Wouldn’t it be simple if all a plan sponsor needed was one firm, one person, and one set of services to address all their unique retirement plan needs?
That dream is not a reality and in some very important ways not desirable.
The retirement plan provider community attempts to control the varying retirement plan service needs by creating something they call a “bundled approach.” A pitch is made to plan decision makers about the simplicity of the bundle, keeping responsibility centralized and reducing cost.
The reality is far different than the pitch. Rarely does the plan sponsor have one contact person with broad (quarterback) expertise. Trustee inquiries tend to be passed from one specialist to another in different departments with no one person taking overall accountability. Relationships are unclear and passing the buck is not uncommon.
Since the bundled services are provided by the same entity, the lack of independence usually creates an environment of covering up mistakes and poor service from the different service departments. The plan sponsor is hard-pressed to fire one dysfunctional part without disturbing the whole.
Cost savings is another myth because the majority of bundled programs do not fall under full disclosure rules. Costs are hard to identify and almost impossible to compare on a competitive basis. Different costs apply to investments, plan administration, custodial services, etc., with the entire cost rarely understood and intentionally camouflaged. The Department of Labor is well aware of this practice. This greatly hampers the trustee's ability to fulfill their fiduciary duty to know the cost and assure its fairness.
Premier’s solution is to put together formal strategic alliances with carefully selected independent firms who specialize in a unique component of services to retirement plan trustees and participants.
Premier calls this approach a “seamless solution.”
Premier creates long-term professional strategic alliances where all parties are clear about their duties and areas of responsibilities. In addition to Premier’s duties and responsibilities, Premier also oversees the entire operation of the plan to ensure that all of the parties are fulfilling their duties and responsibilities.
Our independence allows us to “keep the pressure on” all parties to perform as agreed. If necessary (it rarely is), one service provider can be replaced while maintaining the integrity of the rest of the program.
Each strategic partner is subject to ongoing review and the plan’s satisfaction with their service is discussed at the annual review meeting.
All members of the Premier strategic alliance commit to fair and competitive cost with a passion for delivering exceptional service.
Each member of the team understands the fiduciary standard and supports it. There is also an agreement to “look over each other’s shoulder” to assist in maintaining the highest standard.
Premier fully believes that this approach creates the greatest likelihood that plan trustees and participants will have an extraordinary experience.
A Registered Investment Advisor – Securities and Exchange Commission, who will provide investment expertise and employee education. They should also have a broad range of fiduciary support services for trustees.
Third party plan administrators (TPAs) will be responsible for plan design and the ongoing administrative compliance. They will also be accountable for keeping the plan and trustees updated on any needed changes. These functions are performed under contract. A TPA often times is not a deemed fiduciary of the plan but serves as an agent or contractor to the fiduciaries of the plan.
Investment Provider, usually a mutual fund company, is used to provide the investment options in the plan. Premier strongly recommends a fund company that believes and supports the use of passive investment strategies. Premier believes that this is not only the most prudent investment strategy, but it is also closely aligned with the Restatement of the Law Third.
Custodian is an organization or entity that holds the securities for an individual or other entity. In the retirement plan arena, a custodian generally keeps track and holds the securities for a plan. Typically, a custodian is a financial institution, like a trust company, bank, insurance company, mutual fund company, and transfer agent or brokerage firm. A custodian is not considered a plan fiduciary, but does provide services to a plan in a fiduciary-like capacity.
Record keeper/Investment Platform is the entity [bank, mutual fund company, insurance company, trust company, third party administrator (TPA), etc.] that maintains the participant accounts and issues participant statements. Often times a record keeper serves as the investment platform. For daily valuation services provided by the record keeper, Premier prefers an investment that has an open architecture environment. This provides us with the flexibility to make requests for the addition of investment options that ultimately benefit the plan participants we serve.
ERISA attorney is a lawyer that specializes in employee benefits laws. This usually includes retirement plans and welfare plans.
