The Invisible Work Of Retirement Plans

Let’s talk about “invisible” work. So much of what we do at Retirement Planology is “invisible” to our clients, but it’s imperative work in order to make sure their retirement plans run smoothly. Here are a couple of analogies that will make the concept of invisible work a bit clearer.

The Invisible Work of Making Dinner

There are basically 3 phases to making dinner:

1. Conception phase - Crafting the menu

2. Planning phase - Writing the grocery list, determining cooking plans, buying groceries

3. Execution phase - Cooking and serving the dinner

Both the conception and planning phases are largely invisible, behind the scenes work. The execution phase is the visible phase, with the final product being the home-cooked dinner. 

The “Clean” House Invisible Work

Part of work is simply defining what it is that needs to be done and when it is finished, which is often largely invisible. If you and your housemate are striving for a clean house, but the definition of “clean” hasn’t been identified, you may find yourself at odds. (Hello, college roommates.) You could also be undertaking chores that either you or your housemate deem completely unnecessary. By doing the invisible work of defining what “clean” means, you’ll be able to execute on or outsource the cleaning tasks that are important to you both. 

Applying These Analogies To Retirement Plans

Let’s apply the making dinner analogy first. Most plan sponsors want to focus just on the execution phase of the retirement plan process, and would rather outsource the conception and planning phases (i.e. make them “invisible”). I’d even go so far as to argue they SHOULD only focus on the execution phase. You’ve got 99,000 tasks on your task list. Keeping up with all the aspects of new retirement plan legislation and trends shouldn’t be one of them.

Your retirement plan advisor (like us!) should be meeting with you periodically and providing the research, preparation, plan design, investment information, marketplace information, changes, etc applicable to your plan that you need to keep your retirement plan on track. Your advisor needs to be engaging in ongoing conversations with you about your plan to help you execute on what has changed and what you need to do to prepare for the future. All the prep work and figuring out what needs to be done (i.e. the conception and planning phases) - that is your advisor’s job.

With respect to the clean house analogy, the DOL has a very strict definition of “clean” when it comes to retirement plans. They want to see evidence of your invisible work - not just the bill for having the carpet cleaned after the dog’s accident, but the chore list, what got checked off, who was overseeing it, and how things are done in rotation.  If the DOL or the IRS come in with their white gloves, you need to be able to demonstrate that your house is being cleaned and dusted regularly – in other words, that your retirement plan runs well the vast majority of the time and that you’re thoughtful about your decision making. That’s where your retirement plan advisor’s invisible work will pay off; it will demonstrate your prudent process for how your plan is run.

Retirement plan advisors are also governance advisors - they will help you execute on your governance plan (how your retirement plan is run), as well as document it. That involves working with your ERISA attorney, as well (if your plan is large enough to support an ongoing relationship with one). If you as a plan sponsor haven’t defined what “clean” means - that is, if you haven’t decided what your prudence standards are, you need a couple of things:

1. A retirement plan advisor that includes ongoing fiduciary education and training as part of the services they offer - This will help you determine what’s appropriate for your plan and enable you to focus on the execution phase while still providing evidence and documentation that the invisible work is being done.

2. A good look at the DOL’s handbook for Meeting Your Fiduciary Responsibilities - It provides a high-level overview of what you should be doing so that you can take a step back and determine whether you’re meeting those standards laid out in the handbook.

Do You Have The Right Advisor?

When you review your relationship with your advisor, you should be looking for evidence that there is invisible work happening - documentation, ongoing proactive touchpoints, etc. - which will then help you with the execution phase. Also consider how your retirement plan fits in with your overall benefits and how you’re rewarding employees, as well as how the retirement plan will help your employees retire successfully. If you’re not getting this level of service, it’s time to look for another advisor.

If you’re a small to medium-sized business, we’d love to help you make smart decisions when it comes to your retirement plan. Reach out to us at hello@retirementplanology.com, and let’s talk!