There are plenty of 401K service providers out there, and three different service providers do the three parts to a 401k plan. They are the recordkeeper, TPA third-party administrator, and the advisor. These can all be under one provider, or you might have hired each one separately.
When you first started the plan, chances were much higher that someone would show up on location to set everyone up. But with COVID and the sweeping online connectivity, this might not happen anymore. And it doesn’t have to be in-person, face to face, to be honest. However, it could be a screen-to-screen process. But most provide an 800 number to call or a website to go through. In one case, no one showed up or even connected online with the employees, and the website content and process wasn’t that good either. What good are the best investment funds if you don’t know how to select them or even be told what an investment risk assessment is? One provider I saw set the default investment selection to the Target Date Fund based solely on the employee’s retirement age. The 800 number likewise recommended the TDF as well. Why settle for this low level of service?
So, employers, what’s your expectation? An 800 number where the employee can’t even “see” what they’re talking about or screen-to-screen? And what kind of 401k plan education do they get? Nothing, or would a brief video about the plan and how it works to be better? Most advisors leave the plan questions to the TPA, and they’re usually set up to handle those calls. But you and or the employee have to call them. Most employers with a plan do what they are supposed to and just accept what they’re given because they haven’t seen anything else. It takes work to find, search, and demo all the possibilities. Let’s not forget you have a business to run and the time it takes to do all this.
Expectation part two. I’m also going to assume that you didn’t go too crazy reading through your agreement with the provider. Again, I’m just assuming you thought they’re all the same and sign on the line and be done. All of this reading through documents written by attorneys and checking just plain takes too much time. Most agreements put more responsibility and liability back on you. They will simply say you’re the “Fiduciary,” not them, meaning you’ll be more responsible than you probably want to be. I know you’re not surprised but are disappointed to hear that. Heck, I saw one agreement that specifically spelled who was responsible for what and that employer had plenty of work to do! Expectations were not met there at all. Thus, sometimes, your expectations aren’t meeting your reality.
I’m sure plenty of you are happy with your service providers and that they are doing what they’re supposed to. But if you’d like to see what else is out there and how a different system could work, contact me, and we’ll find out for sure.
As always, seek the advice of your financial professionals before implementing any method on your own.