I still often get asked, “Why would I hire a Retirement Plan Consultant/Advisor to help with our 401(k) plan when that is what our recordkeeper is for or that is my job?”

The role of the Retirement Plan Consultant/Advisor is not to replace the HR/Benefits Manager, Investment Committee or the Recordkeeper.  The Consultant/Advisor’s role is to sit on the same side of the table as the Plan Sponsor and to be an advocate for them with their recordkeeper and other providers.

Another significant role of a consultant/advisor is to help reduce the fiduciary liability of the Plan Sponsor by hiring a consultant/advisor who will sign on in writing as a 3(21)-Investment Advisory Fiduciary or 3(38)-Investment Manager.  This allows the Plan Sponsor/Investment Committee to shift some of the fiduciary responsibilities to an outside objective retirement plan consultant/advisor who specializes in this area.  However, we all know that hiring a fiduciary does not replace 100% of the Plan Sponsors liability.  So, if someone tells you this beware!  

"At ACG, we believe in helping Plan Sponsors to mitigate fiduciary risk while improving plan and participant outcomes."

When hiring a consultant/advisor for your plan, you want to look for someone who has a strong ERISA plan governance background, in addition to investment experience.  A Retirement Plan Specialist consultant/advisor has experience and can assist with sharing latest trends in plan design, financial wellness programs, negotiating fees with vendors, conducting the RFP search process, implementing best practices for investment committees and education strategies/programs for employees.  Most importantly, consultants/advisors help keep the Retirement/Investment committee on track to follow a well-documented process.

Did you know, most plan committees focus mainly on investments fees even though in 2018 over 64% of the DOL audit fines were a result of plan administration errors1? Fees are important but it’s not the only thing to pay attention to for your plan. In addition to investments, plan governence and following a well-documented process is key.

"Did you know, most plan committees focus mainly on investments fees even though in 2018 over 64% of the DOL audit fines were a result of plan administration errors1?"

We are seeing more and more companies adding a consultant/advisor for 3 key reasons:

1. To free up their teams’ time to focus on other job duties

2. They are concerned about the rise in fiduciary litigation cases

3. To help with plan governance and financial wellness programs

At ACG, we have specialized in ERISA plan consulting for over 20 years.  Please don’t hesitate to email or call if you have any questions related to this article or to your plan.  For more information, check out our website at www.acgbiz.com

By: Stacy Allen, Sr. Market Development, Retirement Plans & Financial Wellness

Contact info: sallen@acgbiz.com or 612-230-6950.


Source: https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/fact-sheets/ebsa-monetary-results-2018.pdf