About the only thing tougher than saving and investing for retirement is being a Plan Sponsor. As a Plan Sponsor, responsibility lies with keeping the plan in compliance and acting in the sole interest of the Plan’s Participants. Plan Sponsors act in a fiduciary capacity to the plan, so they must also ensure that the plan is only paying reasonable expenses for necessary plan services.
The reality in today’s retirement plan industry is that many Plan Sponsors rely far too heavily on service providers to the plan for guidance on keeping the plan in compliance. It is worth noting that service providers usually perform valuable services and are typically up-to-date with current plan requirements and best practices.
However, it is not surprising that many service providers have balked at required fee disclosures that are being provided to both participants and Plan Sponsors this year. It is also not surprising that many of the “bundled” service providers offer to gather the fee disclosures for the Plan Sponsor. With the bundled service providers help, in many cases, the Plan Sponsor does not actively review the plan’s service providers or the corresponding fees. The result often leads to the “fox guarding the hen house”. It is amazing how some Plan Sponsors are unaware that there is a separate firm receiving trustee or investment management fees, which may be used to offset the record-keeper’s fees.
What is the solution? Plan Sponsors need to objectively review the plan’s fees and confirm that the fees are in-line with industry standards with respect to both cost and service. Reviewing the total value of each service provider is essential, but can be overwhelming for a Plan Sponsor who might not have the resources or experience to evaluate every service and cost. With this in mind, Plan Sponsors should strongly consider engaging an independent, unbiased firm to complete a benchmarking and fee analysis of the plan’s service providers.
Retirement Plan benchmarking is a prudent and cost-effective method of ensuring that the Plan Sponsor is meeting its fiduciary standard of conduct. Atessa has successfully worked with companies to benchmark both Defined Benefit and Defined Contribution plans for many companies including those in the Fortune 10. Atessa’s in-depth analysis and customized benchmarking reports will provide the Plan Sponsor with the data and insight to make the essential, fiduciary decisions.
Please contact Mike Bourne at 858-673-3690 x109 to further understanding and discuss benchmarking your retirement plan. Atessa will be happy to provide a complimentary “total plan fee” estimate based on your plan’s publicly available fee disclosures on Form 5500.