Surveys indicate that about 70% of plan sponsors have been using the same record keeper for 5-7 years. Given the changes and possibilities in the field, it might be time to explore current offerings. Cybersecurity? Error reduction? Both are critical considerations.
Seek Out Solutions for Pain Points
If it has been 5-7 years since you assessed the field and contracted with a record keeper, you may be missing out on services that could make the administration of your plan better—and safer. Experts observe that ongoing consolidation in the industry, fee compression and technological advancements are creating both new possibilities—and challenges. For example, have the people relationships changed so much that you don’t know who you can call? Do your employees and plan participants find that the call center representatives have sufficient training to provide high levels of service? Are participants benefiting from financial education that helps them in these shifting times?
In addition to these traditional fundamentals of good service, it’s a good idea to look at advancements in the field related to cyber protection and error reduction. Plan Sponsor, offers these tips from industry experts:
With cybersecurity, go beyond asking about the basics of what a record keeper does to prevent attacks, suggests Jim Sampson, director, retirement advisory services at Hilb Group Retirement Services in Cranston, Rhode Island. “It’s also an issue of: Who’s got a guarantee to reimburse a participant if there is a loss, and what do the guarantees entail?” he says. “It’s something I think too few sponsors are asking about now.”
The ability of record-keepers’ systems to fully communicate with payroll providers’ systems also has become an issue in current searches….Sponsors increasingly look for 360-degree integration…. They want not just 180 degrees, where their payroll provider’s system can speak to the record keeper’s system, but the two systems communicating seamlessly. “The data is transmitted directly from the record keeper’s system to the payroll provider’s without the employer having to touch it….There’s no better way for a sponsor to create efficiencies, and it’s also an opportunity to reduce errors, which goes back to the desire for fiduciary protection.”
Failing To Appropriately Select…
Appropriately selecting—and monitoring service providers is a fiduciary responsibility. Accordingly, under ERISA law, you can be held personally accountable to the plans’ participants and beneficiaries for a breach of these duties. The rise in ERISA lawsuits filed each year, makes it ever more important to mitigate your risks and protect your personal assets.The harsh reality is that even when you are not at fault or liable, you can still be sued—and defending yourself can be ruinous. For example, just one hour with an expert ERISA attorney is likely to cost you upwards of $600.Plan sponsors across the country trust Colonial Surety, for affordable and comprehensive protection packages. Uniquely, at Colonial, plan sponsors can obtain affordable fiduciary liability insurance and cyber liability coverage along with the required ERISA bond. Colonial’s fiduciary liability insurance covers your business—and you as the fiduciary—against claims of alleged or actual breaches of duty in connection with the employee retirement plan. Annual premiums total less then just an hour or two with an expert ERISA attorney. Colonial’s comprehensive ERISA bond packages offer plan sponsors up to $1,000,000 of fiduciary liability insurance. Choose Your Plan Sponsor Protection Package Here.
Bells and Whistles?
While there are many features and benefits available from service providers, don’t get so distracted by “shiny objects” and flashy talk that you (and your committee) forget about the challenges you set out to solve when exploring the field. New online tools for participants to use are of course interesting—and might be helpful—but perhaps you need to steer the conversation back to making sure you actually understand the plan fees? Similarly, what services will actually reduce errors? Less errors means less risk for everyone. Alicia Malcolm, a senior vice president and partner in The D’Aiutolo Malcolm Consulting Group at UBS Financial Services Inc. in Buffalo, New York offers this reminder:
“Payroll integration is an important issue for many sponsors now, but [it’s] boring to talk about. So oftentimes in these meetings, the recordkeeper’s salespeople will focus more on showing flashy technology,” she says. “I always remind clients, ‘The salespeople are really good, but let’s not let the sales process blur what’s important to you. Let’s keep in mind, what are they saying about what they’re going to do to help you fix your plan’s problems?’”
Leading national ERISA bond provider, Colonial Surety Company is a trusted source of protection in the pension industry. Plan sponsors are invited to opt for cost-saving multi-year coverage packages designed specifically for the times at hand. Come to Colonial for: the DOL’s required ERISA bond that protects the assets of the retirement plan from theft; Fiduciary Liability coverage that protects you and your assets from personal liability; and, Cyber Liability coverage to safeguard your company and plan from covered losses and expenses in the event of a cyber breach. With Colonial, you can easily and quickly secure your affordable coverage package today. Take a few minutes and do it now: Complete ERISA Bond Package.
Serving customers since 1930, Colonial Surety is the trusted source for the pension industry to secure legally required ERISA bonds, fiduciary liability insurance and cyber-liability insurance. We help safeguard plan sponsors, pension professionals and financial advisors – and keep their businesses compliant – with pain-free, efficient, and friendly service every time.
Colonial Surety Company is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed and in business all across the country.