As a 401(k) consulting firm, we exist to help clients make informed decisions. To achieve success, we’ve created solutions and processes to help the plan committees we serve, to support our clients’ human resources departments and to engage 401k plan participants.
So what is the best committee question I’ve received in 30 years and close to 1,000 meetings? The answer allows plan advisors to provide true thought-leadership to clients and prospects. It also serves as the foundation for our service model.
The meeting in question involved the committee of a large company—more than 20,000 employees and close to $1 billion in plan assets. The CEO sat in, but didn’t participate; he just watched and listened. Not surprising, everyone was a bit on edge, as he’d not attended meetings in the past.
As time was about to expire, he raised his hand and said, “What needs to happen in this 401k plan in order for our employees to succeed?”
There was a whiteboard nearby and I outlined the following:
Any 401k or 403b plan—whether it $10 billion or $1 million dollars in plan assets—has three primary stakeholders. They are the plan committee, human resources, and of course the participants.
Many plan advisors focus immediately on employee outcomes—which isn’t easy. The employee needs to know how much to save, how to invest, when they should retire, and what the best income distribution strategy is based on their personal goals and financial resources.
These are very complex and personal details. And before any of those, if the committee doesn’t make good decisions, the remaining stakeholders have very little chance of retirement success.
The committee needs to make informed decisions and have a fiduciary process that documents prudent decisions and oversees sound plan governance.
HR needs a consultant that will help implement best practices, deliver efficiencies, and benchmark plan performance.
Focusing on these two areas first provides a solid foundation for the third stakeholder, the plan participant, to have better opportunity for success.
After we perform plan reviews, we survey our plan sponsor clients for feedback on content and delivery. The most important is question we ask is, “Do you believe you are making more informed plan decisions for your employees?”
We want to curate the best ideas, create solutions to really make a difference, and learn from the past so the plan gets better over time.
I’m happy to report that 100 percent of our clients have come back and said they are making more informed decisions. I hope this idea helps as you serve your client. Serving all three stakeholders will make a difference and it’s the way every successful 401k plan should be run.
Todd Timmerman, CEBS, CFS, AIF, is managing director of Charlotte, North Carolina-based Retirement Plan Analytics. He’s been helping retirement plan clients make informed decisions for 29 years. During that time he has had the opportunity to work with clients that have won multiple industry awards for their 401k retirement plan programs. Retirement Plan Analytics (RPA) is one of the retirement industry’s most experienced service providers assisting retirement plan sponsors and plan advisors in evaluating and managing competitive and comprehensive retirement plans. Timmerman can be reached at todd@plan-analytics.com.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
