Fidelity published the results from a recent survey and it showed that over 1/3 (34%) of businesses are looking to change their 401k advisor. That’s more than double the 2020 number (16%)! Why the big change?

The top reasons for wanting to change plan advisors was:
  1. Better employee communication and education
  2. Lower stated fees
  3. More retirement expertise
  4. Better investment lineup.
401k financial advisorI was asked to comment on why such a HUGE jump. Here’s what I said: That number could be twice as high if plan sponsors knew their actual fees and expenses. Many plan sponsors I speak with have very little understanding of what all the plan fees add up to and those that think they know… are usually way off. When I show them my analysis, they are shocked.
That’s because deciphering plans fees is… COMPLICATED.
  • Honestly, do you really know what your company and employees are paying?
  • Are you relying on your advisor or 401k company to tell you “your fees are good”?
  • Remember, ERISA requires you to know your fees and to ensure they are reasonable. When you have your DOL audit and they ask you what your fees are and you don’t know, you can be fined. That’s what happens on a DOL audit.

Better communication and education: I am so glad to see this. Education and communication help employees pursue their goals. It’s all about service. Have you ever had a great teacher that didn’t only help you understand the content but also get you excited about learning?

Retirement expertise: Today, many 401k plans have advisors that are not specialists in retirement plans. Their specialty might be investment management, not 401k and retirement plans. That is not the same. Monitoring the investment lineup is 10% of what I do for my clients. There is a WHOLE LOT more to retirement plan success and the success of your employees than simply giving them access to a 401k.

Consider these:

  • Do your employees actually know how much to contribute to pursue their individual goal? How to build a balanced and appropriate portfolio for their age and goals? They won’t just “figure it out”.
  • Are you providing them Financial Wellness education so they can strive to be better at managing their own money? Sadly, we are not taught these skills in school.
  • Is the 401k even the right plan for you? Should you offer an additional plan along with a 401k to meet your business needs and needs of executive team?
  • Have you recently (or ever) gotten a 2nd opinion on your retirement plan fees, plan design, fiduciary risk, features, and tools? Are you offering a competitive plan for today’s labor marketplace?

Ready to discuss your retirement plan with a 401(k) Advisor?

 


Disclosures

For plan sponsor use only, not for use with participants or the general public. This information is not intended as authoritative guidance or tax or legal advice. You should consult with your attorney or tax advisor for guidance on your specific situation.

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