Plan Sponsors – We Expect a Lot, But We Should Also Have Your Back. Let’s talk about expectations for a moment, shall we? Specifically, let’s consider the expectations the retirement industry puts on plan sponsors.
The expectations are many, and they’re hefty, not to mention legally dicey if a sponsor should fail to meet them. Here’s just a few, top of mind, in no particular order:
- Fulfill your duties as a plan fiduciary, which includes most of, if not all, of the below
- Prudently manage your retirement plan and investment line-up
- Monitor your service providers and the investments in your plan
- Handle all plan-related paperwork, and document, document, document all of your decision-making processes and procedures
- Meet regularly with, and wrangle all the members of, your retirement plan committee
- Benchmark your plan and its investments regularly
- Educate your participants on the benefits of the plan and the importance of saving for their retirement
- Get employees enrolled in the plan
- Boost overall participation and savings rates
- Choose and consult regularly with a retirement plan advisor, and monitor their activities and decisions relative to your plan (if your plan has an advisor)
- Handle and answer participants’ questions about the plan and its benefits
- Stay on top of regulatory developments and changes in the industry
- Ensure your plan creates successful retirement outcomes for your participants, and measure and keep tabs on those results
There’s likely more we didn’t mention, but this list in and of itself probably seems overwhelming, maybe even exhausting. That’s a lot of responsibilities! And that’s what we’re getting at. As an industry, we talk a good game and say we understand that plan sponsors are blindly busy with the day-to-day responsibilities of running a business or attending to other corporate duties in addition to managing the retirement plan. Sure, we offer our assistance — the retirement industry as a whole is based in large part on helping plan sponsors create and offer solid retirement plans to ensure their participants achieve their retirement goals.
That’s all fine and well, but arguably, even in our quest to “help,” the industry presumes a lot of knowledge on sponsors’ part, which they may or may not possess. Sometimes, a sponsor may have only marginally more knowledge than the participants in their plan. How on earth are they supposed to competently manage all of these tasks and responsibilities and keep on top of their day jobs, too?
Admittedly, we put a lot on plan sponsors. That said, there are plenty of resources available to help sponsors fulfil their fiduciary duties with aplomb. If your plan has a relationship with a knowledgeable retirement plan advisor, feel free to ask questions and pick their brain. In fact, you should be having these types of conversations with your plan advisor on the regular.
Don’t understand your plan’s investments? Ask. Fees got your mind in a twist? Ask. Think you could be doing more for your participants? Yup, you guessed it – ask. In short, it’s okay to know what you don’t know — even if you think you should — and ask for help figuring it out.
There are also courses, information sessions, lunch & learns and online resources you can seek out and tap into for help. The Plan Sponsor University (TPSU) is an excellent curriculum designed to help plan sponsors be better stewards of their retirement plan and engineer improved outcomes for their participants. (We admit, this might appear a bit self-serving, but we also believe in the program and its results so highly that we’d be remiss if we didn’t mention it.) The Plan Sponsor Council of America (PSCA) also offers resources, advocacy and best practices for employers, and has members representing employers of all sizes across a variety of industries.
A simple Google search for “plan sponsor resources” or similar keywords will yield several websites where you can find a plethora of tools and information. Of course, be careful and verify that the source is accurate — not everything you read on the Internet is true.
At the end of the day, plan sponsors have a lot on their shoulders. That’s not just a well-worn phrase used in the majority of financial services providers’ marketing materials. And sponsors shouldn’t feel like they’re being tasked with needing to know every single nuance of overseeing their retirement plans. That’s why third-party providers exist. That’s why advisors are useful partners. And that’s why we need to make sure we have sponsors’ backs.
That said, we’re not absolving sponsors of their duty to try to do what they can to understand their responsibilities and fiduciary roles. Sponsors are definitely accountable, and ignorance of the rules doesn’t get you off the hook. Nonetheless, we recognize sponsors need help and proactive guidance. As an industry, we can and perhaps should dial back our expectations for sponsors, and also do our best to deliver on our promise to support them.
