About 15% of 401(k) Plans Change Providers Each Year

by Ron Lang | Feb 12, 2020

Thinking About a Change for your 401(k) Plan?

Why do 15% of the 401(k) Plans Choose to Change their Service Provider?

Let’s start with the obvious reason, SERVICE! It’s all about service and when you don’t receive the service you desire or require, it’s time to change. It is amazing to us when we ask “Why are you looking to make a change”, the immediate answer is, “we aren’t getting the service and the response time is not acceptable”. Unfortunately, we hear this quite often, you have the opportunity for a better plan by changing your service provider. Obviously with this email, we are making a pitch for ourselves, but you need to decide for yourself if you make a change and what are your expectations!

What are the steps to consider a 401(k) Service Provider change?

Get a Benchmark Analysis on your plan to baseline the administrative fees and performance of your asset lineup.
Get a Fiduciary Review on your plan to determine areas where you are doing well and areas they your group has been delinquent.
Send a 5-7 question simple survey to your employees to get their feedback on what they like and don’t like about the plan.
Determine whether or not a Financial Wellness program is worthwhile for your employees.
Timeline – what’s involved and when is the best time to convert to a new service provider.

Don’t take the following for granted and make sure you are taking care of the following for your company:

Fiduciary Responsibility – You should have a 3(38) & 3(21) fiduciary associated to your plan.
OnBoarding & Financial Wellness – Critical to increasing Participation Rate and overall plan satisfaction with employees. Your service provider should put together a comprehensive plan.
IPS (Investment Policy Statement) – This is necessary to determine the type of investments that will be offered in the plan, how they will be managed and process for how they will be evaluated to remain in the plan. The IPS also reviews an Annual Benchmark on the plan to determine fees are inline with competitors and performance against their benchmarks.