Plan participants are counting on you!
The first step in identifying someone to help you with your employee benefit plan is to understand your responsibilities, and where you might need assistance.
As outlined by The Employee Retirement Income Security Act of 1974 (ERISA), plan fiduciaries include any individual named in the plan document as a fiduciary and those who have discretionary authority over plan management or plan assets. Plan fiduciaries have a standard of conduct and various responsibilities imposed by ERISA.
The obvious responsibilities include representing the best interests of the plan participants by acting with care, skill, prudence and diligence, avoiding prohibited transactions, and following plan documents. But some of the more behind-the-scenes duties involve hiring service providers and monitoring investments and the reasonableness of fees.
Benefits of an ongoing relationship with an experienced advisor
Although an audit happens only once a year, when looking at service providers, consider one that will stay on top of your business needs year-round. But at a minimum, you should request an overview of the firm, their business practices, and their team’s experience with benefit plans. A recent Department of Labor Audit Quality Study reported a direct correlation between the size of an audit firm’s employee benefit plan (EBP) practice and deficient work. Firms that audit less than 100 plans had higher deficiency rates. Working with the right advisors and auditors helps reduce the risk of noncompliance, and the partnerships you create are invaluable if errors do occur and corrections are needed.
Ensuring value and results
Once you have a service provider in place, you still have a responsibility to monitor their work, including evaluating their performance, reading reports they produce, comparing fees to the service agreement, and following up on any complaints from participants.
Note that the plan sponsors’ responsibility is not always to find the lowest-cost provider. Instead, the responsibility is to evaluate the provider’s quality and level of service and compare them against the fees. Hiring the right expert is paramount in order to protect the plan and the fiduciaries.
If you’d like to learn more, the U.S. Department of Labor has a number of guides and resources about fiduciary responsibilities and ERISA:
If you’d like to arm yourself with all the information you need to evaluate and hire the right auditor for your benefit plan, download our Buyer’s Guide.