Selecting Your Company's Small Business 401(k) Provider

Not all 401(k) providers are made equal. Some are large operations, while others are just a single individual. Some providers are better suited to larger employers, while others have more experience serving smaller organizations. As the owner of a small or mid-sized company, it’s in your best interest to find a small business 401(k) provider that understands your unique needs and will help you make the right decisions for your company and your employees. Here’s a quick look at three ways to do just that.

1. Find a Specialized 401(k) Adviser

If there’s one thing most small business owners have in common, it’s that they simply don’t have enough time. If you’ve ever felt like your workload keeps growing, you’re not alone: A recent poll shows that 30% of small business owners are working more now than they were a year ago, compared to only 6% who say they spend less time at work now.1

You may have many options when it comes to finding a provider. Perhaps your payroll provider offers a 401(k) plan, or your insurance broker. But how much of their business comes from administering retirement plans? Do they have experienced professionals who know enough about investing to help you make responsible decisions? Perhaps most importantly, do they know what it takes to serve a small business? A good small business 401(k) adviser can offer help that’s specialized to your needs as an employer with everything from customizing the right plan for your business, to choosing and monitoring investments.

Speaking of your employees, there’s also evidence to suggest that small business employees have unique needs. One-in-four small business employees doesn’t know if their retirement account is on track. But your employees likely want help; 77% of employees prefer to receive 401(k) management support from their employer. Find a 401(k) adviser who is able to provide plenty of employee support and education.2

2. Look for 401(k) Providers with Transparent Fees

Of course, with a need for specialized 401(k) education and support for your employees comes a need to pay for that service. A big part of 401(k) plan management is making sure the fees you and your employees pay are reasonable in relation to the level of service you receive. That’s only possible if you understand your fees in the first place—which is easier with some 401(k) providers than others.

While there’s no one right way providers might charge fees, it’s important to look for a provider who will be 100% transparent about every dollar charged to you and to your employees. Ask a potential 401(k) provider for a full accounting of who would be getting paid, how much they’ll receive, and where that money comes from. That way, you can get a true sense for the cost of a 401(k) provider’s service and more clearly compare them to other providers.

3. Get the Right Level of Fiduciary Support

When you offer a 401(k) plan to your employees as an employer, you take on the role of a “fiduciary” for the plan, which means you have a personal, legal liability to make good choices on behalf of your employees. It’s a big responsibility, but it’s one that some 401(k) providers can share. Before you review potential 401(k) providers, ask yourself what kind of help you’ll need. Will you want support in administering the operations and compliance aspects of the plan? Do you want recommendations when it comes to the plan’s investment lineup, or would you prefer a more hands-on partner who can actively manage investments and share in your fiduciary risk? Tell potential providers what you need in the way of fiduciary support and make sure their capacity to provide that support aligns with your needs.

Take a Closer Look at How to Select Your Company’s 401(k) Provider

Taking the proper time now to fully evaluate your 401(k) provider options can help you find the right partner to fit your unique needs, and can give your employees the tools and support they need to make the most of this great benefit you’re offering.

Are you ready to take a deeper dive into your 401(k) provider review? Download our free resource—3 Steps to Selecting Your Company’s 401(k) Provider—for a closer look at these important steps in finding the right retirement plan partner.

 

 

1 https://www.freeenterprise.com/one-thing-small-business-owners-cant-get-enough-right-now/
2 Fisher Investments 401(k) in the Workplace Poll, page 8

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