Is It Time to Switch Retirement Plan Advisors? A Guide for Plan Sponsors

Retirement plan advisors can help relieve specific fiduciary responsibilities, optimize your benefits, and drive better employee retirement outcomes. Still, not all relationships are built to last. The Department of Labor (DOL) encourages employers to benchmark their retirement plan vendors every three years. When the time comes for you to evaluate if your advisor is still “the one” and explore alternatives, here are a few questions to consider.  

How does my advisor support the company?  

1. Is my advisor a 3(38) investment fiduciary?  

First, ensure you’re working with an advisor who will sign on as a fiduciary. Not all advisors are willing to accept that liability and responsibility, meaning the risk associated with the plan’s investment options remains fully with the company.  

If your current advisor is a fiduciary to your plan, are they a 3(21) or 3(38)? The former is the lesser of the two options. A 3(21) advisor will make investment recommendations, but the company ultimately has the final say; therefore, there is some liability. When you work with a 3(38) advisor, you’re offloading the full responsibility for selecting and monitoring the investments, giving them sole discretion and all the risk.  

2. Does my advisor proactively advocate for the company?  

An advisor might advocate for their client in several ways, some of which could happen daily, while other forms are more infrequent but just as important. If there’s anything on this list that your advisor doesn’t do, it may be time for a change.  

• Do they jump in to help with compliance or logistical questions from your other plan vendors or employees?  
• Are they tracking tasks and projects with your other plan vendors to ensure timely progress?  
• Are they proactively reminding you to benchmark the plan every few years to explore potential opportunities for improvement?  
• Have they ever recommended negotiating your fees with other plan vendors and going to bat for you?  

3. Is my advisor “present” or “absent”?  

Another way to ask this question is, “Does my advisor care about my business and employees?” Suppose your advisor isn’t regularly engaging with you to understand the company’s needs better and what’s important to your employees. Can they effectively advise you and steer you in the right direction?  

What is my advisor doing for my employees? 

4. Do I understand my advisor’s investment philosophy and am confident it’ll drive better employee retirement outcomes? 

While priorities differ from company to company, one of the primary reasons many seek out a plan advisor is their investment philosophy so they can implement a menu of fund options that might help employees save more for retirement. As the sponsor for your company’s retirement plan benefit, do you understand your advisor’s approach to investing? Are you confident that they’re offering employees diverse and low-cost options?  

If you’re not sure, get a second opinion!  

5. Does my advisor proactively educate my employees about the retirement plan or general financial wellness?  

You’re offering your employees a way to save for retirement, but do they truly know how to maximize that benefit? Who is educating them on investment options or providing guidance on how much they should contribute to accomplishing their personal goals? The answer should be your advisor.  

Need help assessing your retirement plan advisory services? Contact us today to learn how we can guide you through the evaluation and transition process. 

This content is for informational and educational purposes only and should not be construed as individualized advice or a recommendation for any specific product, strategy, or course of action. Brighton Jones, its affiliates, and employees do not provide personalized investment, financial, tax, or legal advice through this communication. This material is not intended to, and does not, create a fiduciary relationship under ERISA or any other applicable law. For individualized advice tailored to your specific circumstances, please consult with your adviser.