At A TPSU program held at Bentley University just outside Boston, a 401k plan sponsor discusses the process he undertook to refresh their 401k plan starting with interviewing for a new plan advisor.
Recently joining the company, the HR professional realized that their 401k plan had grown substantially since the last plan review as the employees at the audio/visual company as employees tend to stay longer and have healthy salaries even though the company has less than 50 employees. The new HR professional decided to review and select an advisor before looking at investments or their record keeper as he is not an expert in those areas and wanted to rely on their new advisor to help.
Rather than go through a formal advisor RFP, which is recommended for larger organizations, the Boston area AV company interviewed a few advisors, some known to the HR professionals and others that had been calling on them, and then invited two to submit a formal proposal and make a presentation. The AV company is now in the process of conducting a formal search for a new record keeper and complete review of investments including their target date fund (TDF) with the help of their new advisor.
Though a formal advisor RFP may not be in the cards for smaller plans, there are ways to make the process easier and simpler. Using an RFP template is the first start and referencing a database of qualified DC plan advisors is another. Ultimately, the cultural fit with the HR group, the company and their employees becomes most important element of an advisor search as long as there is a prudent, documented process.
One new best practice is to search for a TDF with the help of a fiduciary advisor even before selecting a record keeper as the TDF, especially when used as the default investment option (QDIA), is critical with such a high percentage of new contributions flowing into them. Many record keepers offer multiple TDFs but smaller companies might be limited to the record keeper’s proprietary TDF which may not be the best option for plan participants and might even put the
