Plan advisers can work with sponsors using The Resource Optimizer, developed by Guardian and Pension Resource Institute LLC (PRI), to establish the need and value of service provider support. The tool enables clients to determine plan risks, employer needs and the opportunity costs of implementing a retirement plan.
“Fee disclosure, a changing regulatory landscape and broker/dealer restrictions on fiduciary roles are creating significant opportunities for both experienced financial professionals and non-fiduciary financial professionals, particularly in the small-plan retirement marketplace, which accounts for the vast majority of plans,” said Jason Frain, vice president of 401(k) product management and development at Guardian Retirement Solutions. “These changes are forcing plan sponsors to rely on financial professionals to provide education and actionable solutions for compliance challenges. Many plan sponsors lack the experience, time and resources to effectively manage these plans to help participants achieve successful retirement outcomes.”
The Resource Optimizer includes a comprehensive worksheet that determines the necessity of various services involved in the implementation of a retirement plan. The 15-question worksheet assesses a plan sponsor’s needs and allows clients to discover plan risks and understand costs. Frain told PLANSPONSOR that 10 questions in the worksheet are process-focused (e.g., committee meetings, investment policy statements), and five questions are based on employee outcomes.
For plan sponsors, The Resource Optimizer clarifies some of their fiduciary duties under the Employee Retirement Income Security Act (ERISA) and identifies the specific areas where they may require professional assistance. The worksheet and results map demonstrate a commitment to plan governance and participant engagement and help simplify what is required for maintaining a successful retirement plan. For advisers, it can help them demonstrate value to their clients by determining what works best for their plans, Frain said.
The tool can prompt more open discussions among sponsors, providers and advisers about what sponsors need from the provider, Frain said. It also serves as a “precursor” to benchmarking, and “helps set the stage to go into an RFP (request for proposal) process,” he added.
For non-fiduciary financial professionals, The Resource Optimizer is a service tool that helps financial professionals focus their efforts on service and education, rather than on investment advice. With many broker/dealers not allowing their registered representatives (RRs) to act as fiduciaries, RRs will need to reconsider their approach to working with plan sponsor clients. Once the support needs are identified, financial professionals can work with GIAC and other service providers on creating an optimal mix of products and services to help address these needs.
“In light of the recent regulatory changes, we expect employers to devote more time to addressing retirement plan governance over the next two years,” said Jason C. Roberts, Esq. founder and chief executive officer of PRI and managing partner of Roberts Elliott. “Small plans often lack the required processes and/or internal expertise to demonstrate compliance with all aspects of fiduciary governance, and many are considering outsourcing investment-related responsibilities to professional investment managers.”
The Resource Optimizer is available in PDF or print and can be requested by calling Guardian Retirement Solutions at (866) 390-7268, option #2.