We encourage Plan Sponsors to always be thinking about how they can make their plan better and there are a number of ways to measure “better”.
If you’re thinking, “It’s a new year approaching, let’s start out fresh on our Employee Benefits!” Here are some ideas regarding your 401(k) plan!
We include why you might consider each idea:
Benchmark your plan - use a third party fiduciary - not anyone currently serving the plan. Make sure they are not benchmarking to “averages” but rather actual plan pricing/features. Include in the benchmark an “Aggregation Plan”.
Why: Know where your plan rates and document it as proof that you are doing your job. Manage your fiduciary liability.
Increase the plan’s attractiveness as an employee benefit. Increase employee engagement and their benefit from the plan; as well as that plan’s ability to attract new employees and retain current employees. There are a many tasks that could fall under this category, some costing money and some not. I’ll give you one of each.
Make your plan advisor do more - and team up with your advisor to measure the plan participation and come up with an action plan. then Implement that plan.
Consider adding a robust financial wellness platform that includes the ability for participants to talk remotely to live CFP-credentialed financial coaches and has leading edge “game design” that engages employees.
Seriously consider moving your plan to an Aggregation Plan. Step 1 on this topic is to learn about Aggregation Plans - how they work, how they differ from a typical standalone plan. Step 2 is part of the Benchmark study above. See how your standalone plan benchmarks vs. an Aggregation Plan. Make sure you benchmark against a mature and large Aggregation Plan since the benefits result from tapping into the Economy of Scale.
Why consider an Aggregation Plan? Aggregation plans are low cost as tens of thousands of SMBs come together with almost $2.5 Billion of assets to demand very low cost. Then an extra fiduciary is added that handle the daily, quarterly and annually administrative minutiae. An investment fiduciary is also included and with both fiduciaries in place, liability is as low as it can be. Business owners and executives involved in plan oversight still have to oversee, and it won’t take as much time! So these key business leaders get some time back to work on high priority business needs.