Benefit Strategies

‘Saving for retirement is not getting any easier. Yet the people charged with steering many of the nation’s 401(k) plans often have little investing experience and no formal education’[1]. SmartMoney Magazine recently published a three part article profiling three different plan sponsors, detailing how they were coping with their fiduciary challenges.

The first was a small business owner in New Jersey who managed his employees’ 401(k) plan with help from his broker.  He fired his first broker for not telling him about the surrender charges that were imposed on anybody who left the plan within 2 years. His next  broker then offered him a deal he couldn’t refuse …no fees for three years provided the 401(k) money was invested with a single fund family.

However, employer and employees seem satisfied with the arrangement except that the broker offered no advice on the more than 50 available funds to choose from. So, the owner, being paternalistic, showed the employees what he had chosen … a mix of energy and international stocks and offered advice to help his employees in their fund selection. Things went relatively smoothly until the market crashed.

Does this sound like you? In our experience with consulting with hundreds of small plan sponsors, this is more the norm than the exception. So, what’s wrong with this picture? 

Fiduciary responsibility for ERISA plans requires that anybody acting in a discretionary capacity not only act in the best interests of their employees but be held to the highest fiduciary standard under the law. In short, this means that a plan sponsor must be an “expert” or must hire one.  

 Fiduciary risk is yours unless you hire an individual or organization that agrees in writing to accept fiduciary responsibility to act as your plan’s investment manager or act as advisor to your plan’s participants, or both.  Benefit Strategies has served thousands of plan sponsors and their participants for more than thirty years. We advise plan sponsors on all aspects of plan design, administration and management. Our clients can retain as much discretion and responsibility as they feel comfortable with or they can delegate their fiduciary responsibilities to qualified third-party fiduciaries. Our job is to work with you to determine the best arrangement for your plan. Give Don Potter a call today at 540-989-2020 or email him at DJP@BenefitStrategies.com to arrange a no-cost consultation.

[1]Who’s Running Your 401(k): Amateur Planners  SmartMoney Magazine by Janet Paskin

Posted in Featured |