If your organization sponsors a 403(b) employee retirement plan, you want to pay close attention. The 403(b) marketplace is rapidly moving toward greater fiduciary oversight and, as a result, better retirement plans for employees.
Today, plan sponsors and their advisors have a growing desire to help employees prepare for a financially healthy retirement. In that pursuit, they are demanding from their plan providers: transparency, better investment options, lower fees, and a robust employee experience.
Sooner than later, you may feel the need to explore the 403(b) marketplace for yourself to determine whether the employees under your care are getting a square deal for their retirement dollars. Or maybe you’ve already taken the first steps down the path of change, only to feel like throwing your hands up in the air at the many roadblocks that seem to hold you back. Right now, there are several key steps you can take to regain control of your plan’s future.
Roadblocks to Change
We recognize that no matter how compelling the case for wholesale change is, it doesn’t come easy for sponsors whose plans are tied up with multiple providers, individual contracts, and guaranteed products. Even the politics surrounding employee thinking can make change difficult. And when sponsors do decide to make a move to a new provider, the existing vendor may charge exorbitant back-end fees for the privilege.
FiduciaryVest is in the business of change. Every day, we work as advocates for our plan sponsor clients, helping them to maximize their retirement plans for the employees under their care. If you are not ready to bring in a third-party expert, then follow this three-step process and, we believe, you will achieve long-term success:
- Envision the kind of plan you want for your employees and work to select the best provider to make it happen, ignoring the complications involved with transitioning the existing assets. The fact is, employees’ future plan benefits should not be held-back by old decisions that cannot be undone.
- What if your plan doesn’t attract the best providers? It may be too small and/or too wrapped up in individual contracts and guaranteed accounts. If that is the case, renegotiate vigorously with your existing provider to immediately move your plan to a mutual fund platform, continue to build assets, and try again down the road.
- Work with your new or current vendor to implement a laser-focused educational campaign designed to convince employees to move any legacy assets to the new platform. And always calculate the switch fees beforehand.
Your 403(b) retirement plan is a critical benefit to your employees, and it’s “healthier than ever,” claims the Plan Sponsor Council of America (PSCA) in its latest survey. Know where your plan stands. Be sure it stays healthy. Investigate. Innovate. Stay Involved.
Always in your corner,
Zack Sadler, senior consultant