How To Select The Best 401(k) System for your Company

Are you interested in a Top Performing 401(k) plan or starting a new 401(k) program for your company?

How do you choose the Best 401(k) system for your company?  401(k) provider selection may be the single most important factor in providing you and your employees with a high performing 401(k) plan. While many companies have internal resources that can perform an elementary 401(k) Plan system search, utilizing a 401(k) Advisor or Consultant will make the evaluation and selection process much more efficient.


Why should you hire a 401(k) Advisor or Consultant to improve your existing plan, or evaluate new providers for both an existing or start-up plan?

Does your company have sufficient resources to properly evaluate your existing 401(k) plan or to find new 401(k) provider? Most qualified 401(k) plan advisors will serve as a Plan Fiduciary. As a Fiduciary, Advisors are held to a higher standard than Brokers. Fiduciary advisors act in the best interest of the 401(k) plan Sponsor and Participants.  

401(k) advisors will provide you with Benchmarking, Plan Health, and Investment Comparison reports. They will evaluate your Total Plan cost against similar size plans in the Marketplace and provide you with a low-cost competitive Plan Fund menu. 

Fiduciary Advisors will provide your employees with Investment Advice and Financial Planning assistance. They will also draft a 401(k) plan Investment Policy Statement(IPS) to set forth the performance criteria funds must meet to be included in your plans Investment Menu. On an ongoing basis they will monitor your Plan’s Funds against the criteria set forth in the IPS and provide quarterly performance reports.  Experienced 401(k) advisors will assist in establishing a Retirement Plan committee and service as draft the meeting notes after all meetings.


Can a 401(k) advisor assist in the servicing my plan?

Probably the most critical function a 401(k) advisor can provide a plan sponsor and participants, is as a dedicated Service Liaison with your provider. Unfortunately, most 401(k) providers only communicated via email and hold times for inbound phone calls average an hour plus for both plan sponsor and participant inquiries. Most 401(k) providers have perfected “Silo” Service.

Translation, most service issues, from plan testing, plan document review, participant  level issues, are the responsibility of someone in a “Silo”  different from the one you originally called.  A frequent response to service inquiries, “This is not my responsibility please call or email another Silo at my company.” 401(k) plan participants are expected to transact and solve problem soley via vendors 401(k) system websites. Frequently, 800# participant help lines have over hour wait times. A 401(k) advisor will be your first point of contact on service issues and work with the multitude of departments at your 401(k) provider to resolve your plan administration and participant issues.


What are some of the specific features and provisions of a 401(k) plan a plan sponsor should be concerned with?

All significant market share 401(k) providers offer access to every major Mutual Fund Family, Vanguard, Fidelity, T. Rowe Price, Blackrock, American Funds, and all other top mutual fund families. They all provide Full Service 401(k) administration, which includes, plan document drafting services, completion of all required annual tests, and form 5500 preparation.

The participant services offered, website, education, planning tools are largely indistinguishable.  Some Payroll Vendors offer integrated Payroll / 401(k) systems, which can save you time and money over non-integrated Payroll / 401(k) systems.


Are there any common “Fine Print” items a plan sponsor should be concerned with?

 Many Insurance Company based systems offer Guaranteed Investment Options, which often times assess charges at the time of contract termination.  Some 401(k) systems require you to utilize a fixed percentage of their proprietary funds or charge additional fees to offer competing fund families. An experienced Advisor can expose these contract provisions and advise on how to avoid them.


Who will represent the best interests of the Plan Sponsors and Participants?

A 401(k) advisor partners with your company to understand your Retirement Plan  needs and objectives. They represent you and your employees not the 401(k) provider. Many 401(k) providers will offer their services on a Direct, no advisor, basis.  Often times promoting savings from not hiring an advisor.  Unfortunately, direct sold 401(k) provider plans can’t guarantee they will act in the best interest of Plan Sponsors and Participants.  They are ultimately interested in maximizing their Company’s bottom line not maximizing your Retirement Plan return’s. Your 401(k) vendor service contacts will not have the same vested interest as a Qualified Advisor in providing you and your participants with a high level of service.  An advisor will obtain multiple 401(k) administration quotes and negotiate total costs on your behalf.

They will insure your 401(k) plan investment menu offers the best funds available and not a menu of 401(k) vendor proprietary funds that create hidden revenue for the 401(k) vendors.  They can assist with Plan document design and Government mandated Plan restatements.  

 Contact our advisors here!