Advisors who work with plan sponsors should always be focused on creating value when designing a retirement plan to benefit plan participants. The greatest benefit of having a retirement plan is the opportunity to save money and then use it to retire comfortably. In that the retirement plan becomes a vehicle to replace income stream after retirement. This concept of replacing the income stream should be the objective of the plan design.
A fiduciary to a retirement plan will be monitoring funds offered to participants to ensure that the plan menu provides enough option to select from to address different needs of various participants. The proper selection of funds is one of the most important responsibilities of the fiduciary and the start of the plan design. There are other important variables in the plan design process like different fees associated with the plan, service providers, etc.
As a fiduciary it is important to know all details of the plan design in order to be able correctly analyze it and compare it to other options. The advisers who grow their business working with plan sponsors will have a positive impact on the relationships with prospects if their approach to a plan design would emphasize objectives important to plan participants such as income replacement after retirement. The plan design should provide easy to select options from the menu.
As research shows, more options create more confusion when a selection must be made. Other important features of the plan are auto enrollment using default options, increasing contribution over the time. These are features of successful retirement plans. As suggested in the article “How does our retirement plan compare to others?” running a detailed analysis of the plan and looking at how well plan is designed to benefit plan participants by helping them to achieve their financial goals when they will retire can help to separate good plans from the ones that need to be replaced.