Sadly, it's not uncommon for plan sponsors to ask what their financial advisor is getting paid to do. There is much value a financial advisor can add to a 401(k) plan. Here are a few everyday things advisors should be doing for the retirement plans they manage.
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Sometimes when I'm meeting up with a new prospective client, they ask, "well, do I need an advisor plan?" Sometimes they asked a very similar question, which is, "What exactly am I paying my advisor to do for me?" The underlying concern both of these questions bring up is the value of having an advisor on my 401(k). Being a 401(k) advisor, I see many instances where I could see why people question this.
If I was in your shoes, this is what I would ask myself first, "Do I have any service contracts that expressly show what this advisor is getting paid to do?" My personal opinion about 401(k) advisors is that they are kind of like your quarterback. That is the person that you go to first when you have a question. Your advisor won't help you with every detail of the plan, but he or she can point you in the right direction and give you some thoughts.
It can be easy to get lost wondering, "Is this a question for the TPA? Is this a question for the record keeper? Is this a question for my advisor?" but it's nice to know when you have someone you can trust whom you can go to, to at least lead you in the right direction.Another value that an advisor can bring to the table is fiduciary services. One of the main concerns that plan sponsors and administrators have is their fiduciary role. If your advisor can offer some fiduciary service, it can increase your confidence in the plan's direction.
A second area that an advisor can help with is investment support. If your 401k plan has an investment policy statement or runs an investment committee, having an advisor can bring much value to that.
Another value that can be brought to the table by an advisor is looking at different providers independently and giving you feedback related to costs and comparisons of services to feel confident about the providers you're utilizing. I would see it very unlikely for a provider to say that a different provider will be a better or cheaper option.
Another value that an advisor brings to the table is on the education side. Financial, wellness, and retirement plan education can be vital to participants. Your advisor can help you create an education plan to give your plan participants the resources to understand how to make better financial decisions. Some advisors will even offer to meet with the participants and make sure they have their individual questions answered. If you're in a competitive industry, having this type of support provided to participants can add much value to your company.
This video scratches the surface of some of the everyday things you'll see among 401k advisors. The next question is, is he or she doing this? And second, is he or she qualified or experienced in this area?
That's all we've got for you today. If you have questions about your 401k plan or would like a second opinion, please reach out to us. If you want us to do a whiteboard on a specific topic, please reach out to us.
You can also find us on YouTube by searching for CUI Wealth Management. Keep in mind that this is not tax or legal advice. Please reach out to appropriate professionals if you need that kind of help.