As a retirement plan sponsor, you know that you have a big responsibility. Most plan sponsors find that the responsibility of running a plan and keeping it compliant with federal law is beyond the scope of their interest and skill level. Luckily, there are many service providers and other professionals that can help you fulfill your duties.
As a plan sponsor, one of your most important duties is selecting service providers to help you administer your employee benefit plan. Here are nine tips for selecting and monitoring your plan’s service providers:
Know What You Need
Before shopping for a service provider, you need to know what it is you’re looking for. Some of the kinds of help that plan sponsors look for are legal, accounting, trustee/custodial, recordkeeping, investment management, investment education or advice. What services does your particular plan need?
Survey Potential Providers
Once you know which services you need, you can start talking to different providers to find out if they offer those services. You should find out about their:
- Services
- Experience with employee benefit plans
- Fees and expenses
- Customer references
- Quality of service
- Customer satisfaction with their services
Collect Information
Once you’ve identified several companies that provide the services you’re looking for, it’s time to let them make you an offer. Give each one identical and complete information detailing the needs of your particular benefit plan so that you can make an accurate comparison of their bids. Don’t forget to consider bundled services, or providers who can combine multiple services under one fee.
Compare Bids
Once you’ve collected several bids for service, you can compare them and choose a provider. Make sure you know the specifics of which services are provided and which aren’t for each bid.
When comparing bids, don’t only look at cost. Cost is important, but you are not required to choose the cheapest option. Quality and types of services provided can be just as important as fees.
Verify Bonds
A fidelity bond is required for any service provider who will handle plan assets. Fidelity bonds are a type of insurance that protects the plan from losses caused by fraudulent or dishonest acts. Verify that the service provider does indeed have one.
Check Licenses
Some service providers must be licensed, such as attorneys, accountants, investment managers, and advisors. Double check with state and federal licensing authorities as to the status of their licensure. Licenses should be up-to-date and you should ask if there are any pending complaints against the provider.
Understand Before You Sign
Make sure that you have a solid understanding of the contents of any contract or agreement before signing it. You need to know the terms and what obligations both you and the service provider have under the agreement. It is also your responsibility to ensure that the fees and expenses being charged are reasonable in light of the services provided.
Record Your Process
Keep track of everything you do and why. You need a written record of the process you went through and the reasons for making your ultimate choice. If someone questions your selection in the future, you will have an answer and evidence to provide to them.
Review Performance And Comments
Once you’ve selected the best service providers for your plan, you cannot simply trust them blindly. You need to review their performance periodically to see if they are living up to their promises and fulfilling their part of the contract. Have them commit at the onset to providing regular updates on what they are doing and monitor costs.
In addition to information from the provider itself, you need to review information from the plan participants. Ask for their comments and listen for complaints. The retirement plan is supposed to be for their benefit. From time to time you should also review with the service provider if there have been any changes to the information they provided to you during the selection process.
How We Can Help
Choosing and monitoring service providers can seem like a daunting task. We are here to come alongside and help you, or even take over the entire process. If you have questions about selecting and monitoring service providers or how we can help you do it, call us at (312) 973-4911 or email info@planpilot.com. It is your legal duty to make wise choices, but you don’t have to do it alone. We are here to help.