Plan Sponsors - You Can Bullet Proof Your
Profit Sharing/401(k) Plan Investments
-
introducing
401Know Better
Crosshairs. As a pension fund trustee, you risk finding yourself as
a target in the crosshairs each day. Few investments are more
important to an individual than his or her 401 (K) retirement
account. As the caretaker of that money, you run the risk of
disgruntled plan participants or beneficiaries taking a shot at you.
These potential snipers carry a big gun -- the courts and the
Department of Labor. The bullets they use are the Prudent Investor
Rule and ERISA. The injury to you is your personal net worth.
The purpose of this corner is to outline the steps you should review
to take yourself out of the crosshairs, bulletproof your 401(K) plan
investments and introduce you to a different way of approaching your
fiduciary responsibility to your plan participants.
You can have better reporting, better advice, better investments,
better plan costs, and better plans for your employees.
Is there a better way?
Profit Sharing/401(Know) Better
Plan Sponsors Who Know Better. . .
Know Better Reporting
· Analyze performance rate of return, including contribution,
expenses, gains, losses and
distributions – see performance calculated on a monthly basis
· Receive detailed employer contribution reports with accurate
accounting detail and payroll
records to ensure that you meet your fiduciary responsibility to your
plan.
· Benefit from quarterly recommendations and market updates
Know Better Advice & Education
· Uncover hidden costs that are the greatest source of employee plan
dissatisfaction
· Expose your employees to the benefits of diversification and
long-term rates of return. With
a broader range of investment approaches available, your employees can
tailor their
portfolio to their current needs.
· Offer diversified fund groups based on employee “lifestyle” needs.
No one plan fits all.
· Help employees make investment decisions based a “personal risk
tolerance” assessment
survey
Know Better Investment Vehicles
· Offer Institutional Funds vs. Retail Funds – Institutional Funds
such as DFA offer long term
investment growth without the initial operational costs of retail funds –
think of it as buying
factory direct
· Make available no load funds vs. loaded funds – Many funds build
their marketing expenses
into their investment vehicles and pass those costs on to plan
participants
· Present a portfolio approach vs. stand alone approach – Few would
disagree with the need
for investment diversification. DFA funds are designed to be part of a
diverse portfolio of
investments
· Make it easy for your plan participants with “Lifestyle” choices –
Groups of funds pre-
selected for the varied needs of your employees. One click builds an
entire portfolio of well-
balanced funds.
Know Better Plan Costs – Did you know
· Uncover hidden costs – Many plans bury costs in the plan
performance where it is hidden
from the view of participants – this practice shifts some of the
responsibility on the plan
sponsor
· Reveal higher transaction costs – plans that take a buy and sell
approach inherently
produce higher transaction cost for participants
· Disclose Turnover costs, Conversion fees, Commission fees – Some
plans expect you to
believe that these costs of doing business don’t exist – When these costs
are either buried
or passed on to plan participants an environment of miscommunication
develops.
Know Better Plan Platform for Employees
· Introduce big time plans to your small business – Technology and
increased competition
allows any size employer to sponsor plans with features formerly
available to only the
largest employers.
· Make it high tech but simple to administer – Internet access and
online support makes
access and help a click away
· And yes, offer traditional printed paper reports delivered by the
United States Post Office
· A challenging process made easier – Our conversion team has
developed a “hand holding,”
highly organized conversion process that has successfully converted
1000’s of plans
· Offer a full time electronic advisor – Our plans offer an
“Automatic Rebalancing” feature that
readjust funds to keep the desired balance of investments in line at all
times.
Know Better Responsibility (Liability)
· Engage an advisor that accepts shared fiduciary responsibility
with regards to investment
advice information
· Brokers driven plans are currently the target of many Department
of Labor investigations.
Contact a
registered investment advisor at Cornerstone Wealth Advisors when
you're ready to know better. At Cornerstone, our investment advisors
are CPAs.
The Cornerstone Difference
/
Our Process
/ The Role of Risk
/
Investment Policy Statement
Effective Tax
Planning /
Time to Rebalance /
DFA Funds
/
Efficient Market Theory
Our Partners
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Principals /
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Investments /
Cornerstone360Blog
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401(Know) Better Tools
Profit Sharing Resources -
Helpful links to
profit sharing and 401k investment plan strategies
"Understanding
Retirement Plan Fees and Expenses."
This free publication from the US Department of Labor will give
fiduciaries a good fundamental overview of plan fees and expenses.
Department of Labor - Small Business Compliance Center
Compliance Assistance For 401(k) Plans
Meeting Your Fiduciary Responsibilities - To meet their
responsibilities as plan sponsors, employers need to understand some
basic rules, specifically the Employee Retirement Income Security
Act (ERISA). ERISA sets standards of conduct for those who manage an
employee benefit plan and its assets (called fiduciaries). This
publication provides an overview of the basic fiduciary
responsibilities applicable to retirement plans under the law.
Understanding Retirement Plan Fees And Expenses - This
booklet will help retirement plan sponsors better understand and
evaluate their plan's fees and expenses. While the focus is on fees
and expenses involved with 401(k) plans, many of the principles
discussed in the booklet also will have application to all types of
retirement plans.
Selecting An Auditor For Your Employee Benefit Plan - Federal
law requires employee benefit plans with 100 or more participants to
have an audit as part of their obligation to file the Form 5500.
This booklet will assist plan administrators in selecting an auditor
and reviewing the audit work and report.
Reporting and Disclosure Guide for Employee Benefit Plans -
This guide is intended to be used as a quick reference tool for
certain basic reporting and disclosure requirements under ERISA.
401(k) Plans For Small Businesses - This booklet highlights
some of a 401(k) plan's advantages, some of the options and
responsibilities of an employer operating a 401(k), and the
differences among the types of 401(k) plans. |
