Plan Sponsors: We Can’t Go On Like This – Time For a Change. I was going to write an article this week about ways for plan sponsors to inspire older workers who are behind on their retirement savings and strategies to help them catch up. Then, I readyesterday, and wrote . Needless to say, I decided to table that topic for another time. I’m pretty fired up.
Here’s why: Half of plan sponsors don’t believe they’re fiduciaries?!?! Whaaattttt?! Frankly, I was appalled to read that statistic, along with the other findings of a recent Alliance Bernstein survey, which indicated that plan sponsors aren’t very aware of their fiduciary roles and responsibilities. I was also a lot concerned. In my opinion, there’s no excuse for data like that coming out in our industry research. And yet, it seems to be a trend that perpetuates.
I want to be clear: I’m not blaming plan sponsors. I’m not entirely sure there’s blame to be cast here. But it points to a very serious problem, and I’ve written about: overseeing America’s retirement plans is a very big job, and plan sponsors often don’t receive the education, training or support they need to do that job well, or even halfway competently. I have to ask: why?
Why are we putting people in charge of helping our nation’s workforce to prepare financially for retirement without giving them the tools, the know-how or the help to do so? Doesn’t that strike you as more than a bit scary?
Now, I’m not saying that plan sponsors are ignorant — far from it. The Herculean efforts you pull off with limited knowledge and resources are commendable. Despite ourselves, Americans are taking advantage of their workplace retirement plans, and retirement readiness is on the rise. That said, there’s still work to do, and plenty of improvements to be made in our retirement system overall.
But it seems woefully unfair to say to sponsors, “hey, you have this fiduciary responsibility, and if you screw it up, you could go to jail, or your participants could bring a lawsuit against you, or you could lose your job, or all of the above and worse.” And oh, by the way, you’re on your own unless your organization has a knowledgeable expert in-house, or your plan has an adviser or a third party provider who can walk you through what you’re supposed to do. That’s putting an awful lot of responsibility on the shoulders or someone who may or may not understand their role, and who may not know where to go to get help.
It boggles my mind that so many plan sponsors simply don’t know they’re fiduciaries, or even if they acknowledge they have fiduciary responsibilities, they don’t accept or recognize the title. But “fiduciary” is more than a word or a title — it is a way of making sure you and your plan’s decision makers are managing your plan prudently AND acting in your participants’ best interests. And truth be told, it isn’t all that hard to stray afield of those requirements, even if you do know and recognize your role a as a fiduciary.
That’s what programs like(TPSU) are for — to help sponsors understand their fiduciary roles so they can be better stewards of their retirement plans and their participants’ money. I know, I say this at the risk of sounding self-serving, and I give the usual disclaimer — this article is not meant as a thinly veiled advertisement for TPSU. But TPSU is a resource — and a good one — to help plan sponsors get the training they need to do right by their plan and participants. There is no lack of resources out there — TPSU is just one of many — but I think as an industry, we have to be more proactive in helping plan sponsors find and take advantage of them.
All this to say, again, we have to do better when it comes to supporting plan sponsors. Our expectations of their knowledge and capabilities are unrealistic, and findings like those from the Alliance Bernstein study clearly bear this out.
We can’t go on like this. If we’re going to hold sponsors accountable, we have to be more accountable as an industry. The definition of insanity is doing the same thing over and over, and expecting different results. If we expect plan sponsors to lead the way in improving retirement outcomes for America’s workforce, we need to equip them with the necessary knowledge and training to do so. Something has to change.
Latest posts by Robyn Kurdek (see all)
- It is Okay for 401k Plan Sponsors to Ask for Help - June 20, 2018
- The Case for Health Savings Accounts to Improve Retirement Readiness - June 20, 2018
- Five Common Fiduciary Mistakes Plan Sponsors Should Avoid - June 17, 2018