Fiduciary Best Practices | Retirement Plan Advisor | Rea CPA

Another Way Great Plan Advisors Can Add Value

Fiduciary Best Practice | Retirement Plan Advisor | Ohio CPA Firm
If your advisory practice can implement processes that execute a repeatable fiduciary process that make it easy for your clients to fulfill their fiduciary responsibilities, they will become a client for life. Keep reading to learn more.

Fiduciary Best Practices

Plan sponsors who have implemented a solid fiduciary process have the lowest risk and generally the best investment and participant outcomes. While implementing best fiduciary practices is not difficult, it does require discipline. That’s where plan advisors can really help.

If your advisory practice can implement processes that execute a repeatable fiduciary process that make it easy for your clients to fulfill their fiduciary responsibilities, they will become a client for life. So what services and deliverables do you need to provide and how frequently?

Listen to episode 145, “Building Your Retirement Paycheck,” on Rea & Associates’ award-winning podcast, unsuitable on Rea Radio, hear Doug Feller, a principal and financial advisor with Investment Partners explain where the money for retirement comes from and how plan participants should approach the retirement planning process.

Create an Investment Policy Statement.

While not a required document under ERISA, it’s still a best practice. This becomes the business plan for the retirement plan. It creates criteria for initial investment selection as well as the criteria for ongoing monitoring of funds and service providers.

Schedule recurring meetings with the plan sponsor.

These can be as often as quarterly but should be no less frequently than annually. Take responsibility for scheduling the meetings and creating the agenda. Most of your clients will never get around to it, and they will be grateful for your assistance in holding them accountable.

Provide periodic reports on investment performance relative to appropriate benchmarks.

There are lots of tools out there to help you create economies of scale. Benchmarks should be identified in the investment policy statement, and funds should be placed on a watch list if they are not meeting the monitoring criteria. If funds continue to lag behind their peers, they need to be replaced.

At least annually, remind your client of the plan fees, including your own.

Plan sponsors have a tough time understanding and monitoring fees; they will appreciate having the information readily available. If you can provide benchmarks for the various plan fees; that’s even better.

Every 3-5 years, request proposals from other plan record keepers and share the results with the plan sponsor at your regularly scheduled meeting.

As plan assets grow, consider your own fee and make sure that it is still reasonable given the time you spend serving the client. Reduce your fee (as a percent of assets) if you need to. Consider a flat fee if necessary.

Provide a written summary of your meeting and any action steps taken.

Clients always fall short with this, and it is crucial to the fiduciary process. Afterward, be sure to complete any action steps that apply to you and provide a reminder to those that apply to others.

Engage and educate employees.

There are many plan design concepts and strategies that automatically encourage higher rates of participation and deferrals. Consider using group and individual employee meetings as opportunities to educate participants. It’s also best to work with plan record keepers who are generally the most supportive of you in this process with best-in-class website tools and educational materials.

Rea & Associates works hard to be a good business partner to the retirement plan advisors we work with, whether it’s pursuing a prospect or serving existing clients. We are grateful for your trust and confidence and want to help you meet your business goals. Feel free to contact our retirement plan services team any time with your questions.

By Paul McEwan, CPA, MTax, AIFA (New Philadelphia office)

Check out these other great retirement plan resources:

Prepare For The New Employee Benefit Plan Audit Standard Now – Not Later

Proposed MEP Legislation Would Undermine Fiduciary Protections

Room For Growth: How To Get To The Top Of Your Fiduciary Game