It is Okay for 401k Plan Sponsors to Ask for Help. A few weeks ago, I“hubris is not a financial planning strategy.” That article was about Americans’ reluctance to admit they’re not necessarily as financially savvy as they purport to be. It turns out, plan sponsors can fall victim to hubris, too. As from BenefitsPro points out, sponsors typically know a lot about their day-to-day responsibilities, whether they are running a business or overseeing a specific organizational function, but when it comes to managing the retirement plan, they tend to get stuck in that “limbo” place of not knowing what they don’t know.
The issue, of course, is that lack of knowledge creates risk — the risk of fiduciary breach, personal liability, and lawsuits. I’m not saying that to scare anyone; that’s just reality. And unfortunately, ignorance doesn’t get sponsors off the hook. If sponsors don’t know what they’re doing when it comes to overseeing their organization’s retirement plan, under the law, they’re expected to vet and hire experts to help.
However, that’s where the hubris challenge rears its head. As the BenefitsPro article points out, plan sponsors are an “alpha” bunch. In other words, they’re not keen on admitting that they’re wrong or they don’t know something, and like most alpha-type personalities, they loathe to ask for help. But here’s the thing: the lone-wolf approach isn’t such a good fit for those in charge of retirement plans. As most sponsors know, there’s a ton of moving parts, a lot to keep track of, and a lot of critical decisions to be made. None of those are ideal situations in which to act alone, and even less so if you’re not absolutely, 100% certain you know what you’re doing.
So first, if you’re looking at all of the different parts of your organization’s retirement plan — selecting, managing and monitoring the investment menu; fees; administrative responsibilities; participant education and communication; managing vendor relationships; etc. — and you’re thinking to yourself, “I got this,” think again. You very likely need more help than you think. Evaluate where there are holes in your knowledge and how to fill those gaps. Do you need to hire a third-party vendor with the expertise you may be lacking? C’mon, be honest — don’t let your alpha nature stand in the way here. This is where getting it right matters much more than being right, both for you and your participants.
The BenefitsPro article notes that hiring a fiduciary expert can help “solve” a lot of these problems for sponsors. And maybe so — if that fiduciary is a good one. The article defines a “good” fiduciary as one who puts plan sponsors’ interests first. That sounds about right — your fiduciary partner should “have your back.” In other words, they should be predisposed to protecting your best interests, and their recommendations and advice should reflect that. In turn, you can do what’s best for your participants, which is really getting the right support is all about.
In short, the first step for sponsors is admitting there’s a problem, to begin with. What don’t you know? Do you know what you don’t know? Again, be (brutally) honest with yourself. The second step is getting the expert help you need to fill those knowledge gaps and make sure you’re fulfilling your responsibilities from a fiduciary standpoint.
BenefitsPro also suggests “systematizing the solution,” for those times when your expert help is not available, and to make it easier for you and other plan committee members to fulfill your duties, no matter who is holding the baton, metaphorically speaking. Having a template can also help mitigate, but not eliminate, the risk that comes with not knowing what you don’t know. However, keep in mind that templates grow stale and need to be updated from time to time. Your fiduciary partner can help you with that, too.
Just as hubris is not a viable financial planning strategy, it is also not an effective lens through which to manage a retirement plan. Don’t let pride get in the way of doing what’s right. Additionally, as a plan sponsor, you don’t have to do it all alone. It’s okay to admit that you don’t have all the answers and to hire the help you need to support you and your retirement plan. Don’t think of asking for help as admitting defeat — think of it as a victory, for you and your participants.
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