Common Mistakes Plan Sponsors Should Avoid

Neglecting to Annually Review a Plan   

Whether it is the plan providers, plan document, plan administration or plan design, sponsors should have their plans reviewed annually. The sponsor may want to make changes simply because the company has grown and the plan no longer fits employees’ needs. When a plan increases in asset size, the TPA or bundled provider may also no longer be cost effective, Rosenbaum said.

The adviser should help with the annual review, but plan sponsors should remember to review the adviser, as well.

When reviewing the plan, Rosenbaum said sponsors should look for for several signs that either the provider or adviser should be changed:

•  Plan assets have changed;
•  The company has grown or experienced cutback;
•  The adviser or provider is not adequately communicating; or
•  The provider is not offering the products the sponsor needs.

Being Too Loyal to Providers  

Although it may be tempting, plan sponsors cannot be creatures of comfort and remain with the same provider just because they have always used that provider.

“This loyalty may not be justified,” Rosenbaum cautioned, and speaking to another provider to compare services is good form as a plan fiduciary.

This loyalty might be to a provider that is incompetent or charging excessive fees, which can be detrimental to the participants. 

Corie Russell
editors@plansponsor.com