Why Plan Sponsors Should Hire a Retirement Plan Consultant

Many plan sponsors lack the expertise to effectively manage their retirement plan and fulfill their fiduciary obligations to plan participants without some outside assistance. This is where a retirement plan consultant can be invaluable. Plan sponsors rely on consultants to provide knowledge and expertise. No two plans are alike—and the same can be said of retirement plan consultants. Learn more about why plan sponsors choose to hire a retirement plan consultant, as well as a few of the questions you’ll want to ask if you’ve determined that you need one.

Why Choose a Plan Consultant?

When a plan sponsor decides to hire a retirement plan consultant or advisor, the reasons can often be boiled down to one of the following:

• Assistance with and/or delegation of fiduciary responsibilities
• Independent analysis from a broader menu of investment funds and monitoring fees
• Assistance in managing and overseeing the retirement plan, including plan design and participant communications

Administering a retirement plan can be a complex process. With specific expertise in the ins and outs of retirement plans, a plan consultant can work with your organization to design and maintain a plan that will meet the goals of the organization and also meet the participants’ needs. From review of the plan document and developing an investment policy statement to reviewing investment managers’ performance and fees, consultants can provide assistance with every aspect of retirement plan administration.

Delegating these complex duties to an expert can free up your time to do what you do best—run your business. Use of a consultant will bring you far along the fulfillment of your fiduciary responsibilities.

Three Questions to Ask Your Potential Plan Consultant

Interviewing a potential plan consultant can provide you with the crucial information you need to make a decision that’s in both your employees’ and your organization’s best interests. With this in mind, here are three of the most important questions you should ask a potential consultant interviewing to determine if they will be a good fit.

Are You a Fiduciary?

Working with a consultant that provides fiduciary services, such as assume liability as a 3(21) or 3(38) fiduciary, can yield far more benefits than a non-fiduciary consultant. A plan consultant that is also a fiduciary has additional responsibilities  to your organization. Specifically, a fiduciary must always act in a way that promotes the best interest of plan participants. This means avoiding conflicts of interest (like directing investments into high-fee commission-based and/or proprietary products) and maintaining strict oversight over the plan to ensure that it continues to fulfill the objectives identified in the plan’s document and investment policy statement.

It can be difficult to determine whether a particular plan consultant is a fiduciary, especially since not all advisors perform as fiduciaries, so it is important to be straightforward when asking this question (and to get your answer in writing).

What Qualifications and Experience Do You Have?

Your plan consultant must have in-depth experience and specialization in managing retirement plans; but even more important is that the consultant you select has experience in working with organizations similar to yours. No two retirement plans are exactly alike, but consultants that have worked with organization that are in the same general industry, have similar employee demographics, and are similar in size to your organization are better equipped to handle your unique needs.

You’ll also want to decide whether certain certifications are important to your selection process. Some consultants may be a Chartered Financial Analyst^® (CFA), a Certified Financial Planner™ Professional (CFP^®), or an Accredited Investment Fiduciary^® (AIF), each of which indicate that the advisor is highly skilled and specifically trained in retirement plan consulting.

How Are You Compensated?

A plan consultant’s pay structure should be free from conflicts of interest and potential conflicts of interest. This can mean forgoing consultants who work at large banks or financial institutions that distribute proprietary and/or high-fee, commission-based products. Consultants who are employed by such organizations can have a financial incentive to recommend products and services that may not be in your participants’ best interest. Even if no conflict of interest exists, a consultant that is beholden to a specific financial institution may not have access to a certain range of products.

Before selecting a consultant, talk to them about their fee structure and any potential conflicts of interest. It’s also important to ask if the consultant is an independent or Registered Investment Advisory (RIA) firm. An RIA firm lacks any investment banking relationships, which can help them provide more objective advice, free from commission-based influence.

Work With PlanPILOT

Considering the fiduciary risks and responsibilities, administrative requirements, coordination of meetings and commitment to employees’ retirement readiness, hiring a retirement plan consultant can give you peace of mind, provides assurance that your plan is compliant and that you are closer to fulfilling your fiduciary role.

If you are ready to speak or hire a retirement plan consultant, we would be happy to assist! Enlisting the help of a qualified retirement plan consultant is beneficial to plan sponsors and their plan participants. As an independent Registered Investment Advisor, PlanPILOT is not tied to any investment fund or record-keeper. We offer clients unbiased, conflict-free advice and assistance to control their retirement plan risks and deliver benefits effectively. Contact us at (312) 973-4911 or info@planpilot.com.

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