By Mark Olsen, Managing Director at PlanPILOT
Every plan sponsor has sat through an investment advisor or recordkeeper review that spends 45 minutes on fund performance and 5 minutes on everything else. That ratio is backwards. The investment menu matters, but it’s one piece of a much larger relationship, and it’s usually the piece that’s easiest to evaluate. The bigger questions, the ones that actually determine whether a plan works, tend to get skipped.
In our decades of experience working with plan sponsors, we’ve seen time and time again where glossing over the critical aspects of an employer benefits plan can come back to haunt plan sponsors later. Let’s examine what a good plan evaluation should include.
Look Past the Investment Menu
A recordkeeper is the active financial interface your employees rely on to enroll, check balances, model retirement income, and decide how much to save. If that experience is confusing, participants will disengage and a strong fund lineup won’t fix that on its own.
Plan sponsors should review and go through the enrollment process themselves and assess how “user-friendly” the plan is:
- Is it clear how to sign up? What is the process to select investments?
- Can a new hire figure out what percentage to contribute without calling HR?
- Does the mobile app work as well as the desktop version?
- Is the provider responsive to inquiries, either in real-time chat or with a phone call?
These questions determine whether people save at all, and whether they save enough.
Service Quality Shows Up in the Details
Recordkeepers tend to look alike in the process of requesting a proposal evaluation. Everyone offers similar technology, similar fund access, similar reporting templates. The differences become apparent later, in how issues get resolved.
When a participant calls with a question about a rollover, how long does it take to get an answer? When HR needs a file corrected before payroll runs, is the recordkeeper’s team responsive, or does the request sit in a queue? Plan sponsors should track this over time rather than relying on impressions from a single call. Service-level agreements are only useful if someone checks whether they’re being met.
Our senior consultants at PlanPILOT work closely with clients on this exact issue: matching the service model a recordkeeper promises during finalist presentations against what shows up six months into the relationship. We can relate stories about how the promise often falls short of reality later on.
The Fiduciary Weight of Data and Reporting
Sponsors need visibility into participation rates by department or location, deferral rate trends, and where employees are stalling out in the savings curve.
Good data doesn’t just sit in a report; it flags problems early, such as:
- A company location with low enrollment
- An employee demographic group that is under-saving
- A fund with unusually high redemption activity or funds that continually lag their peers in either performance or cost-efficiency
A recordkeeper that surfaces these patterns is doing part of the sponsor’s fiduciary job for them. One that buries the same information in a hundred-page PDF is not.
Benchmarking matters here too. Sponsors should be able to compare their plan’s participation and savings rates against similar plans, not just against last year’s numbers.
Cost Only Means Something Next to Value
Fee benchmarking gets a lot of attention, and it should, but the cheapest recordkeeper on paper isn’t automatically the best choice. Fees need to be weighed against what’s actually being delivered: how responsive the service team is, how strong the participant education is, how good the technology is, and whether outcomes are improving.
A recordkeeper charging slightly more but delivering faster resolution times, better participant tools, and clearer reporting may be the more defensible choice from a fiduciary standpoint. The goal of a retirement plan is better outcomes for participants, and cost is just one input into that objective.
Two More Areas to Add to the Checklist
Cybersecurity deserves its own line item. Recordkeepers hold sensitive personal and financial data on every participant, and the Department of Labor has made clear that cybersecurity practices fall within a sponsor’s fiduciary oversight.
Ask about data encryption standards, breach history, and how quickly a recordkeeper notifies sponsors if something goes wrong. Under new SEC regulations, those with access to investors’ personal information are required to notify investors as soon as a breach is discovered and within 30 days maximum. As part of their fiduciary duty, plan sponsors will likely be held accountable for making inquiries about a recordkeeper’s cybersecurity protocols.
Transition support is important as well, especially for plans that have changed providers before or expect to again. A recordkeeper’s conversion process, how it handles data mapping, participant communication, and blackout periods, says a lot about how the organization operates day to day. A rocky conversion is often a preview of a rocky ongoing relationship.
What This Means for the Next Review
None of this replaces a fund lineup review; it sits alongside it. A committee that only asks how the funds performed is answering a narrower question than the one that actually matters:
Is this recordkeeper helping participants save more, understand their options, and reach retirement in better shape than they would otherwise?
That’s a challenging question to score on a spreadsheet, but it’s the one worth asking at the next committee meeting.
Is Your Recordkeeper Meeting the Standard Your Plan Deserves?
Evaluating these operational, data, and security metrics requires time and specialized industry benchmarking. At PlanPILOT, we help plan sponsors look past the standard fund menu to analyze the true value your recordkeeper delivers. Our client partnerships are built on trust, communication, and responsibility, cornerstones of a healthy, prosperous relationship. We’re committed to providing objective guidance, informed innovation, and an integrated approach tailored to your unique objectives.
PlanPILOT’s team of seasoned professionals upholds the highest professional standards, so every strategy we recommend aims to support both your organization and the participants who depend on it.
To learn more about how we can help evaluate your recordkeeper relationship and strengthen your retirement plan management, reach out to us at (312) 973-4913 or send an email to mark.olsen@PlanPILOT.com.
About Mark
Mark Olsen is the managing director at PlanPILOT, an independent retirement plan consulting firm headquartered in Chicago. PlanPILOT delivers comprehensive retirement plan advisory services to 401(k), 403(b), and 457 plan sponsors. His specialties include plan governance, investment searches, investment monitoring, and plan oversight. Mark is recognized as a leader in the industry and speaks at national conferences, including those organized by Pensions & Investments, and CUPA-HR.