Pension Consulting Services
We provide advice to pension plans and their trustees in the areas of:
- Identifying investment objectives and restrictions
- Allocating plan assets to various objectives
- Selecting investment choices for plan participants
- Monitoring performance of investments and make recommendations for changes
- Make recommendations for other service providers, such as custodians, administrators and broker dealers
Business owners and plan trustees rely heavily on the expertise of their pension consultant, and are often reluctant to change their 401k/profit sharing plan once it has been established. This is understandable considering plan changes have a direct impact on employees and can be a cause of a short term disruption in productivity. Many trustees don’t have a real sense of the total costs and fees that reside inside the plan, and are often shocked to find out they are paying far more than they thought.
Years ago the 401k/profit sharing plan space was dominated by insurance companies. This was mainly because they were among the few companies that could provide employers with 401k investment choices from multiple fund families. As the years have passed, the landscape has changed. Technology advancements have leveled the playing field to the point where mutual fund companies and broker dealers can now offer the same flexibility at a significantly lower and far more transparent cost.
Insurance companies charge up to .5% or more per year for their record keeping and other costs. In today’s environment new technology exists and is being used by mutual funds and broker dealers to reduce this expense down to a fraction of this cost by tying it to the number of participants and not the overall value of the plan. To combat this growing cost disparity, insurance companies have been adding lower cost index funds to their 401k options in an effort to get the overall average expense ratios down. Unfortunately, this gives the illusion that their plan is lower cost. In many cases the cost of owning these funds inside of an insurance company sponsored 401k is more than double the cost of owning the exact same fund inside a more efficient plan.
If you currently have a pension plan and you have not had a cost analysis done in recent years, it might be a good idea to have an independent evaluation. This is especially true if your plan is currently with an insurance company. Having a firm such as ours look at it removes any bias or potential conflict of interest. We operate as fiduciaries and must legally act in your best interest. This is the same responsibility that plan trustees have with employee participants. There has been considerable press about pension costs and what is reasonable. There is a growing trend of lawsuits brought by employees against companies that have not addressed this and other plan issues.