401k Best Practices

Proven Strategies to Grow a Successful 401k Practice

2-Service your 401k Clients

Seven Policy Statements Every Plan Should Consider

by Sharon Pivirotto | Follow Me on Twitter Here

 

Seven Policy Statements Every Plan Should Consider

I recently read an article titled “Five Administrative Policies Every 401(k) Plan Needs” by the National Law Review. 

I have to say, I’m not sure every plan needs to adopt all five. I think a lot depends on the size of the plan, how much time the plan sponsor allocates to the management of their plan, what kind of process is in place to ensure the plan is being run according to all plan documents, and so many additional factors.

Especially since any policy adopted, becomes an “official plan document” and accordingly, must be followed.

And of course, I always recommend a plan sponsor check with their ERISA attorney before formally adopting any such policy.

7 Plan Policy Statements to Consider…

That being said, here are the policies listed:

  1. Loan Policy
  2. QDRO Procedures
  3. Cybersecurity Policy and Procedures
  4. Missing Participant and Uncashed Check Procedures
  5. Investment Policy

Additional policies plans I often see plan sponsors request or use include:

  1. Education Policy 
  2. QDIA Policy

What are your thoughts?

Do you feel most plans need to adopt all of these policies? 

Are there other policies you’ve seen or used with your clients?

Are there other ways to simply document best practices in each area and how the plan is addressing these each year without formally adopting a policy?

Let me know what you think.

And if you’re looking for a sample best-practice list or sample policy statements for the above topics, check out the new 401k Plan Compliance File Kit.

 

Fiduciary Risk Management 101 – Building a 401k Plan Compliance File

by Sharon Pivirotto | Follow Me on Twitter Here

 

Fiduciary Risk Management 101 – Building a 401k Plan Compliance File

Do you offer a 401k plan compliance file to help protect plan sponsors in the event of an audit?

I’ve heard it many times before that if a plan is audited, and the plan sponsor is able to quickly produce all of the items the auditor is requesting, the audit itself is usually pretty fast and painless.

However, if they don’t have, can’t find, takes forever to pull together the requested material, it’s a good sign the auditor will likely find additional things wrong with the plan (bad news for the plan sponsor).

So what does your process look like to onboard your plan sponsor clients, then help gather and organize the important plan documents that demonstrate prudence in the management of their plan?

Whose Job is it Anyway?

It’s not really the job of an advisor to hold all the plan documents.  I remember a prospecting situation where the Plan Sponsor said they had an Investment Policy Statement, but the Advisor had it in his office. They didn’t have a copy or access to a copy.  (And if you’re thinking maybe that was just a brush off – they did give us 80% of the documents we asked for.)

As an advisor, I’d submit you bring a lot of value to the table by helping plan sponsors understand how to document a prudent process, and how to build a solid plan compliance file that helps them demonstrate they’re meeting regulation with process.

I would not, however, recommend you take responsibility for holding this audit file in-house.

And with cybersecurity concerns, I’m not even sure I’d recommend you set up an online vault anymore (I used to be huge advocate for this back in the day – today however, you’re just one hacker away from leaking personal plan data).

I would recommend you provide plan sponsors with a compliance file checklist to identify what they should keep on file, including document retention guidelines.

I also feel that if plan sponsors need assistance in building out their compliance file, you should help them by providing sample documents and sample policy statements that they’re welcome to incorporate into their plan file. 

So, what should be in a plan compliance file?

First, I’d recommend organizing it by key area of responsibility:

  • Fiduciary Documents
  • Investment Documents
  • Service Provider Documents
  • Participant Documents
  • Administration Documents

Then, in additional to the usual you’d expect to find (e.g. plan document, SARs, quarterly investment reports, service contracts, tax forms, participant disclosures, ERISA bond, etc.), I’d consider offering your clients some sample documents to help them demonstrate prudence in how the plan is being managed in each of the key areas. 

NOTE: I would NOT provide all these documents to EVERY client. It would depend on plan type, client size, plan sponsor committee(s) involvement, etc.  But here is a list of some of the items you might consider sharing with your plan sponsor clients to help them build a more audit-proof compliance file:

Fiduciary Document Add Ons:

  • ​​​​Internal Fiduciary Worksheet 
  • ​Fiduciary Appointment & Acknowledgement Letters
  • ​Fiduciary Resignation Letter Sample
  • ​Sample Bylaws
  • ​Sample Code of Ethics
  • ​Sample Conflict of Interest Policy
  • ​Recommended Reading Form for New Committee Members
  • ​Sample Committee Minutes

Investment Document Add Ons:

  • ​Sample Investment Policy Statement
  • ​IPS Review Checklist
  • ​Investment Review Checklist

Service Provider Add Ons:

  • ​Service Provider Agreement Checklist
  • ​Service Provider Review Checklist

​Participant Document Add Ons:

  • ERISA Section 404(c) Checklist
  • ​Required Participant Disclosures Checklist
  • ​Sample Employee Education Policy Statement
  • ​Sample 404(c) Notice to Participants
  • ​Sample Participant Education Program Calendar
  • ​Participant Education Program Checklist

Administration Document Add Ons:

  • ​Sample Plan Administration Calendar
  • Plan Operations Review Checklist
  • Committee / Advisor Responsibility Checklist

Today, there’s also a lot of discussion around policy statements (Education, QDRO, Loan, Missing Participant, Cybersecurity, QDIA, etc.) so having a sample template that reviews best practices in these areas could also help you provide tremendous value to your clients.

Less is More… Except When it isn’t…

So there are a few schools of thought on how much additional documentation plan sponsors should have on file.

On one hand there are those who say don’t adopt anything but the required plan document – because when you adopt a new policy for how you’ll manage the plan – you.must.follow.it.

On the other hand, it’s often what’s missing from an audit file that hurts a plan sponsor more than the efforts they took to document a prudent process.

I say use your best judgment, and always recommend your plan sponsor clients consult with an ERISA attorney before formally adopting any written policy.

If you’re interested in helping your plan sponsors clients build a more solid compliance file (aka fiduciary risk management file), and would like to have access to a complete set of compliance documents to use in your practice, then check out the 401k Plan Compliance File Kit.

 

Free Template Tuesday Downloads Starting October 18

by Sharon Pivirotto | Follow Me on Twitter Here

Free Template Tuesday Download Now Available Starting October 18, 2022

Every week inside the free VIP Resource Library, I give away one (or more) templates from the 401k Business in a Box Library (normally only available inside the paid program).

Here is this week’s free template.

Click Here to go to the VIP RESOURCE LIBRARY and Download the FREE TEMPLATE

Service Your Business:
Service Agreement Checklist

Inside the Compliance File in a Box Complete Kit, you’ll a service agreement checklist under Plan Provider Documentation.

This checklist helps plan sponsors document:

  • who their service providers are
  • who they have current contracts on file for
  • how they’re paid (plan assets or by the company directly)
  • who has provided required disclosures (401(b)2 and Cyber Security Policies)

Having this checklist makes provider reviews and benchmarking much easier as well!

This week you can access the Service Agreement Checklist.  Just log into the Free Resources VIP Library to access.

 

If you’re not already a member of the VIP Resource Library, click here to join now (it’s free).

Creating Your Own Unique 401k Service Process

by Sharon Pivirotto | Follow Me on Twitter Here

Creating Your Own Unique 401k Service Process

How can you avoid the commoditization trap – selling the same products and services as everyone else and competing on price?

In this article, I’m sharing one way to package your services that allows you to sell value and the experience you’re taking your clients through (instead of having to compete to sell the same products and services that everyone else offers).

The Commoditization Trap

The commoditization trap is basically competing to sell the same products and services as everyone else – and having to compete on price. How can you stop competing on price and start competing on value?

I think you can do that by selling the experience you’re taking clients through instead of your products and services.

What I mean by that is you should create a unique service process that explains the services that you offer and what the experience looks and feels like as a plan sponsor client.

An Example of a Unique Service Process – the 401k Service Solution

6 Steps to Include in Your 401k Service Process

Back in the day, when I was a practicing financial advisor, my partner and I created the 401k Service Solution.  I actually created a full-on binder that had a set of clear plastic sleeves for each step in this 6-step process.  Each step included an education guide, a workbook, and then a summary report containing the key decisions and documents for that step.

Here’s are the 6 steps in that 401k Service Solution* process:

  1. The Vision Session – defining your vision of plan success
  2. A Solid Foundation – using an investment policy statement effectively
  3. The Portfolio Builder – comparing plans and reviewing expenses
  4. The Advanced Investor Series – developing an effective employee education program
  5. The Peak Administration Guide – staying informed and educated about your plan
  6. The Lead Fiduciary Practice – reviewing your plan’s investments

So basically, every service that we offered (that everyone else offered), we gave it a name. Then we created our own multi-step process for each particular service offering outlining the steps that we would take clients through. And then we called the whole set, the whole six steps, the 401k Service Solution.

Another Example – Charlie Epstein’s 401k Coach Retirement Solution (trademark of Epstein Financial Services)

Another example is Charlie Epstein’s “The 401k Coach Retirement Plan Solution.” The stages in his process included:

  1. The Plan Evaluator
  2. The Plan Optimizer
  3. The Fiduciary Shield
  4. The RFP Manager
  5. The Paychecks for Life Experience
  6. The Wealthcare Monitor

So do these examples help you understand what I mean when I say create a “unique process” to take your clients through the experience of what it’s like to work with you? To take all of the services that you offer and put them in a format, in a process that the plan sponsors can easily understand?

There’s more value and more credibility that comes with saying, “We’re going to take you through the Plan Optimizer Process,”  instead of just saying, “We are going to help you review your investments and make any changes.”

We’re basically talking about packaging up the services that you offer into a unique process that plan sponsors understand.

And when you go through the exercise of creating a process, your services actually do become more valuable. You see the gaps in what you’re offering. You’re able to identify all of the different phases and things that have to take place for every one of the services that you offer. You’re able to more easily explain that to plan sponsors. So it actually does become more valuable. And it sounds a lot more valuable as well.

Creating Your Own Unique Service Process

To build your own unique process, start by writing down all of the services that you offer. Then give each service a unique name. Just having a name implies value and suggests that it’s not a commodity.

Give each stage a descriptive, but unique name, like: blueprint, formula, process, evaluator, manager.

Then package up your process in a visual way.

Inside the 401k Quarterbacks Template Library (and inside the Pitchbook Presentations in a Box Kit, we have over 11 different super-easy-to-edit graphics already created for you to choose from. Simply pick one, modify the colors to match your brand, add your own unique process names – then you have a visual representation of your service process.

But it’s really not difficult to create your own unique service process. If you do a Google search right now with the term “401k service process,” you’ll find several other examples from other advisors who are doing the same thing.

And I know when I read about any company who has a process for how they deliver their services, I see them as more of an expert. I think to myself – they must have more experience, more knowledge, more organization skills than most of us – and more sales skills, because truth be told from a marketing standpoint, it’s an authority builder when you’ve packaged up what you offer and you’ve put it into a process.

This article is a super-condensed version of a longer training that includes more examples and a full workbook for creating your own process that I’d be happy to share with you if you’re interested. If you would like that, send me an email and I will send you a link to it.

And if you want done-for-you process graphics that you can use to build your own unique process, I have those inside the 401k Quarterback’s Template Library.

*The 401k Service Solution is a trademark of fi360 (since we sold them our IP on that process back in 2013)

 

Listen to the Podcast episode of this topic here.
Or watch the video on YouTube here (coming soon).

[PDF DOWNLOAD] Investment Committee Starter Kit

by Sharon Pivirotto | Follow Me on Twitter Here

Download the Investment Committee Starter Kit

Information on what plan sponsors need to know and do when setting up an Investment Committee (with sample committee templates)

Helping your clients set up an investment committee to clearly define and document a process of plan oversight is an effective way to help them limit the liability associated with managing a 401(k) plan, and provide tremendous value.

There are a lot of great articles on how to build a strong 401k committee – but I wanted to make it easy for you to explain to plan sponsors what to do and how to do it, so I put together this 18-page Investment Committee Starter Kit.  It’s not a big long comprehensive overview of fiduciary responsibilities…

It is a short, easily digestible, instant-value giveaway that you can use all together, or as 10 individual handouts – that’s up to you.

Besides the bookends (the cover and the last page where your contact information would go), here’s what’s included in this downloadable PDF:

 

​5 Sample Forms Including:

  • ​Committee Bylaws
  • Fiduciary Appointment & Acknowledgment Letter
  • Sample Meeting Agenda
  • Sample Meeting Minutes
  • ​Investment Policy Statement

5 One-Pagers Covering the Following Topics:

  • ​Why Set up a Committee
  • ​Oversight by Plan Size
  • ​10 Steps to Build a Successful Committee
  • ​Common Questions about Setting up a Committee
  • Document & Regulation Overview

Here are just some ways you can use this download:

> To grow your business – if you’re looking for ways to add value when you meet with prospects – or something to get your foot in the door – give them this investment committee starter kit – or even just one or two of the educational one-pagers found within, or any one of the sample template forms…

> To service your clients – if you want to add more value to your existing relationships, this set of documents will help you add another layer of value to your service model

> To bullet proof your book – your small plans may not be ready for a full-blown committee yet, but at some point they will be, and if they don’t know you can help them with setting up a committee – you’ve left yourself open to your competition coming in and discussing this with them

> To move up-market – if you only work in the micro plan market and want to move up market, having this resource can open doors to plans ready to set up a committee as they often outgrow their current “services” and want someone to proactively discuss next steps with them

> To generate leads online – if the only thing you have on your website is an opt-in form asking people to “subscribe to our newsletter” – change that to – “download the free committee starter kit” and you’ll start to get qualified leads by exchanging something of value with an email address of someone that wants information on services you offer

Note – the Investment Committee Starter Kit is completely free.

Click here for Instant Access to the Committee Starter Kit

Note: This kit can be used as is with no editing, just add a final page with your contact information.

You’ll have an option to grab the fully editable PowerPoint version (for less than $50) making it super-simple to customize if you do want to make changes, update the design to match your brand, etc..  If you do that, here are some suggestions for customizing this investment committee kit to make it your own:

1. Consider changing the title to: “401k Plan Fiduciary Kit” or “Retirement Plan Committee Resource” or “401k Committee Kit” or “401k Committee Template Pack” or “Committee Resource Kit” or… keep it the same – that’s up to you!

2. Swapping out the book “Best Practices for Investment Committees” referenced on one page of the kit (since it is no longer in publication as of 10/22/22) with the free DOL Guide “Meeting Your Fiduciary Responsibilities” or fi360’s “Prudent Practices for Investment Stewards” or… any other book you think Plan Sponsors should read.

Click here for Instant Access to the Committee Starter Kit