Considerations When Selecting a Plan Provider

January 23, 2013 ( - If only designing the best retirement plan to offer your employees were as easy as it sounds.

With so many provider options available, it can be confusing to know what you should be looking for.   And, considering that Americans’ confidence in their ability to retire comfortably is stagnant at historically low levels, with only 14% of workers noting they are very confident they will have enough money to live comfortably in retirement (According to the Employee Benefit Research Institute (EBRI) 2012 Confidence Study.  Data is statistically equivalent to the survey low of 13% measured in 2011 and 2009), building that confidence to reach out for assistance can be a challenge.  While selecting your provider may feel like a daunting task, there are staple elements that should always be considered when choosing one.  

Below are five crucial items plan sponsors should examine when choosing a retirement plan provider: 


It’s important to look for a provider with a proven track record of offering successful retirement plans. Some attributes to consider include: 

  • Size – Consider how many plans and participants a provider already serves, and how long they’ve been in the business. What’s the average tenure of with the provider’s plan sponsors? Whether you’re a for-profit or not-for-profit, you’ll want a provider with the right scope of resources to meet your needs. 
  • Types of Plans – A provider should be able to offer a plan that is designed with features to support you and your employees, including the type of plan, size and participants’ needs.  Providers should be willing to offer you a customized solution, and work with you to create a successful plan built around your plan’s specific needs.   
  • Stable and Committed –Look for a provider with a good reputation that is committed to developing innovative retirement solutions with a strong track record of doing so. 

Plan Sponsor Support 

In addition to offering competitive products, a good provider should offer customized support for your plan, as well as assistance in navigating industry changes and information concerning legal and regulatory issues. 

Closely examine what type of plan sponsor support will be provided, from transition to implementation. A qualified provider can also help you define possible priorities that will lead your plan on a path that results in better outcomes for your participants, and then developand execute strategies to achieve those objectives. Does the provider offer customized reports that can help plan sponsors analyze their plan and compare options? An experienced provider willclosely review the plan data, demographics and activity to see if the plan is meeting its goals. 

Accessible customer service is a must, whether it’s through a user-friendly website a provider can offer or through a dedicated 24-hour hotline that can assist to resolve any issues you may have, as well as serve as an educational resource to learn about industry changes that may affect your plan.  

Participants Services 

It’s important to carefully examine the participant services offered. The educational resources that a provider can offer are often the key to a successful retirement plan. After all, many participants simply don’t understand what’s being offered on their plan menu and need guidance and support to help work towards their retirement goals.  

Look for a provider who can offer the following tools and information to your participants: 

  • Education – Finding a provider that understands participants’ savings behavior and can educate them about the steps to reach their retirement goals is crucial. A provider that skimps on educational resources can lead to participants that aren’t ready for retirement. Proven providers offer educational assistance through different methods depending on how participants want to receive it, including one-on-one consultations with retirement specialists, on-site events and workshops or self-service materials to drive employees to take action on their own terms. 
  • Tools and Resources– Many retirement surveys have revealed that participants are in need of simple and direct guidance. A provider that can offer that guidance through easy-to-use tools and other resources should have a leg up.  
  • Face-to-face counseling – Often times participants ignore retirement planning materials that are sent to them. Online resources are helpful, but just one component of a qualified provider. What type of in-person support can the provider offer the plan sponsor, and how many employees are on staff dedicated to onsite educational services? Having direct access to a retirement expert through onsite education may be the best recourse, offering participants the knowledge to help them take action and prepare for retirement. 

Investment Offerings 

Plan sponsors need to make sure that the funds in their plan’s investment menu enable participants to design well-diversified portfolios that meet their varying needs and risk tolerance. 

  • Asset Allocation - When selecting a provider, consider the current and future liabilities of the plan, the ability of the current investments to meet those objectives, and if the plan offers diversified investment options across all asset classes. While asset allocation can help reduce the impact of market volatility, it does not assure a profit or guarantee against a loss in a declining market. 
  • Managed Accounts – Giving participants access to managed account services helps increase the effectiveness of their retirement plans and takes some of the guess work out of selecting and managing their investments. Providers that offer managed accounts can help alleviate participant concerns while enhancing fiduciary protection for plan sponsors by allowing them to choose from a network of money managers. Please keep in mind that there may be additional fees for this service. 
Fixed-Income – According to McKinsey Global Institute, as investors enter retirement, there is a shift from equities to bank deposits and fixed-income instruments.( McKinsey Global Institute, The emerging equity gap: Growth and stability in the new investor landscape, December 2011). Choosing a provider that offers a fixed-income account with a strong rate will be crucial.


A 2011 AARP survey showed that more than 70% of plan participants think they don't pay any fees for their company retirement plan. 

Fees do vary from plan to plan based on the services provided. A good plan provider will be able to help clients gain a better understanding of the services covered by certain fees. As a result clients will be better prepared to assess the cost of services among providers and gauge the value and services they are receiving for these fees.  

Plan sponsors should consider providers who are transparent about their administrative fees, so the sponsor knows what exactly they’re paying for and getting in return. A provider who has no administrative fee may not be openly mentioning fund operating expenses, account fees, lower rates on investment returns or other charges related to the plan.  

It is also important to note that a plan shouldn’t be evaluated on fees alone.  Having the lowest fee doesn’t always mean a better plan. Plan fees should be evaluated on the value of services provided.  Paying a higher fee and receiving better service may provide the best fit and outcomes for you and your employees.   


There’s plenty to consider when selecting a plan provider, however, taking the time to properly understand and interpret the information provided will ensure you choose a provider who can put your employees on the right path for a secure financial future. 


Eric Stevenson is senior vice president for Nationwide Retirement Solutions in Columbus, Ohio.  

Nationwide Investment Services Corporation, member FINRA. In Michigan only -Nationwide Investment Svcs. Corporation 

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.