America needs a new approach to retirement plan management.
The complexity of retirement plans is overwhelming companies’ ability to manage them. Fifty years ago, pension plans were generally funded by simple insurance contracts. Today, retirement is a $29 trillion industry.
The growth is propelled by a widening range of investment products, from basic index funds to increasingly sophisticated financial vehicles, all supported by a vast ecosystem of specialized players. Mutual fund companies, investment managers, hedge funds, private equity funds, consultants, trust banks, custodians, record keepers, administrators, and lawyers all play unique roles which fuel this system.
The more financial services companies innovate, the more complex retirement instruments become. The differences are in fine print, and the fees are buried in byzantine structures. It takes an arcane mastery to decipher them.
Unchecked over time, these fees can eat into the growth of many Americans’ retirement savings.
Companies try to manage retirement plans with fiduciary committees comprised largely of C-level executives. Their best intentions and efforts can’t solve the underlying problem because it’s too specialized, intricate and dynamic. Like a home cook trying to run a Michelin Star restaurant, no advice or recipe can overcome the fluency gaps. Unwittingly, this distraction of senior executives’ time ends up compromising the very operational efficiencies that companies need to face today’s unprecedented economic challenges.
Increasingly, the slightest misstep puts a fiduciary committee in the crosshairs of an army of litigators. It also risks employee dissatisfaction and possibly the company’s reputation.
The future is independent fiduciary management.
There is a simple, powerful solution. Qualified expert professionals can evaluate plans and review, select, negotiate with, and monitor service providers – all consistent with the uncompromising fiduciary standards of ERISA.
Independent fiduciaries can bring the right qualifications – an uncommon skill set of ERISA and investment expertise. Professional fiduciaries bring independence, and resources (time and effort) so that plans can be leaner, compliant and economically efficient. The best inoculation against the expanding legal risks associated with plan management lies with independent fiduciary oversight and management.
When companies embrace independent fiduciary management for retirement plans, they can rest assured that qualified experts are managing their employees’ retirement savings. As an additional benefit they can eliminate a drain on executive time and corporate performance. They can focus their best people 100% on the critical jobs that demand their special expertise.