401k Plan Partners Improve Participant Outcomes. The Plan Sponsor University (TPSU) held a Fiduciary Education Program in Portland, Oregon at Marylhurst University. At the conclusion of the program Adjunct Lecturer, Nathan Fisher, Managing Director of 401(k) Solutions at Fisher Investments, interviewed Cindy Nillson, HR Director at a Portland-area real estate firm with 65 employees. One important topic of that conversation was in identifying the difference between a proactive partner – one who brings strategic suggestions to the plan, and a vendor – who continually rectifies a plan sponsor’s problems on an as-needed basis.
Having vendors, such as record keepers, TPAs, and advisors, who respond to calls from defined contribution (DC) plan sponsors and who do the basics to make sure the plan complies is needed. However, a proactive partner will bring innovative ideas to improve processes and participant outcomes, before they are needed. HR and finance professionals that run their company’s 401k or 403b plan are busy with lots of jobs so keeping up with the latest creative ideas for DC plans is close to impossible. Leading DC providers and advisors should fill that role.
The HR director at the TPSU Program noted that while she is comfortable with her providers, she said that it would have been better if they had brought the idea of auto-enrollment to her company years ago, as the plan only has about 50% participation. (Auto-enrollment was thoroughly explored at the TPSU Program.) After hearing the benefits of auto-enrollment at the TPSU program, she plans to go back and implement this improvement and other components of the TPSU Ideal Plan.
Also discussed at the TPSU program was the idea of a forensic audit or gap analysis reviewing DC plan processes and documentation to not only make sure that the DC plan is running efficiently but also in case the DOL conducts an audit for which the plan will be well prepared.
The DC recordkeeping industry has gone through massive consolidation over the past decade, going from over 100 national firms to less than 40. As a result, service has improved as the industry survivors are better equipped with more capital to invest. The plan advisor world is just starting to experience the same consolidation. Having the proactive advisor, one who is experienced and well-versed in the DC industry, can be that a proactive partner who helps plan sponsors to avoid problems before they occur.
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