Is It Time for Plan Sponsors to Rethink Retirement Plan Management?
The retirement plan system is broken – just ask corporate directors and C-suite executives who are responsible for these plans.
A barrage of increasing risks, known and unknown, demand and divert the attention of senior management:
- Mounting plan liabilities
- Sophisticated and complex investment strategies
- Class action litigation
All of these risks divert senior management’s time from executing the company’s corporate mission. Too many CEO’s offer the same complaint, “The retirement plan is one of my biggest headaches.”
ERISA does not mandate that a plan sponsor or its senior managers act as fiduciaries of a plan or assume the ancillary potential liability that is associated with fiduciary responsibility. Still, most corporations rely on internal committees to manage plan responsibilities. Typically, these committees are staffed with senior executives who have well-honed experience in areas such as finance, legal and human resources but often, they are not investment professionals. And yet, ERISA imposes personal liability on these corporate fiduciaries.
Therein lies the challenge – does this structure best serve the interests of the plan participants or the plan sponsor?
For some plan sponsors the answer will be yes. But for an increasing number, the realities of handling retirement plan management internally just don’t make good sense. As the world and the economy are rapidly changing, it may be good time to consider another option.
Today’s economic environment requires corporations to focus all available resources on executing core business strategies. Allocating the fiduciary responsibilities and maintenance of employee retirement plans to an expert independent fiduciary can eliminate a significant distraction.
For many retirement plans this is a departure from the old ways of doing things. But this new business model will enable plan sponsors to transfer the burden of fiduciary responsibility and the risk associated with it.
Hiring an independent fiduciary can not only significantly mitigate the personal liability of corporate officers but will likely generate material savings on the administrative costs of managing an ERISA qualified retirement plan. As expert professionals in fiduciary practices and investment management, the actions of Harrison Fiduciary Group and the decisions that we make, are always in the best interest of plan participants, ensure that there are no conflicts of interests and are consistent with all other ERISA fiduciary standards. Any independent fiduciary that a plan considers, should also make this pledge.
Hiring an independent fiduciary firm can assure corporate directors and senior managers that their valued employees and retirees receive the very best expert investment oversight and decision making with respect to their retirement savings. And importantly, it will free them from the aforementioned responsibilities, including the associated liabilities, so they can concentrate exclusively on their core business challenges.
Maybe it’s time.