Apparently some plan sponsors and even advisers overlook a basic resource when conducting 401(k) enrollment and education sessions: The TPA. “Advisers are sometimes surprised to see a TPA at the meeting,” says Beth Harrington, president of Benefit Resources Inc. in Sacramento. “That shocks me.”

Perhaps that’s because she also has been told that that hers is one of the few TPAs included in enrollment meetings. Yet she considers it a basic way TPAs can help plan sponsors fulfill their legal obligations because enrolling eligible participants is a fiduciary responsibility. Advisers should make a point of involving TPAs in this process, she suggests.

The advisers she jointly presents with at enrollment meetings, she says, are greatly relieved to have a TPA along side them who can complement their own investment expertise with that of an individual who knows the plan’s features and operations better than anyone. “During the Q&A I like to stand next to the adviser so it looks like we’re working shoulder to shoulder with the adviser” -- which is indeed how she likes to operate.

In her experience, enrollment meetings with expert presentations from service providers produce far better results, with employees coming away with true understanding of the plan and its investment options. Yet some plan sponsors still expect adequate results from simply distributing stack of printed enrollment materials without expert testimony to accompany it.

She is a fan of having advisors hold one-on-one meetings with participants following the general enrollment session, and encourages her clients to make that possible.

What are employees asking?

In her enrollment presentation with advisers, Harrington hears all kinds of investment questions.  And what sorts of questions are being thrown at you in participant meetings today? Compare your experience to that of Greg Makowski, CFP, AIF, a co-founder of CFS Investment Advisor Services who operates on the other side of the country from Harrington, in Totowa, N.J. Following are typical statements and questions he is hearing from participants, and, informally and broadly stated, the gist of his response:

I don't know anything about investing.

“If investment lingo makes your eyes glaze over and you don't want to think about how or what to invest in then split your money between a target date fund and a balanced fund.  You can then stop worrying about everything and just keep putting your money in: The Rip Van Winkle approach to investing.  Set it, go to sleep for 20 years and wake up to a large account balance.”

I can't afford to participate.

“Can you afford $3/day? That's one Latte/day less.  $3/day will grow to about $50,000 in 20 years.  If your employer is matching 50 percent that's now $80,000!  $4/day with the employer match is $100,000.  How can you not put away $3 or $4/day?”

I don't know how much risk I should take.

“If you have $1,000 in your account and it goes down 20 percent you're temporarily down $200.  What will you do?  (Answer; nothing.)  If you have $10,000 in your account and it goes down 20% you're temporarily down $2,000.  What will you do? (answer: nothing).  If you have $100,000 in your account and it goes down 20 percent you're down $20,000.  What will you do? (Answer: panic).  Ok, then since you have $10,000, invest in the age appropriate target date fund and as you get older and your account gets larger the risk goes down, so let's not worry about anything right now.”

Should I invest in the index funds or actively managed funds?

Yes.  Whichever you pick, if you stick with it and keep putting money away, it will pay off over time. It doesn't matter which fund you invest in, what matters is that you put money away.

Should I invest in the ROTH 401(k) or regular 401(k)?

“If you invest in the regular 401(k) and save $2,000 in income taxes what will you do with the income tax savings, spend it or save it?   Participant answer: ‘I guess spend it because I don't think about it.’  Then invest in the ROTH because it forces you to invest the income tax savings.”

Should I invest in the ROTH 401(k) or regular 401(k)?, part II:

“Would you like to have the ability to take money out of your 401(k) plan at retirement and buy a vacation home? ‘Sure.’ Then invest in the ROTH because if you have $100,000 in your regular 401(k) you won't take it out and pay $30,000 to the government in taxes.  If you have $100,000 in your ROTH you can take it out tax free-the ROTH gives you more flexibility.

I'm afraid to invest in bonds right now because interest rates are so low.

“Then invest in the stable value fund and as interest rates go up your principal remains fixed.”

I don't know if I should have any money internationally right now.

“When you go shopping do you like to pay full retail or do you want to buy when everything is on sale?  Europe is on sale; it might be the greatest sale in a generation.”

 “These,” Makowski says, “are typical questions and answers.” Yet he also gets plenty of even more basic questions, like “what is a stock? or “what is a mutual fund?” In a perfect world, employees would have had the benefit of an “Investments 101” course prior to enrollment meetings. But life is not always perfect.

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