As the regulatory environment continues to change and retirement plan administration becomes more complex, employers are increasingly adopting best practices to ensure compliant administration one of those practices is using an adviser.
Most (73%) plan sponsors use an independent adviser for at least one of their retirement plans, according to Strategic Benefit Services 2014 Retirement Survey
Report, which also underscored a dire need for adviser help with employer understanding of their plans. One quarter of employers said they were unsure how often their plan went out to bid and 21% indicated their plan had never been put out to bid. In fact, most plan sponsors (80%) werent even sure whether they or their plan adviser was acting in the fiduciary capacity.
An adviser can play a critical role in helping employees understand the importance of retirement planning as well as the investment options offered to them, SBS says in its report, adding that comprehensive education is also critical in securing maximum employee plan participation and understanding.
Advisers dedicated to retirement plans offer a broad range of services to assist a plan fiduciary. Ninety-one percent of plan sponsors said their adviser offered investment review and analysis, 83% said their adviser consulted on plan design, and 78% said their adviser offered employee education.
Those responses are consistent with accepted best practices, according to SBS, which suggests that among other services, retirement plan advisers should offer assistance in the development of an investment policy statement; help in selecting a plan provider; guidance with regard to plan design, including identifying significant plan objectives; help in selecting investment options offered to plan participants, including a specific investment menu structure; plan monitoring and regular review; and participant engagement and education.
Also, of particular interest in the 2014 survey was the impact of recent regulatory changes on not-for-profit organizations and the retirement plans they offer. Revised 403(b) regulations, which generally became effective Jan. 1, 2009, impose expanded Form 5500 reporting requirements and, for many plans, a plan audit requirement. More recently, the plan and participant fee disclosures§408(b)(2) and §404(a)(5)have provided information to 403(b) plan sponsors that previously was often difficult to obtain. In a few years, sponsors of 403(b) plans have taken on significantly more administrative and fiduciary oversight responsibility.
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