Fiduciary-based 401K plan management can improve results and reduce expenses.

Background:

401K ProAdvisor was approached by a company with approximately $15 million of 401K fund assets. The company had recently changed their 401K plan and investment options, and the CEO was disappointed with the results. He requested a professional evaluation of the plan, including costs and participant results, with recommendations to improve both.

Approach:

401K ProAdvisor utilized their FRAMESM (Fiduciary Responsibility and Management Evaluation) service to conduct a thorough review of the company's plan. They uncovered the following issues:

  • The company had complete legal liability for the 401K plan, but was not aware of that fact.
  • While disclosures had been made, the information was neither explained nor understood.
  • The broker was paid over $50,000 in commissions for changing the plan, plus ongoing commissions which included 0.5% of deposited funds and additional compensation on asset levels.
  • Employees received no additional benefit from the plan change. They paid these expenses out of their funds, but received no investment advice as the broker was legally prohibited from doing so.

Solution:

The 401K ProAdvisor solution provided services as a Fiduciary Investment Manager (not a broker), taking on fiduciary responsibilities and liability for investment decisions. This included implementing a fee-only relationship, changing the investment options based on the company and employee needs, and rebating all transaction fees. Ongoing program management would be reduced by over 30%, with improved personalized service, investment options, and quarterly reviews. Interested employees could receive specific investment advice at program launch and as requested over time.

Independent contractors receive big business retirement benefits.

Background:

The regional franchise of a leading real estate company maintains a culture that emphasizes both independence and teamwork among its 9,000 agents. The company wanted to demonstrate team value by offering a set of benefits that would leverage group buying efficiencies while still maintaining the flexibility of independent business relationships. This included a retirement savings program, but the company needed to provide large-plan advantages without becoming the plan sponsor. They called on 401K ProAdvisor for assistance.

Approach:

401K ProAdvisor viewed this from the perspective of a large, feature-rich corporate program, and then added the flexibility and focus offered through a solo 401K. The independent agents needed to receive:

  • Professionally selected, custom funds
  • Personalized attention, education, and advice
  • Full retirement savings program services, including rollovers and tax free loans
  • Simplified plan adoption and ongoing management
  • Lower group costs

Solution:

401K ProAdvisor developed an industry-first retirement savings program for the independent real estate agents, choosing funds from their GuardrailSM Tactical Growth investment portfolio to maximize risk protection. A full suite of retirement program services are available, including professional advice, custom portfolio support, and both traditional and Roth plan options – all with group pricing benefits. Enrollment and ongoing transactions are managed through a convenient online investment platform maintained by an experienced technology partner. Agents feel like they are enrolling in a large company 401K, not starting their own, while they enjoy the opportunity to deduct up to $49,000 per year from taxes.

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Site disclaimer: 401k ProAdvisor is a DBA of Wealth & Pension Services Group, Inc., a registered investment advisor. This site is for information purposes only regarding services. This is not an offer to buy or sell any investment. We do not provide legal or tax advice. Securities offered by Triad Advisors, member FINRA, SIPC.