Don't Miss

401k Plan Advisor Makes Dramatic Improvements

401k Plan Advisor Makes Dramatic Improvements

401k plan advisor services can be the difference in helping plan fiduciaries and retirement plan committees to maintain a strong retirement plan. Retirement plan fiduciaries and retirement plan committees periodically work with the qualified retirement plan on a sporadic basis. Frequently they will address plan related issues every month or every quarter. It is rare that a plan retirement committee is able to spend significant amounts of time on continuously improving plan design, features, and outcomes. At the conclusion of a Plan Sponsor University (TPSU) Fiduciary Education Program held at a Georgia State University in Alpharetta, Georgia, TPSU Founder, and CEO, Fred Barstein spoke with Kathy, a TPSU Program attendee. As the Director of Human Resources at her approximately 500-employee organization, Kathy oversees the 401k plan administration.  One of the major changes Kathy has successfully addressed is improving investment performance and the lowering of investment-related fees. Learn how Kathy implement these investment-related improvements.

Full Transcript Here

Fred Barstein:
This is Fred Barstein with 401K TV. Just completed a TPSU program in Alpharetta, Georgia on campus at Georgia State University, and I am here with Kathy. Welcome, Kathy.

Kathy:
Hi, how you doing, Fred?

Fred Barstein:
Okay if I ask you a few questions?

Kathy:
Absolutely.

Fred Barstein:
Okay. Tell us, before we do, tell us a little bit about your role and the size of your organization.

Kathy:
Okay. I work for a company, automotive company, and we have 500 employees, and I am the HR director for the last 10 years.

Fred Barstein:
Good. So in the discussion today, you talked about you had a fiduciary review. What does that mean?

Kathy:
Well, at the time, I had no idea. So I had never had any contact with my broker at that time, and I knew that I had to do something. I figured that there had to either get my broker in here or find out what’s going on. So I got a call, a cold call, actually. And he says, “You know what your fiduciary responsibility to have your plan monitored, or at least checked, periodically.” And I said, “No, I had no idea.”

Kathy:
So he said, “Well, I can do that for you, no cost to you, and I’ll let you know how your plan is doing.” So I figured, “Okay. No cost. Great.” So he came in, reviewed our plan, and when our plan was originally began, incepted, it was in a fund or our funds were in very high-fee investments. So he said, “Well, number one, your plan has grown exponentially from when you first started it, so you need to be migrating into a different type of rate factor.” So he directed us as to what rate factor we should be at.

Kathy:
He also changed it where our fees were no longer hidden within the funds themselves, and we have full disclosure to our employees, and we went into, he modified our funds to where the fee structure is considerably less. The returns are significantly better, and he was charging us less than what our other broker was going to do, which our other broker was just collecting the commissions and not providing any kind of service.

Fred Barstein:
Right.

Kathy:
So as a result of that, I mean he … I’m very happy with my broker. He just recently contacted me and said, “Hey, what do you think if I come in and do a lunch and learn on retirement?” So as a result of him coming in to do that review, it ended up helping our employees. Our plan has grown from 30 million to 7 million in three years. Now, granted, that’s also because-

Fred Barstein:
To 70.

Kathy:
No, I’m sorry, 3 million to 7 million in three years.

Fred Barstein:
Wow.

Kathy:
And so as a result of that, I mean, it just keeps going up and up. And my highly compensated employees didn’t have to get money back.

Fred Barstein:
Right. You didn’t fail testing. So the lesson is don’t necessarily wait for that call.

Kathy:
Right.

Fred Barstein:
Be proactive.

Kathy:
Be proactive.

Fred Barstein:
And not all advisors are specialists, as you found out.

Kathy:
Correct.

Fred Barstein:
Right, to do that. Well, it’s great. So you’ve done a lot. From a couple of things you learned here that you want to take back and maybe institute?

Kathy:
Oh, absolutely. One of the things that he did cover when he came in is to go with the auto-enroll. So we instituted that, as well, which has been phenomenally successful.

Fred Barstein:
Right.

Kathy:
And I learned about the auto-escalation.

Fred Barstein:
Right.

Kathy:
I also, I mean, I got a lot of benefit from this program. I mean, I was really surprised, even at break, I contacted my CFO, and I said, “Okay, you’re not going to believe this, but this is really good. Because, to be honest with you, I thought it was a sales factor.

Fred Barstein:
Okay. That’s what we normally get. Do you have any sales here?

Kathy:
No. No, and it was awesome. It was totally awesome.

Fred Barstein:
Great.

Kathy:
And I love learning, so as far as I’m concerned, you did an amazing job.

Fred Barstein:
Well, good. Well, we do it four times a year in the Atlanta-Alpharetta area, so we’ll hopefully see you again.

Kathy:
Oh, I will be here by all means.

Fred Barstein:
Very good. Well, thank you for your time, and thank you for watching 401K TV. Please stay tuned.

x

Check Also

401k Court Cases

401k Court Cases Alarm Plan Sponsors.

401k Court Cases Alarm Plan Sponsors 401k court cases have been noticed by many plan sponsors over recent years.  It is less expensive for a plan fiduciary to be aware of plan requirements than to argue the facts during a ...