The best 401k plans offer the full services, value and performance your company and its plan participants deserve. How do you know you, in fact, have one of the best 401k plans out there? In a word: Benchmarking.

In the first part of our blog post on benchmarking your 401k and comparing it to others, we spoke about the importance of having thorough documentation as compliance audits from the Department of Labor will be going up over the next several years – and targeting those with fiduciary responsibility. Now we’re going to focus on some other key advantages of why plan sponsors can find the clarity they need through 401k benchmarking.

By Nick Economos

By benchmarking your 401k, you can potentially:

Uncover Potential Opportunities For More Competitive Rates And Services

We’ve talked about audits and lawsuits but let’s remember that even without those worse case scenarios, you still likely want to ensure that your 401k plan’s fees are in line with others. Benchmarking can help reveal if the administrative and investment fees are paid are reasonable or if they hinder growth of a participant’s retirement savings.

For example, let’s say a benchmarking initiative shows your current plan is higher compared to those from another provider offering a lower rate. You can then bring these findings to the attention of your current provider and ask them to bring their rates more in line with a competitor or you can move your company to that different provider. In either event, benchmarking for better rates may not only help you act in the best interests of plan participants but also the company itself.


Appreciate The Plan’s Full Scope of Services

Rather than looking at plan fees in a vacuum, we have to correlate what the plan’s entire full of services entail. Not all services are created equal, especially when you factor in volume and frequency of services used. The more sophisticated the plan is, the more likely it will bring higher fees. So it’s crucial to understand this link between fees and services.

Don’t forget about the services that third-party administrators and advisors are offering to you when measuring value associated with fees. 

  • When participants have questions, are those questions answered clearly and in a timely manner?
  • Is the plan’s performance steadily improving over time due to an advisor’s investment services?
  • Are they committed to providing strong guidance on plan options so that plan participants have a greater likelihood of a solid retirement?
  • When changes to the plan’s design occur, is the advisor communicating news of that change and the potential impact?

To be clear, it may be fine to pay more than other plans as long as you’re actually receiving more – as in more of the value, support and services that the best 401k plans tend to offer. Knowing this favorable comparison comes through benchmarking.


Understand Your Plan’s Strengths And Weaknesses Better

Benchmarking a 401k isn’t just about managing fees and staying on top of compliance matters but also ensuring the plan you offer is the best quality it can be for maximum participation.

For instance, one challenge in front of you may be that some employees are on board with your 401k plan while many others still need to enroll. How does your rate of enrollment compare and what opportunities exist to improve upon those numbers?

In addition, consider these questions on quality:

  • Is the service provider experienced in developing plans for your industry?
  • What do their processes entail to minimize conflicts of interest?
  • Who will you be dealing with in terms of key contacts?
  • How are they consistently improving the plan?

Benchmarking may show where potential areas of weakness within your current plan lie and how to strengthen them accordingly. It could highlight the fact that if certain elements of the plan are enhanced (company matching, stock options, a wider mix of funds, etc.) or if more educational materials provide some much-needed clarification on investment options, participation rates could drastically improve.


It’s Time To Ensure Your 401(k) Plan Is Optimized.

Nobody Said You Have To Do It Alone.

For nearly 20 years, our fiduciaries at Fiduciary Financial Partners have been helping employers just like you to wade through the complex waters of retirement plan management. We can supply a benchmarking report done for you absolutely free to help give you a much stronger sense of where your plan stands in comparison to others. It might be one of the best 401k plans out there. It might not. In either case, we’ll tell you exactly where yours ranks.

Based on these findings, we can then have a broader discussion about what kind of goals you’d like to accomplish as a company with your 401k plan – or if a different type of retirement plan is needed altogether.

We’ll also talk about plan design when it comes to participation rates, key employee recruitment, possible compliance risks, fees and meeting your fiduciary responsibility.

If you’re like many plan sponsors, acting on behalf of your plan and its participants is hardly the only responsibility on your plate. So take the first step of getting the insight you simply can’t be without through a 401k benchmarking report from Fiduciary Financial Partners today. Call us at 630.780.1534.

Chief Retirement Officer Nick Economos shares why your retirement planning should include the days beyond your first day of retirement.

Nick Economos, CRPS is a dedicated independent Financial Advisor and Chief Retirement Officer at Fiduciary Financial Partners. He has a wealth of expertise in designing qualified retirement plans and participant education programs.

Fiduciary Financial Partners, LLC is a Registered Investment Adviser. This blog is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Fiduciary Financial Partners, LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Fiduciary Financial Partners, LLC unless a client service agreement is in place.