Mergers and acquisitions are changing the marketplace of 401(k) plan service providers. Plan sponsors are advised to have high expectations.
Expect Robust Products and Services
Although the mergers and acquisitions among service providers in the 401(k) market have created some anxiety about less competition and higher fees, there has actually been a trend toward lower fees and in some cases, more robust services. As the Society for Human Resource Managers observes:
Plan sponsors may be pleasantly surprised by more robust products, services and technology if their providers merge with or acquire other players. “They could see new capabilities and major improvements in the information available to participants, including retirement planning tools,” said Jim Bartoszewicz, chief compliance officer for the Fiducia Group, a retirement plan advisory firm in Pittsburgh.
Importantly, experts encourage plan sponsors to periodically assess what providers are offering, as well as the associated fees. Check-in with colleagues in finance and HR too and consider the services that will ultimately benefit plan participants the most. Experts advise:
Cost savings is not the only reason to go to market. Over time, providers roll out new services for plan sponsors and plan participants. Therefore, the RFP process can help employers see what is available.
Employers with smaller plans may benefit from additional administrative services and more robust participant education since they lack the internal HR and other support staff available in larger organizations. Consolidation also can make expanding services in the small plan market less expensive for providers, thanks to economies of scale.
Secure Comprehensive Support
When it comes to protecting your plan—and yourself as a fiduciary—let a national leader in the field serve you. Uniquely, Colonial Surety Company’s comprehensive and affordable coverage packages arm plan sponsors with:
The ERISA bond required to protect the assets of the retirement plan from theft;
Cyber Liability coverage to safeguard your company and plan from covered losses and expenses in the event of a cyber breach; and,
Fiduciary Liability coverage to protect you and your assets from personal liability.
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Experts recommend actively partnering with your chosen 401(K) service provider. Tips include:
- Build and leverage your relationship with your account manager. For example, when a merger or acquisition is in the works, ask for discussion on the impact to plan services. You may even ask to serve on an advisory board—or help to start one!
- Regularly check out the market to ensure your current investment fund and administrative providers are competitively related to fees, products, and services. Take extra care to monitor the competitiveness of investment funds and fees. This is a critical aspect of your fiduciary duties.
- Network with other plan sponsors, expressing shared needs to help providers prioritize.
With an active year ahead as a plan sponsor, don’t forget your coverage! Select your comprehensive ERISA bond package from Colonial. With our unique, affordable packages, you can secure up to $1,000,000 of fiduciary liability insurance.
Remember, the ERISA bond required for the retirement plan protects the participants of the plan, but does not cover the plan sponsor (you!) as the fiduciary. Colonial’s 2 or 3-year ERISA bond packages provide great overall savings and protection. In addition to fiduciary liability coverage, you can add cyber liability insurance to safeguard your company and plan from covered losses and expenses in the event of a cyber attack. Colonial even includes extended coverage to ensure your ERISA bond remains US Department of Labor compliant.
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