Evaluating Your Plan Provider - Summary

Here are the facts and circumstances of the retirement plan industry: There has been record consolidation in the recordkeeping space. As a result of these mergers and acquisitions, many retirement plans are being migrated to other recordkeeping companies. Sometimes this goes well. Sometimes it does not! Sometimes you get an upgrade, and sometimes you realize you don’t have the features you loved from the old provider.

What to do? It’s time to take a hard look at your plan (and plan providers) and figure out if it’s a good time to see what else out there might serve you better (spoiler alerts: it IS a good time to do so).

Why? Because you have a fiduciary duty as a plan sponsor to select and monitor your service providers and to only pay reasonable fees!

Here are 5 things to look for when evaluating your service providers:

1. Payroll Connectivity - what is your involvement in the plan from a payroll standpoint?

   • You may have more options for payroll connectivity if it’s a merger/acquisition situation with your service provider

   • More automation is better to reduce human error

2. Complexity of Plan Design - what makes your plan unique in how it’s serviced?

   • Evaluate the defaults and restrictions that the new recordkeeper has in place

   • Get your plan advisor to run through the plan with the recordkeeper

3. Employee User Experience - what do employees get when they interact with the plan?

   • Tools, education, financial resources

   • (3.5) Plan Sponsor User Experience - how easily can the plan sponsor interact with the plan?

   • Are reporting and making changes easily done?

   • Recordkeeping services vary - some are white glove, some are DIY - reflected in the pricing

4. Investments - are they moving you from fund to fund?

   • You need to do your due diligence on any changes/adjustments

   • There may be restrictions on what the new recordkeeper or platform can handle investment-wise

   • It may be beneficial to use investments from new recordkeeper for better pricing, but due diligence is key

5. Add-ons - what else is important to you?

   • How can you sweeten the pot? Negotiate & ask for perks from new recordkeeper

The above are minimum standards - here’s how to maximize the plan…

First, take a step back. If you’re our client, you know we’re going to ask, what is this plan supposed to do? What is its purpose? How will you know if the plan is successful?

Second, consider why you are making this change (to a new recordkeeper). Are you being forced into it, have you outgrown the current provider, are you looking for something specific, are you trying to outsource certain responsibilities, etc.? What will your employees use and benefit from?

Other areas of the plan to look at include:

• Efficient back office administration

• Flexibility with plan design options

• Service protocols - both for the plan sponsor and the employee

• Fee allocation

• Compliance culture

• Fiduciary support tools

• Financial wellness tools/resources for employees

The answers to these questions and ranking them in your preferences will make up the criteria for the plan’s service provider...what you put on your shopping list!

Once you’ve organized and formalized the wish list, the next step is to go shopping -- work with your plan advisor on this! You may want to whittle the list down and select your finalists to come and present to the committee for the final decision. You may decide to stay right where you are or move to another provider. After that decision is made, document everything for your fiduciary file on your selection process and how the decision was made and executed.

Unfortunately, as a plan fiduciary your job is not done at this point. You also need to know how you’re going to evaluate the provider moving forward because you always have the duty to monitor your service providers. Your plan advisor will assist you in reviewing the provider periodically in order to make sure that they still meet your needs. You’ll need to revisit your original shopping list too, to make sure that the criteria you set back then still makes sense after time has passed. (Growing companies, take note of this! That criteria changes quickly.)

Whether you’re searching for a new plan provider or monitoring the services provided by your current one, the evaluation process doesn’t need to be scary or overwhelming. Follow the framework above and you’re sure to end up with a provider that will make all stakeholders happy! Oh, and if you need some help with your evaluation process, feel free to contact us at hello@retirementplanology.com or through our website.