How Can You Tell If Your Retirement Plan Provider Is Doing a Good Job?

The following excerpt is from our ebook, “Reviewing Your Retirement Plan,” which you can download by clicking here.

Now that you understand the functions of each vendor, you can determine each provider’s effectiveness. You should evaluate four primary competency areas: Service, Compatibility, Fees, and Compliance.

Service

  • Are your points of contact responsive and knowledgeable?
  • Does the time zone/location of the provider cause communication issues?
  • Is the provider proactive or reactive?
  • Can you speak directly to the person/department you need without going through an intermediary (e.g. client service representative)?

 Compatibility

  • Have you “outgrown” your vendor?
    • Are you limited in your plan design or investment options?
    • Is the provider lacking services or technology resources you need or want?
  • Are you too small for the types of plans they typically work with?
    • Many large “name-brand” vendors focus on the “large-plan” market and may not provide the service you want/need (or they may charge more based on your plan’s size).
  • Is their website intuitive and easy to use?
  • Does their communication style work for your needs/preferences?
    • Do they only communicate via email or a website message center when you prefer phone calls?
    • Can you speak to the same person you email on the phone?
    • Do they promptly respond to your email and phone calls?

Fees

When you assess fees, don’t just go with the cheapest provider. Instead, focus on whether the costs are reasonable for the services provided. Review vendor compensation for reasonableness by asking these three questions:

  • Are you paying for services the plan doesn’t use?
  • Are the fees negotiable/flexible?
    • Can you pay for the services the plan uses?
    • Can fees be shared between the plan and the employer?
    • Can the employer be invoiced for all plan fees directly instead of charging plan assets?
  • Are they transparent?
    • Many fees are embedded into the investment costs and can be hard to determine. Do you know how much compensation your provider receives from your plan?

Compliance

  • Are they preparing and filing required paperwork (e.g., a Form 5500) in a timely manner?
  • Are there errors in their compliance work?
  • Are they ensuring your plan document is up-to-date with regulatory requirements?
  • Are their fees reasonable for the services provided?
  • Do they consult with you regarding plan design options and features that can help the plan better meet its goals and objectives?
  • Do they provide illustrations for proposed employer contribution allocations?
    • If so, is there an additional fee?

As you answer these questions, it’s important to document your findings in an organized way. We’ve created two resources to help you easily document your process.

Click here to download our provider evaluation criteria with suggestions for what to consider as you evaluate your providers.

Click here to download a blank plan review template you can use to document your findings.

 

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