Friday, March 27, 2015

Retirement Plan Best Practices for Using an Independent Advisor

Best practices underscore the value of using an independent advisor with regard to developing, implementing, and overseeing a retirement plan. An experienced, independent advisor can offer valuable guidance and feedback to help ensure that a retirement plan is meeting the objectives of both the plan sponsor and participants. As a plan fiduciary, if you are lack the expertise necessary to fulfill your fiduciary obligations,
you must seek the advice of an expert. A plan advisor dedicated to retirement offers a broad range of services to assist a plan fiduciary.

According to our 2014 Retirement Survey Report, seventy-three percent of survey participants said they use an independent advisor for at least one of their retirement plans; nearly 25% indicated they do not use an independent advisor.

Consistency was evident when respondents were asked to identify those services provided by their retirement plan advisors. Ninety-one percent of those responding said their advisor offered investment review and analysis, 83% said their advisor consulted on plan design and 78% said their advisor offered employee education.
Those responses are consistent with accepted best practices. Among other services, retirement plan advisors can assist plans with:
  • assistance in the development of an investment policy statement;
  • plan design based on the plan objectives. This can include modeling contribution formulas and setting other plan provisions, including eligibility, vesting, and availability of loan programs;
  • help in selecting a plan provider;
  • help in selecting investment options offered to plan participants, including specific investment menu structure; 
  • plan monitoring and regular review; and
  • participant engagement and education. 
An advisor can play a critical role in helping employees understand the importance of retirement planning as well as the investment options offered in their plan. Comprehensive education is critical in securing maximum employee plan participation and understanding.


One troubling response appeared: nearly 80% of survey participants said they were unsure of their independent advisor’s fiduciary status in connection with the organization’s primary retirement plan.

As independent advisors’ fiduciary status relates to the selection and monitoring of plan investments, best practices suggest it is prudent that an independent advisor be willing to affirm co-fiduciary status in writing. This not only clearly acknowledges fiduciary status but also clarifies the specific nature of that responsibility to all involved.

If you have any questions about  this article, the 2014 Retirement Survey Report, or would like to begin talking to a dedicated retirement plan advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.