SUMMARY
A truly excellent retirement plan benefits both employees and employer. Regulatory compliance is the baseline of excellence—not the finish line. In this series on “going beyond the regulations,” we cover best practices across six areas:
- Fiduciary Governance
- Plan Design
- Fee Structure
- Investment Process
- Participant Support
- Provider Management
Each entry in the series is anchored by a quick-reference table of best practices. We also share examples drawn from our professional experience with real-world insights and tangible strategies. We invite you to join us as we explore the nuances of creating and maintaining an outstanding retirement plan.
The capstone best practice
The prior entry in this series of “going beyond the regulations” focused on giving retirement plan participants the support they need to achieve financial wellness. Now, we’ll wrap up the series by staying with participant experience—now in the larger context of what to expect from your primary retirement plan provider, or recordkeeper.
We’ll start with the bottom line: Both you as plan sponsor and your employees as participants deserve an outstanding experience. That starts with the plan and account-management portal. Both you and your employees should feel comfortable with how you manage information. You deserve excellence in cybersecurity and confidence in how your provider manages any conflicts of interest. If you feel uncertain about any of these areas, it’s time to review options.
But even if you and your employees are fully satisfied with your provider, best practice is to conduct a request for information (RFI) or request for proposal (RFP) process every three to five years, as the Department of Labor recommends. In our role as fiduciary advisors, we regularly ask clients if there are any areas of dissatisfaction and periodically recommend a full review. We help our clients fulfill their fiduciary obligations for ongoing assessment.
Following is an illustration of how that process played out for one client.
Example: Manufacturer
In this client organization, our main contacts in Finance and HR let us know that the participants reported some frustrations with the current provider’s website. While we haven’t seen that frustration elsewhere, we fully recognize that client preferences vary. We work with three primary providers—Empower, Principal and Voya—and in our experience clients usually find at least one of these takes an approach that matches up well with their specific needs and preferences. Our role is to help explore and evaluate that fit—and the costs.
In this case, our client was working with a provider not among our primary three. We arranged an evaluation process to look closely at how each of Empower, Principal and Voya would approach the plan, which has about $25 million in assets.
Our role is to sit on the same side of the table as our client. We help frame the goals and objectives, then help clients sift through data relating to how providers would go about meeting them. Our client requested spreadsheets outlining services and fees, and we helped interpret and apply that information. Through this process, our client narrowed the field from three to two.
We then helped our client go even deeper into the offerings of the two potential partner firms, with a focus on ease of use as well as costs. We negotiated costs on our clients’ behalf, which helped the client make a final decision. The result was a new plan provider with a system that both the plan sponsor and employees found cost-effective and easy to use.
Best practices for provider management
As with prior entries in this series, we’ve prepared a table that highlights what to do and why.
Best practices for provider management that goes beyond the regulations.
Follow DOL’s recommended tips and best practices in its 2021 guidance, “Hiring a Service Provider with Strong Cybersecurity Practices
What is is:
Adhering to the Department of Labor's guidelines for selecting service providers who demonstrate robust cybersecurity measures. This involves evaluating their practices, ensuring they have strong security policies, and that they can protect sensitive information effectively.
Why it matters to the business owner:
Enhances the security and integrity of the retirement plan and its data, reducing the risk of cyber threats and potential legal and financial repercussions associated with data breaches.
Why it matters to employees:
Ensures personal and financial information is safeguarded against cyber threats, enhancing trust in the retirement plan's management and security protocols.
Identify, address and manage all proprietary conflicts of interest
What it is:
Recognizing and resolving conflicts of interest that may arise when a service provider offers proprietary products or services that may not be in the best interest of plan participants.
Why it matters to the business owner:
Prevents potential biases in the plan’s offerings, ensuring that all decisions are made in the best interest of the participants, thereby aligning with fiduciary responsibilities.
Why it matters to employees:
Guarantees that the plan’s offerings are selected based on merit and suitability rather than the provider’s proprietary interests, promoting fair treatment and optimal investment options.
Conduct a recordkeeper RFP/RFI
What it is:
Engaging in a Request for Proposal (RFP) or Request for Information (RFI) process to evaluate and select a recordkeeper based on a thorough assessment of their services, fees, technology, and support.
Why it matters to the business owner:
Facilitates the selection of a recordkeeper that best fits the plan’s needs and budget, ensuring efficient administration and compliance with regulatory standards.
Why it matters to employees:
Assures participants that the plan is managed efficiently and cost-effectively, with access to high-quality services and support, contributing to a better retirement planning experience.
Next steps
We invite you to reach out for a more detailed discussion on how these practices can be adapted to your business's unique needs. Together, we can achieve excellence in retirement plan management, setting your business and your employees up for long-term success.
