401 (k) Plan Consulting
Navigating the Sea Change in Retirement Plans
As an employer, you share the responsibility for guiding your employees toward making decisions that will afford them greater financial freedom in retirement. But here’s the quandary: just as your workers look to you for financial guidance and advice, you must adjust to a sea change in plan regulation and administration.
Do the following issues look familiar to your retirement plan committee?
- New regulations that add to the complexity of administration
- Fiduciary pressures to provide prudent investment options
- Timely (and potentially complex) fee disclosures to your participants
- Outside advisors whose allegiances are split between plan providers and investment managers
- Watershed regulations that require greater transparency about disclosing relationships between plan sponsors and their advisors
- Employees who feel they cannot afford to save, but are being courted by your competitors through their benefits programs
- Concerns over your employees’ retirement readiness
Investment Due Diligence
Market Volatility makes it critical for retirement plan sponsors and fiduciaries to develop and maintain investment due diligence procedures and supporting documentation. We will work with the retirement plan committee to develop and maintain the plan’s investment strategy, which is codified in an investment policy statement. This investment policy statement is used as a guide to evaluate your current investment offerings, measuring them against applicable indices, your existing provider’s complete menu and the broader universe of investment options. The result is confidence that your plan’s investments are diversified, well managed, and meet the stated objectives of your investment policy statement.
We provide this comprehensive analysis by utilizing multiple tools, including Zephyr’s Style Advisor, one of the most robust investment analytical tools available. Each investment is evaluated by more than a dozen different and objective analytical measurements, including:
- Upside & Downside Capture
- Style: Correlation & Style Drift
- Performance: Excess Return & Tracking Error
- Risk-Return: Standard Deviation, R-squared, Alpha, Beta & Sharpe Ratio
Performing this analysis on a regular basis is essential to documenting compliance with Department of Labor guidelines and minimizing exposure to fiduciary liability.
Communication & Education
A successful communication program is critical to the success of a company’s plan. Enrollment and education specialists at Romero Wealth Management understand that the development of an effective communication program varies greatly from business to business and across industries. We review the wide variety of options available with the retirement plan committee and create the most appropriate program for their particular employee population.
Consistent implementation of the plan increases employee understanding and participation while raising the profile and appreciation of the benefit.
Key components of our communication strategy include:
- Pre-enrollment memos, posters and announcements
- All on-site meetings conducted by securities licensed representatives
- On-site group enrollment meetings
- On-site individual enrollment meetings
- On-site group investment education meetings
- Multi-lingual meetings and representatives
- Multi-lingual enrollment materials
- Video teleconferencing “Meet Me” meetings for remote locations
- Access to on-line investment and financial planning
- Customer service representatives and e-mail contacts for plan participants
Finding the Right Provider
The retirement plan provider review process can be time-consuming, confusing, and frustrating. All too often, standard vendor-provided proposals do not include enough information to determine administrative, recordkeeping, compliance, and employee communication services and standards. Furthermore, total plan costs are usually impossible to determine from the face of the proposals.
Romero Wealth Management is the Plan Sponsor’s outsource partner in the plan provider review process. We employ the SearchPro Plan Provider Review Process, which enables Plan Sponsors to eliminate the confusion and frustration of selecting a 401(k) provider, and dramatically reduces the amount of time plan sponsors must allocate to the evaluation of new plan providers.
Plan Level Benchmarking
The Importance of a Healthy Retirement Plan
Given the nature of the regulatory environment and the emphasis plan sponsors are now placing on the capabilities of advisors and the services they are providing, it is essential that an accurate measurement of a plan’s value exists. While recordkeepers have provided their own branded versions of this type of information to plan sponsors in the past, we understand that now more than ever, advisors want to control this analysis and deliverable. To meet this demand, we utilize the Retirement Plan Health Check, developed by LPL Financial in partnership with Fiduciary Benchmarks. This comprehensive and sophisticated program will allow you to access and provide qualitative plan statistics in a simple straightforward format.
Our Plan Health Check Solution
No matter the size of your practice or book, the new Retirement Plan Health Check tool will provide a competitive offering to you in the form of a true and objective plan health breakdown. The Retirement Plan Health Check tool allows you to report on the “health” of a plan by presenting key plan attributes compared to a valid peer group, such as:
- Historic and age group-based plan participation, deferral rates and average account balances
- Highly and non-highly compensated employee statistics
- Age group segmentation and total participant contribution levels
- Current and historic portfolio diversification data shown in total and divided by age groups
- Aggregate plan performance
- Plan fees
- Ability to save historical results regardless of plan provider
How the Plan Health Check Works
After entering the appropriate plan data, you will decide what information to include in the report. The output is completely modular and you will have the ability to choose from a large number of unique report combinations based on your preferences. The output is plan sponsor-focused in an easy to understand format that includes colorful tables, charts and graphs. All data entered is automatically stored for use in future reports, to eliminate the effort of duplicate entry and show the changes in these key plan attributes.
Plan Level Design & Compliance
In the world of retirement plans, only one thing seems certain: CHANGE is constant. Over the last decade, Congress has burdened plan sponsors with an overwhelming volume of legislation, making continual review of retirement plans essential. It is critical that the legal, compliance and design aspects of a plan are current.
While legislation dictates uniformity for certain plan features, recent changes in law are aimed at increasing employee participation and restoring some of the incentives and benefits previously lost by plan sponsors.
We will review the design and operational features of your company’s plan, from an objective perspective, focusing on:
- Increased employee deferral limits and employee tax credit incentives
- Increased employer plan contribution deduction limits
- The relationship between loan incidence and plan participation
- Tiered and Age-Weighted discretionary contribution formulas
- Online participant access for account balance inquiry and changes
- Key personnel Internet access to plan and participant data
- Paperless enrollment
- Electronic transmittal of payroll, loan and distribution transactions
- Automatic enrollment/negative election
- Controlled Group plan set-up and design alternatives
- Optimum frequency and educational content of employee communications
- Complying with 404(c) investment guidelines and requirements
- Management of the conversion/transition process
The Department of Labor has set a high standard for plan sponsors regarding the reasonableness of fees associated with qualified retirement plans. It is crucial that, as plan fiduciaries, you determine if the costs associated with corporate sponsored retirement plans are reasonable. A truly objective and high quality peer group comparison is one of the most efficient and comprehensive approach for this responsibility. From this type of evaluation, a retirement plan advisor would clarify the value received by a plan sponsor with respect to their retirement plan. We utilize tools provided by LPL financial in partnership with Fiduciary Benchmarks Inc. to create a procedure and output that makes this process seamless and scalable for all of our retirement plan clients.
LPL Financial’s Fee & Analysis Evaluation
The LPL Financial & Analysis Evaluation, powered by peer group data from Fiduciary Benchmarks, allows your advisor to quickly and simply compare plan fees along with value and design complexity against an appropriate peer group; in a format that plan sponsors can quickly read and understand. This four page report is integrated within the LPL Fiduciary Monitoring Toolset, allowing an advisor to leverage plan data already entered into the system and drive efficiency and automation.
How it Works
The Fee Comparison & Analysis Evaluation uses your existing plan data within the Fiduciary Monitoring System, combined with additional relevant statistics to create a comprehensive fee analysis report that includes an analysis on:
- Investment management fees
- Recordkeeping fees
- Advisor/Consultant fees
- Total plan fees
- Plan benefits & features
This comprehensive evaluation tool is yet another example of our commitment to helping sponsors access a premier analysis and reporting solution that allows them to remain ahead of the curve in today’s complex retirement plan regulatory environment.
Romero Wealth Management, Inc.
1585 E. 17th Street
Santa Ana, CA 92705 (map it)
Phone: 714 547-8787
Fax: 714 547-8080
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