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Is Your Company Retirement Plan Working For You?

Among sponsors of 401(k) plans, overall satisfaction with retirement plans is down 30% to 40%, according to the recent 401kExchange 2009 Provider Rating Report.

Most Americans are not prepared for retirement and their company sponsored retirement plan is typically the primary retirement savings vehicle for investors. Unfortunately, many company plans are mediocre at best with high cost and low performing investment options. According to 401kExchange, satisfied plan sponsors cite having a good financial advisor as a main success factor. The right advisor will help the plan sponsor meet their goals for the plan and provide optimal benefits for plan participants.

How do you know whether your plan is working hard for you? Here are a few questions to help plan sponsors determine the effectiveness of your retirement plan.

  • Does our plan have an investment policy statement to guide investment decisions and ensure regulatory compliance?

  • Does our plan offer participants true diversification, including inflation protected securities, real estate, commodities, and emerging markets?

  • Does my investment advisor meet with me on a regular basis to review the detailed performance of each plan asset relative to its peer benchmark?

  • Do participants know the full cost of the plan? Does my investment advisor disclose all fees, commissions, and revenue-sharing arrangements?

  • Does our investment performance justify the costs associated with them?

  • Does my investment advisor provide participants with on-site education?

If you answered no to any of these questions, now is the time to evaluate your plan options. Up until the crisis of 2009, many plans took their financial advisors and investments for granted. Now that times are tighter, plan sponsors are beginning to evaluate whether they have the best plan available for their employees. Obviously, the ERISA regulations demand that plan sponsors take their fiduciary responsibilities seriously. But, the true economic benefit received by plan participants is the bottom line outcome that testifies to whether the plan is actually an employee benefit or merely a mechanism to make employees feel like employers care about them.

Our firm runs across many retirement plans when working with clients. Most plans contain mediocre investment options and high costs, eroding the investment return of accounts. You can design a great plan, so do not settle for less. Contact our firm for a complimentary assessment of your retirement plan.

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