As a 401(k) plan sponsor, you manage a significant responsibility. You must navigate complex regulations, manage fiduciary duties, and strive to offer a benefit that genuinely supports your employees' long-term financial security. A specialized retirement plan advisor can be an invaluable asset in this endeavor, providing focused guidance that extends far beyond basic plan administration.
Managing Fiduciary Responsibility Under ERISA
One of the most substantial duties of a plan sponsor is acting as a fiduciary. This legal obligation requires you to act solely in the best interest of your plan participants. The Employee Retirement Income Security Act (ERISA) sets forth strict standards of conduct, and failure to meet them can lead to personal liability and costly litigation.
A retirement advisor helps you manage this fiduciary responsibility. They possess a deep understanding of ERISA requirements and stay current on evolving legislation from the Department of Labor. An advisor can assist in establishing a prudent process for making plan decisions, from selecting and monitoring investment options to documenting every action taken. This structured approach not only leads to better plan governance but also provides a clear, defensible record in the event of an audit or inquiry. By working with an advisor, you don't just get advice; you get a structured framework for fulfilling your fiduciary obligations correctly.
Improving Employee Education and Engagement in 401(k) Plans
A 401(k) plan is only as effective as its participation rate. If employees don’t understand the benefit or feel confident in their investment choices, the plan fails to achieve its primary objective. Low engagement can signal that employees are not saving enough for retirement, which can affect morale and long-term financial security.
A retirement advisor is instrumental in developing and delivering effective employee education strategies. They can go beyond generic pamphlets and standard onboarding sessions. Advisors can conduct targeted workshops, offer one-on-one consultations, and furnish clear, accessible communications that address the specific needs of your workforce. This can help employees understand complex topics like asset allocation, risk tolerance, and the importance of consistent contributions. The result is a more financially literate and empowered workforce, leading to higher participation rates, increased deferral percentages, and greater appreciation for the benefits you provide.
Evaluating 401(k) Plan Design and Investment Lineups
Is your plan's investment lineup appropriate for your employees? Are the fees reasonable and transparent? Is the plan design, including features like auto-enrollment and auto-escalation, structured to maximize participation and savings outcomes? These are critical questions that require objective, data-driven answers.
A retirement advisor brings an impartial perspective to your plan's structure and performance. They conduct regular reviews of your investment menu, benchmarking funds against their peers and assessing their continued suitability. Furthermore, an advisor can analyze your plan's fee structure to help identify opportunities for cost savings without sacrificing quality. They use industry data and provider knowledge to help you select services that align with your company’s goals and your employees' best interests. This continuous process of analysis and optimization helps your plan remain competitive and effective.
401(k) Service Provider Evaluation and Market Trends
The retirement plan industry is dynamic. New regulations, investment products, and service providers emerge constantly. For a busy HR or finance professional, keeping up with these changes is a considerable challenge. A dedicated retirement advisor’s primary function is to remain at the forefront of this industry.
This specialized focus provides you with a significant advantage. An advisor acts as your guide to the marketplace, helping you understand the vendor landscape when it’s time for a request for proposal (RFP) or a provider review. They bring insights on market trends, innovative plan features, and new technologies that can improve administrative efficiency and the participant experience. This access to specialized information allows you to make strategic, forward-looking decisions for your plan with a high degree of confidence.
The Strategic Value of a Retirement Plan Advisor
Engaging a retirement plan advisor is more than just outsourcing a task; it’s a strategic decision that fortifies your compliance framework, enhances your employee value proposition, and optimizes a key component of your benefits program. By leveraging their focused knowledge, you can more effectively manage your fiduciary duties while helping your employees build a more secure financial future. This level of specialized support allows you to focus on your core business operations, knowing your retirement plan is being managed with diligence and care.
Connect with a Retirement Plan Specialist
Managing a 401(k) plan involves fiduciary oversight, investment evaluation, and employee engagement. Organizations seeking guidance on retirement plan governance can submit a request through our secure form to connect with a retirement plan advisor and discuss their plan objectives.
About the Author
Howard Zodicoff serves as Managing Director in the Financial & Wealth Services division of Risk Strategies, Howard brings three decades of financial services specialization to his clients and was a business owner prior to joining the firm.
In 1996, Howard merged with Standard Pension Services, LLC, and has been an integral part of the firm’s growth. In June 2020, Howard became President of Standard Pension Services, LLC. In September 2022, the firm joined Risk Strategies adding to the company’s existing financial service capabilities, with a focus on retirement planning.
Howard specializes in providing solutions in all areas of wealth management, retirement plan design/administration and corporate benefits for individuals and companies. He is committed to transparency, thoughtfulness, and being available to his clients. Howard strives to build personal relationships with every client he serves. Aside from his credentials and considerable experience, his clients appreciate Howard’s dedication, diligence, and the personal interest he takes to best accomplish their goals.
Howard earned a bachelor’s degree in Business Administration and Management from State University of New York College at Old Westbury. He holds a series 6 and 7 securities license as well as life and health insurance.
Howard lives in Roslyn, New York, with his wife, daughters, and dog. In his free time, he enjoys skiing and traveling.
Investment Advisory services provided through Aurora Private Wealth, Inc., a Registered Investment Advisor. Certain representatives of Aurora Private Wealth are also Registered Representatives offering securities through APW Capital, Inc., Member FINRA/SIPC.
