Should Your Private Wealth Advisor also Manage Your Company’s Retirement Plan?

When it comes to the management of your private wealth, finding an advisor that truly understands your objectives, as well as your lifestyle needs, can help you achieve your personal financial goals. If you also act as a fiduciary to your company’s retirement plan, tapping this same trusted partner to manage the plan might seem like a logical next step, however there are a few things to consider before enlisting their services on such a vastly different line of business.

While there are many investment advisory firms that handle both individual private wealth clients, as well as group retirement plans, not all are qualified (or skilled) at doing both at the level you will need them to perform. Here are five questions you should ask your private wealth advisor/firm before hiring them as your company’s retirement plan manager.

What percentage of your total assets are in qualified plans?

Managing a large retirement plan is no easy task—there are countless compliance laws and regulations to adhere to, which do not apply to individual investors. Because of this, you want to work with an independent retirement plan advisor with the experience, knowledge and capabilities necessary to manage your plan smoothly, not someone overseeing one or two retirement plans to supplement their much larger private wealth client list. Look for an advisory firm that has in-house, dedicated subject matter experts for each line of business they offer.

Who would be servicing your account?

Retirement plans (and the regulations that govern them) constantly change. Experience dealing with these changes and knowledge of how to adjust accordingly are incredibly important when it comes to providing your employees with a retirement plan program that works for them, and your company. For those reasons, you want to know there will be a qualified professional on the other end of the line when you are calling with a question, and you want to know who that person will be. How many retirement plans do they manage? How familiar are they with your current vendor? Do they have experience working with similar plans? The answers to these questions will undoubtedly play a part in the way they are able to manage your company’s program.

What kind of employee education does the firm offer?

While most vendors provide employee education, the level of personalized guidance can differ greatly. Furthermore, certain plan advisors only offer personalized advice to your management team, or use outside firms to conduct employee education. Your advisor should conduct employee meetings and sit with all of your employees, not just your executives, to help with planning and guidance. Also, beware of firms who use their education services to sell insurance or other services to your participants. Remember, for most of your employees, this plan will be where they get the bulk of their money for retirement. Make sure they have all the tools to use the plan properly, including access to someone who can help them in choosing their investments.

What level of fiduciary responsibility will the firm take on?

There are varying degrees of fiduciary responsibility an advisor is able, or willing, to take on. Be sure to understand whether your advisor will act as a full 3(38) Fiduciary or not. Many firms will only act as a co-Fiduciary 3(21). It’s important to find out what level of responsibility the firm you are considering will accept to help determine if they will be able to ease excess liability from your shoulders.

How will the firm be paid?

In other words, what are the firm’s loyalties? To ensure independent counsel and insights that are not commission-driven, your advisor should be compensated by your company and/or your participants only, not a mutual fund company or other vendors. Be on the lookout for advisors who want to immediately move your plan to another provider, especially if you are happy with your current vendor. They may be receiving compensation from the vendor, which should lead you to question were their loyalties lie.

Ensuring a large retirement plan runs smoothly requires a high level of experience and expertise—make sure you’re entrusting your company’s retirement plan to an advisor with the right qualifications. Remember, as a Fiduciary on the plan, you have a duty to review all fees, funds and services, including your advisor, to help your company’s plan perform at its best for its participants.

We recognize this role can be overwhelming. Should you have any questions, or need additional information, contact our retirement plan advisors—we would be happy to provide a complimentary plan review.

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