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Clearly Defining Roles Key to Plan Sponsor Understanding Retirement Plan

Sometimes it can be difficult for administrators of a company’s 401k or 403b plan to understand all the moving pieces especially the various roles played by the providers and advisor. The CFO attending a TPSU program held at Manhattanville College explains his concerns.

One of the analogies that plan sponsors find help to understand these roles is to use the healthcare industry which include:

  1. Advisor = Doctor
  2. Record Keeper = Hospital
  3. Investments = Pharmaceuticals

The plan sponsor is the parent or fiduciary of the patient who is the employee in the plan sometimes called the plan participant. It’s essential for plan sponsors to get the big picture of how 401k and 403b plans work so that as different elements are introduced, they understand how the pieces fit together.

The CFO at the Manhattanville TPSU program also learned more about what makes for a good advisor which includes being proactive and bringing new ideas to the table. He intends to bring some of these ideas back to his plan and challenge their current advisor. Not only is this a sound practice for the company it will also benefit their employees.

Plan sponsors are starting to wake up about the importance of retirement plans at work as well as understanding their roles and responsibilities. It may take formal training but it can be worth it if only to know that you are not alone getting the opportunity to speak with peers. Because most HR and finance professionals wear many hats, it is the responsibility of their advisor and record keeper to educate and push the company to consider new ideas and services to constantly improve the plan administration as well as improve participant outcomes.

When was the last time your advisor came to you with a new idea?


Fred Barstein

Fred Barstein

Founder & Editor-in-Chief at 401kTV | TRAU | TPSU
Fred Barstein is the Founder & Editor-in-Chief of 401kTV. Fred is also the Founder and CEO of The Retirement Advisor University (TRAU), a collaboration with UCLA Anderson School of Management Executive Education and The Plan Sponsor University (TPSU).Mr. Barstein was also Founder and Editor-in-Chief of NAPA Net.
Fred Barstein

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