Conferences are a great place for us to meet with vendors and other advisors to gain insight, share best practices and identify trends. Our goal is to gain knowledge that helps us help our clients. I was recently reviewing the agenda for an upcoming conference and noticed a session titled, “Small Plans, Big Margins”.
One of the key trends over the last few years is managing 401k plan costs, while improving participation and retirement readiness. If the trend is toward less cost with more advisor support, how can small 401k plans produce such big margins?
At Six8, we have spent the last few years continually looking for a better way to serve 401k plans. The result is our Activity-based Advisory Model. We sit down with our clients, discuss what we do and how long it will take. Not only is the process transparent, but it allows flexibility for every client to engage us as best suited for their plan.
Remember, you are responsible for your plan, its providers and the overall cost. As the plan sponsor, you have the right to outsource items such as administration, recordkeeping and advice. With this in mind, I challenge you to think about a few of things:
1. Is everyone that is getting paid on your plan working for your plan? We see a lot of smaller plans where a broker was paid a commission to sell the plan, but they not obligated to serve the plan. Your plan consultant is a service provider and should be no less than a co-fiduciary.
2. Do you know your plan costs? It is an easy question, but the most common answer is “No”. With the ever-increasing scrutiny on fees, you need to know how much and for what you are paying. Remember, as the plan sponsor it is ultimately your responsibility.
3. Are you doing routine reviews to ensure your plan is competitive and working well for your participants. Here is a simple question… Have you done a plan review in the last 12 months? If you haven’t, then you need a review now.
If these simple questions concern you or raise doubt about your plan, give us a call.
So… Instead of “Small Plans, Big Margins”, what about “Small Plan, Great Partnership, Big Support,” That sounds a lot better to me.