It’s annual review time! At least once each year, retirement plan sponsors should be meeting with their 401k plan investment advisor to review what happened in the plan during the prior year. Those plan sponsors that are already meeting with their advisor on a quarterly basis take note – the annual review should be a little different. All annual reviews should cover:
What To Expect
Investment option performance – from a different perspective
Plan sponsors should review performance at the annual review meeting through a slightly different lens. Now is the time to consider making any adjustments to your find line up. Barring emergencies, plan sponsors should try and confine investment menu changes to once per year. After year-end is best since any changes can be included in employee education sessions prior to rollout.
Investment menu changes
Most plan sponsors end up making at least a few investment menu changes each year. Your advisor should have anticipated which funds might need to be deleted or added and come to the meeting with replacement suggestions. For example, this year I will be recommending to my clients that they add fixed income options that can be expected to perform well in a rising interest rate environment.
Discuss when employee education sessions should take place during the coming year. Plan sponsors will want to synchronize these sessions with the effective date of any investment menu or plan design changes. It is always best to hold employee education sessions as close as possible to the date these changes go into effect.
Plan design review
Is your plan design still leading-edge? Should you consider converting your plan to a safe-harbor plan design? Maybe it is time to re-enroll all of your participants in target date funds? Finalize any plan design changes or actions so they can be incorporated into your annual employee education sessions.
Annual review of fees
The Department of Labor expects you to review provider fees at least once per year. I review my fees with my clients during the annual review meeting when I distribute my updated ADV. If your investment adviser is not proactively leading a discussion of his/her fees with you annually, you will need to raise the question.
Review of the Investment Policy Statement (IPS)
Each year your advisor should ensure that the plan continues to follow the procedures outlined in the IPS. Since this is a very dynamic business, it is not uncommon to have changes to the IPS each year.
If your annual reviews with your investment adviser have not included these topics in the past, consider asking him/her to cover them this year.
Robert C. Lawton, AIF, CRPS is the founder and President of Lawton Retirement Plan Consultants, LLC. Mr. Lawton has over 30 years of retirement plan consulting and administration experience and has provided consulting services to many Fortune 500 companies including: Aon Hewitt, Apple Inc., AT&T, First Interstate Bank, Florida Power & Light, General Dynamics, Houghton Mifflin Harcourt, IBM, John Deere, Mazda Motor Car Company, Northwestern Mutual, Northern Trust Company, Trek Bikes, Tribune Company, Underwriters Labs and many others. Mr. Lawton may be contacted at (414) 828-4015 or email@example.com.
Lawton Retirement Plan Consultants, LLC is a Milwaukee, Wisconsin-based independent, objective Registered Investment Advisory (RIA) firm providing investment advisory, fiduciary compliance, employee education, vendor management and plan design services to 401(k) plan sponsors. The firm currently has contracts in place to provide consulting services on more than $400 million in plan assets. For more information, please contact Robert C. Lawton at (414) 828-4015 or firstname.lastname@example.org or visit the firm’s website at: https://www.lawtonrpc.com. Lawton Retirement Plan Consultants, LLC is a Wisconsin Registered Investment Adviser.
This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance, tax, legal or investment advice. Each plan has unique requirements and you should consult your attorney or tax adviser for guidance on your specific situation. In no way does Lawton Retirement Plan Consultants, LLC assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations. Investors should carefully consider investment objectives, risks, charges and expenses. The statements in this publication are the opinions and beliefs of the commentator expressed when the commentary was made and are not intended to represent that person’s opinions and beliefs at any other time. The commentary does not necessarily reflect the opinion of Lawton Retirement Plan Consultants, LLC and should not be construed as recommendations or investment advice. Lawton Retirement Plan Consultants, LLC offers no tax, legal or accounting advice and any advice contained herein is not specific to any individual, entity or retirement plan, but rather general in nature and, therefore, should not be relied upon for specific investment situations. Lawton Retirement Plan Consultants, LLC is a Wisconsin Registered Investment Adviser and accepts clients outside of Wisconsin based upon applicable state registration regulations and the “de minimus” exception.