PLANSPONSOR - August/September 2021 - 14

UPFRONT
What Advisers Wish Plan Sponsors Knew
retirement strategist at Capital Group. This
starts with the sponsor recognizing that it
needs an adviser, retirement specialist or
consultant to help it with this process.
" The way to solve the problem is to
change the way plans are designed, in such
a fashion that plan participants can achieve
good outcomes without having to know
[what's involved], " Doyle says. " I don't see
any evidence that we're any better at this
than we were several years ago. "
Implementing re-enrollment is one
strategy, he says.
According to David Swallow,
managing director, consulting relations
and retention at TIAA, some advisers say
they wish sponsors better understood the
" importance of documenting their actions,
in relation to the plan, and retaining
records. How a retirement plan is ultimately
judged comes down to process.
Documentation supports the process you
went through in making your decisions. "
RETIREMENT plan sponsors need to be
knowledgeable about their investment
lineup and deliver documentation to the
Department of Labor (DOL) and IRS in
a timely manner. Most retirement plan
committee members know this.
Yet, there are some things that advisers
and consultants wish their sponsor clients
were better at, or that they prioritized more.
" The No. 1 thing is being aware of
their role as a fiduciary, " says Craig Eissler,
wealth adviser with Halbert Hargrove.
" Many plan administrators may believe
that hiring advisers and third-party administrators
[TPAs] will entirely divest them of
all liability and decisionmaking. "
But plan sponsors " inherently act as
stewards [that] create the retirement plan, "
he continues. " The investment committee
members are charged with overseeing
the portfolio, and other administrators
are involved in ensuring the plan runs
smoothly. Even with the use of service
professionals, plan sponsor fiduciaries are
still responsible for showing prudence in
the active management of the plan. "
Smarter Automatic Features
Recently, more plans have upped their
default deferral rates for automatic enrollment
from 3% or 4% to 6%: According
to the 2020 PLANSPONSOR Defined
Contribution (DC) Survey, for 52% of plans
that use automatic enrollment, the default
deferral rate was greater than 3%.
Some are pairing that with annual
automatic escalation of 1% up to ceiling
caps of 10% and, in some rare cases, 15%.
Sponsors that use automatic features
should be willing to listen to an adviser's
recommendations on completely
rethinking their deferral formula, in order
to create better participant outcomes, says
John Doyle, senior vice president, senior
14 PLANSPONSOR.COM August - September 2021 Art by Woshibai
Defining Success
Another top-line objective for sponsors
is defining success, Eissler says. There is
sometimes a disconnect between what
plan sponsors and advisers think the plan's
priority, or definition of success, should be.
For sponsors, " ideally, success would
depend on what objectives an employer
has when establishing the plan " and
what responsibilities it is willing to take
on, Eissler explains. " They typically will
prioritize passing annual compliance
tests, ease of plan administration, low
costs and getting competitive investment
returns. While these are all desirable
outcomes, what often can be overlooked
is high participation rates and,
ultimately, sufficient contributions into
the plan to ensure a financially secure
retirement for participants. Pertinent
employee education and straightforward
investment options can often help accomplish
these priorities, " he notes.
A big misconception relates to cost,
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