According to the Callan Institute, an employee benefits research and investment consultancy group, the issue of high concern for defined contribution plan sponsors is that of retirement plan fees. Specifically noted in Callan’s 2019 Defined Contribution Trends Survey, plan sponsors have identified for the third year in a row that improvements in their fiduciary standing comes from a robust and thorough review of retirement plan fees.
Changing 401(k) providers takes time and can be costly. But if your current plan isn’t serving the administrators or participants well, a change is necessary. Before embarking on the process of changing a plan provider, evaluate your options carefully to avoid costly surprises and common errors in selection.
Retirement plans can be a great benefit for drawing and retaining employees. However, is your retirement plan deemed attractive to current and potential employees? How does it compare to other employers you consider peers? An attractive DC plan does not happen by chance – it requires thoughtful plan design. If you craft a plan prudently and with their retirement in sight, it will be beneficial to both your company and your participants. We have helped many plan sponsors with their plan design and observed the main attributes that make a successful retirement plan program.
Return on investment. Compound annual growth rate. Market outperformance. Preservation of principal. Risk adjusted performance. There’s no shortage of metrics available to retirement investors looking to gauge the success of their portfolio. It can be a bit more challenging – and more qualitative – for plan sponsors to gauge their plan’s overall impact on their organization and their participants’ ability to retire. It’s not easy to get a good sense of whether the 401(k) or 403(b) plan your institution offers stacks up favorably with employee expectations. With that said, however, it’s essential for sponsors to have a good idea of what makes their plan attractive (or not), how to measure it and the overall impact on employee satisfaction. Here’s how to start tracking your retirement plan – and its effect on the bottom line.
The retirement planning space is competitive. 401(k) and 403(b) plan providers are under more pressure than ever to make sure that their services are competitive, both in terms of cost and performance. Still, the rising number of plan participant lawsuits filed against sponsors in recent years demonstrates that there remains significant leeway for less than competitive practices if sponsors aren’t vigilant. A vital component of this awareness is regular benchmarking of plan performance and fees against industry averages. This kind of cross-referencing is the responsibility of plan sponsors and can come with significant risks and opportunities. Below is a look at the factors that make sound benchmarking practices so crucial.