ADMINISTRATIVE SERVICES

To ensure that fees and services remain reasonable in light of changing regulations, industry upgrades, and plan growth, plan sponsors should compare the plan against industry averages on an annual basis. Benchmarking enhances the plan sponsor’s ability to evaluate that: 1) the agreement or arrangement is reasonable; 2) the services are necessary, and 3) the compensation is reasonable.

On an annual basis, the advisor should help the plan sponsor to understand all plan costs, who is being compensated through the plan, and how these costs compare with the marketplace. This information should be in writing, reviewed, and filed in the plan sponsor’s fiduciary file. Also, the retirement plan should be independently benchmarked against plans of similar size at least every 3 to 5 years.

There are many challenges to operating a retirement plan effectively. Employers are not in the business of managing retirement plans, so it’s important to have a specialist advisor who is in the business to coordinate initiatives and interactions to help the plan run efficiently. The plan sponsor should have an advisor that takes the lead and relieves them from many of the administrative and compliance burdens. An effective advisor makes the complex simple – by identifying the key issues, interpreting, and providing clear direction on how to move forward.

Some advisors serve as an intermediary to help the plan sponsor resolve concerns, get answers to questions and conduct ongoing monitoring to determine if other plan providers (i.e. TPA, recordkeeper, auditor, attorney, etc.) are performing their duties in a satisfactory and cost-effective manner. Some advisors serve as an advocate for the plan sponsor and negotiate lower fees and upgraded services with the provider(s), assuring that fees and potential conflicts of interest are disclosed.