Why Your Retirement Plan Needs a Specialized Retirement Plan Advisor
As a Retirement Plan Sponsor, you are responsible for making decisions about your company's retirement plan; the earliest being should you even have one! One of the most critical decisions you'll make or manage is choosing a specialized Retirement Plan Advisor to help you oversee the plan. When choosing an advisor, it's essential to consider their fiduciary responsibilities and how they can help you meet your obligations as a Retirement Plan Sponsor.
What is a Retirement Plan Advisor?
A Retirement Plan Advisor is a Financial Advisor that specializes in Retirement Plans. This is someone who is legally obligated to act in your best interests when it comes to your retirement plan by taking on the duties and responsibilities of a fiduciary. Being a fiduciary means that they must put your interests ahead of their own and make recommendations that are in the best interest of your plan participants.
Why Does Your Retirement Plan Need a Specialized Retirement Plan Advisor?
It is important to first mention that a plan sponsor or trustee cannot hire away all of their fiduciary duties. You can engage, and are in fact, encouraged to engage, professionals who have knowledge and expertise that you do not have. A Retirement Plan Advisor may become a co-fiduciary on the plan, or take on certain fiduciary responsibilities. This never absolves a plan sponsor of their fiduciary duty towards the plan. In addition, the plan sponsor has a fiduciary duty to oversee or manage any professionals they retain on the plan.
There are different versions of fiduciary liabilities that a Retirement Plan Advisor can provide, including 3(21) or 3(38) fiduciary services, and a specialized Retirement Plan Advisor will discuss your plan’s needs.
A 3(21) Fiduciary is a co-fiduciary that shares investment advisory with the plan's decision makers. They will provide investment recommendations, but it is ultimately up to the plan to accept or reject. A 3(38) Fiduciary takes the most amount of investment management risk off the plan's shoulders as an Investment Manager. Ultimately, the decisions of the investments remain only in their hands.
There are several reasons why your retirement plan needs a Retirement Plan Advisor, including:
· Legal Compliance: As a Plan Sponsor, you have a legal obligation to act in the best interests of your plan participants. By hiring a Retirement Plan Advisor, you can ensure that you are meeting your fiduciary responsibilities and complying with the many applicable laws and regulations.
· Investment Expertise: A Retirement Plan Advisor has expertise and tools in selecting and monitoring investment options for your retirement plan. They can help you choose appropriate investments based on your plan's objectives, risk tolerance, and participant demographics.
· Fee Transparency: A Retirement Plan Advisor is required to provide full fee disclosure to you and your plan participants. This helps ensure that your plan's fees are reasonable and that you are not paying excessive fees that can erode your participants' retirement savings.
· Risk Management: A Retirement Plan Advisor can help you manage risk in your retirement plan, including identifying potential fiduciary breaches and taking steps to mitigate those risks.
· Employee Education: A Retirement Plan Advisor can provide education and guidance to your plan participants, helping them make informed decisions about their retirement savings. This can include investment education, retirement planning, and financial wellness programs.
· Benchmarking: A Retirement Plan Advisor knows the landscape and can help you understand how competitive your retirement plan is against others of similar size and scale. This may help from during a fee evaluation, or to consider plan provisions that are attractive to potential talent.
By working with a specialized Retirement Plan Advisor, you can help ensure the long-term success of your retirement plan and help to prepare your plan participants for a rewarding retirement.
If you're looking for a Retirement Plan Advisor to help you start or manage your retirement plan, email us today, Christina.Tunison@lpl.com, to learn more about our services and how we can help you meet your fiduciary responsibilities.
This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.
#423472 Mar2023