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Using an Independent Investment Advisor for Corporate Retirement Plans

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. A plan fiduciary who lacks the expertise necessary to fulfill their fiduciary obligations must seek the advice of an expert. An independent advisor dedicated to retirement plans 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. Eighty-three percent 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 should offer:
  • assistance in the development of an investment policy statement;
  • help in selecting a plan provider;
  • guidance with regard to plan design, including identifying significant plan objectives—this can encompass issues such as eligibility, vesting, matching provisions, and availability of loan programs;
  • help in selecting investment options offered to plan participants, including a 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 to them. Comprehensive education is critical in securing maximum employee plan participation and understanding.

One troubling observation: 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 their fiduciary status in writing. This not only clearly acknowledges fiduciary status but also clarifies the specific nature of that responsibility to all involved.

Should you have questions about the 2014 Retirement Survey Report, or for information on how HANYS Benefit Services can enhance your organization's retirement offering, please contact us by calling (800) 388-1963 or email us at hbs@hanys.org.
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