Broker Check

401(k) Plans for Your Employees: Does Outsourcing Make Sense? 

As a business owner, you understand the value of providing a retirement plan for your employees. You also know that the administration of that plan is complex and time-consuming. Outsourcing the administration/oversight of your plan involves the hiring of a consultant from outside your company to handle the ongoing tasks and/or provide services and support to your employees. Even small to mid-sized plans are beginning to outsource 401(k) fiduciary responsibilities.

men shaking hands across a desk of paperwork

Companies often outsource responsibilities to 3rd-party firms for a variety of different tasks, including things like payroll, auditing, marketing & advertising, legal defense, building maintenance, HR services, and more. The reasons for outsourcing generally include:

  • Cost savings
  • Better outcomes/results
  • Time savings
  • Increased productivity
  • Allows employees to maximize productivity and do those things they do best

Business experts and consultants tout the many benefits of outsourcing: “Do what you do best and outsource the rest.” It certainly makes sense to work smarter, not harder. When an outside firm can more efficiently/effectively accomplish a task than your internal resources can, it almost always makes sense to outsource, and it's no different with your 401(k) plan. The growing trend is to outsource plan administration for the reasons listed above, but also for additional benefits like: 

  • Reduced liability
  • Increased objectivity
  • Fewer conflicts of interest
  • Increased service levels

Outsourced CRO™ (Outsourced Chief Retirement Officer)

As your partner, we work to align with a provider that best fits the needs of your organization and employees. The Department of Labor regulations under ERISA (and specifically section 408(b)(2)) require that plan sponsors obtain fee disclosures for their plan and that all such fees be “reasonable” for the services being provided.

Some of the most important services we provide are Plan Design, Fees Benchmarking, and a Participant Success Measures Report, which provides a comprehensive “apples to apples” comparisons of your plan’s fees, design, and participant success. Our benchmarking process provides an equal emphasis on the cost and quality aspects of potential retirement providers services. Our RFP approach helps ensure that apple-to-apple comparisons are used throughout the benchmarking process.

Overseeing the implementation of a competitive employer-sponsored retirement plan is a significant responsibility. Your plan and processes are being observed by various agencies and by your employees. It is important to the protect your employees interests and stay within the laws.

Once your plan is in place, you can expect...

  • Ongoing monitoring
  • Monitoring of participation levels and investment performance
  • Plan cost benchmarking and analysis against other vendors and plans
  • Guidance on areas of improvement
  • Target date analysis and custom target date solutions

Our customized Request for Proposal (RFP) process includes:

ERISA and Fiduciary Responsibility

CFOs, CEOs, Presidents, and other fiduciaries have personal liability for assets in the company’s retirement plan. It is crucial that plan sponsors partner with an independent firm specializing in services that reduce exposure to fiduciary liability. As your partner, we can share the fiduciary responsibility with you, and implement a disciplined and best practice process to better manage your responsibilities. We also provide resources to inform and educate committee members on ERISA's fiduciary liability.

Our extensive process includes:

  • Plan policy creation and documentation, including Investment Policy Statement and Investment Committee Charter
  • Investment Committee Fiduciary Education Modules
  • Comprehensive Fiduciary oversight reviews, and compliance and file checklists
  • Meeting minutes and executive summaries
  • Plan record Documentation and Retention

Investment Selection and Monitoring

Choosing and monitoring the appropriate investments offered in your plan is a serious fiduciary task, as it can impact a participant’s retirement experience, and ultimately their results. As your experienced partner, we will help you establish an investment strategy that fits the distinct needs of your organization and your employees. We then monitor the selection and deselection of funds to align with the goals of your Participants.

Our investment process includes:

  • Investment Policy Statement - We assist you in developing a customized Investment Policy Statement (IPS) to serve as a blueprint for selecting and monitoring your plan’s investments
  • Investment Selection - It’s important to construct a well-balanced investment lineup that offers broad diversification across asset classes. We make investment recommendations using a proprietary fund ranking system, and an in-depth quantitative and qualitative analysis.
  • Investment Monitoring - Our investment monitoring and review is conducted quarterly to ensure investments are meeting the needs of the plan participants, and remain consistent with plan goals and IPS criteria.

Employee Engagement

The true measure of success for any employer-sponsored retirement plan is the engagement of employees. We not only create a plan that is financially sound, we also educate employees to encourage participation. This focus on providing employees with the education and support to best help them become retirement ready is truly what sets us apart.

Retirement Fiduciary Group was built on a holistic approach to financial planning, which allows us to provide independent advice to help your participants feel confident about the financial decisions they make. We will work with you to provide a customized education suite to help deliver essential plan information and provide solutions that can lead to successful retirement outcomes.

Does outsourcing in the 401(k) area make sense for your business? Consider this: ERISA’s “prudent expert rule” specifically states that an Employer's plan should be outsourced to independent experts if they themselves do not have the expertise, because it is ultimately in the plan participants’ benefit.

Click the button below to reach out to us - - we’d love to help you explore your options.

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