PLANSPONSOR - March - April 2023 - 16

30TH ANNIVERSARY | PLAN DESIGN
employers with 1,000 through 4,999 employees and 32% for the
largest employers, the council's findings show.
The safe harbor provision also dictates a few options for the
employer match, which must vest immediately. Even companies
that have not adopted a safe harbor plan sometimes opt for the
safe harbor matching formula.
" Without a doubt, one of the most popular matches is that
safe harbor match: 50 cents on the dollar up to 6%, " says Mark
Alley, national market president at Alerus in St. Paul, Minnesota.
The embracing of safe harbor plans also reflects plan sponsors'
growing recognition of liability and litigation risk. " There's
just been an increased awareness and understanding of what it
means to be a fiduciary, " says Ted Schmelzle, second vice president,
retirement plan services at The Standard in Minneapolis.
" That's been to the benefit of all participants, because when
plan sponsors take that responsibility to heart, they're making
good decisions on behalf of their participants and paying attention
to returns. "
Sponsors also started paying close attention to plan fees,
which became a focus following increased litigation in the early
2000s and implementation of fee disclosure rules in 2012-all
amid growing provider competition and heightened consumer
awareness of 401(k) fees, says Ashish Shrestha, head of retirement
distribution and vice president at Dimensional Fund
THE PLAN
ADVISER
ROLE IS
EVOLVING,
TOO
AS THE WORKPLACE retirement plan
industry has grown and evolved over
the past three decades, so, too, have the
adviser firms that work with the plans.
Some in the industry expected the
role of advisers to diminish along with the
rise of internet data and the passage of
the Pension Protection Act, which allowed
for qualified default investment alternatives
and the easing of advice rules, says
Lynda Abend, head of strategy and transformation
at John Hancock Retirement in
Boston, but the opposite happened.
" While monitoring the investments
in the plan continues to be a key focus,
16 PLANSPONSOR.COM March - April 2023
Advisors in Santa Monica, California.
" The result has been a great benefit to plan participants,
as not only were fees reduced, but the increased transparency
also greatly alleviated conflicts of interest in the delivery of plan
advice, " Shrestha says.
An Evolving Match
Another way sponsors have sought to guard their plans from
risk has been to get help from a growing number of specialist
advisers and consultants. These experts have been adding
value for clients by various means. A notable one has been by
providing guidance about matches and vesting formulas, in
response to regulatory changes, current events and secular
trends in the economy.
The Economic Growth and Tax Relief Reconciliation Act
of 2001, for example, mandated shorter vesting schedules, but,
in recent years, these have trended even shorter as employers
have reversed their view of the schedules' value-i.e., short for a
recruitment tool, vs. long for retention.
" Shorter vesting schedules are definitely a step in the right
direction, " Schmelzle says. " If participants see that they're going
to really have a vested interest in the matching contribution
earlier, they're more likely to become engaged and interested in
participating in the plan. "
many advisers have
added
[further]
services that they can provide to the sponsors
and participants, " she says. " In recent
years, we've seen more advisers take on a
role as a fiduciary of the plan, where that
was not the case 30 years ago. "
This change allowed sponsors lacking
in-house expertise in investments to fulfill
their fiduciary role by hiring an adviser
who can meet
that obligation. As
the
ranks of plan advisers have grown, some
advisers have differentiated themselves
by specializing in a niche such as financial
wellness or smaller-business advising.
Such decisions have been a positive
movement for the industry at large, as
they have allowed more smaller companies
to have access to benefits they may
have previously been unable to offer, says
Suzanne Ricklin, vice president of retirement
solutions and retention at Nationwide
Financial in Baltimore.
A FOCUS ON OUTCOMES
As plan sponsors have learned more
about the importance of plan outcomes,
advisers have played a vital role in helping
them evaluate and benchmark their plan
and their providers to find ways to make
improvements.
" Over
time, plan
sponsors have
the outcome
increased their reliance on advisers to
ensure [the sponsors] get
they target from their plan for their participants
and are also meeting their fiduciary
responsibilities,
including participant
education; fees; investment options
and lineup; due diligence; and financial
wellness offerings, " Ricklin says.
Having that assurance has become
even more crucial as plans have grown
more complex and the regulatory requirements
to avoid liability have heightened.
" As the broad landscape of benefits
and savings continues to evolve, the role
of plan adviser is becoming increasingly
important to help employers navigate this
evolution, " says Amy Vaillancourt, senior
vice president for workplace solutions at
Voya Financial in Windsor, Connecticut.
" This is especially true when it comes to
plan design. " -BB
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PLANSPONSOR - March - April 2023

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