Plan sponsors are always wondering why we go through the exhaustive process of developing a prudent process for reviewing their plan, establishing an investment policy statement, monitoring those investments on an ongoing basis, and occasionally making adjustments as new options become available. They may even think their benefits broker or personal investment advisory person can handle that along with their other responsibilities. What litigation teaches us is that isn’t always the case.
There is a reason why retirement plan advisory firms specialize in one distinct niche within the “investment advisory” world. We also painstakingly benchmark their plans to determine what services we are getting and what we are paying for them. Are those services meaningful to our participants? Are we benefiting from some additional bells and whistles? The Cornerstone Pediatric Profit Sharing plan highlights the reason why you want to have a prudent process in place. This 2.8 million dollar plan was sued by a participant. Yes, the target was the vendor and the attempt was to get this as a class action.
After all, there has to be enough of a reward for the litigator to pursue this sort of action. The lesson however is a simple one. The monitoring of the process you have put in place is critical. As best practices evolve in the advisory world, it is key to hire a firm that will keep you at the forefront of this ever changing critical employee benefit. In 1980 we all agreed you had to have at least four funds. In 1990 we agreed you had to have multiple best in class investment managers. In the 2000’s we figured out that employees could use some help with allocations and thus target date funds were born. In the 2010’s we determined that not all target date funds are made equal and that revenue sharing and working with brokers might not be a good idea. The 2020’s will present their own challenges and working with a specialist retirement plan advisor will keep you at the top of the scrap heap of once great ideas. #401k #403b #QPRetirement #fiduciary