401Klogic LLC.

Case Study

 

 

 

Company Mergers Takes Focus Off 401k

 

Client type - 401k plan

 

Issues - a couple of mergers over the years has doubled the size of the 401k plan. The mergers have taken all the attention away from the 401k plan. New HR person came on board a year ago and this person initiated the thorough analysis of the plan.

 

 

  • Conduct thorough plan review

 

  1. Vendor services
  2. Investment fund review
  3. Fiduciary services in place
  4. Advisor evaluation

 

  • Observations from plan analysis

 

  1. Commission based funds being used
  2. Adviser not registered as a fiduciary
  3. Good plan design
  4. Vendor services were weak
  5. 43% of the plan’s investment menu funds ranked in bottom 50% of their asset class

 

  • Solutions we suggested for client

 

  1. Take plan to market to see if there was a significant cost savings available
  2. Replace Adviser with a consulting group that worked for a hard dollar fee only and did not collect  commissions
  3. Upgrade investment menu
  4. Take administrative burden from company HR office

 

  • Results

Client ended up transitioning plan to a new record keeper-saving about 25% in fees and increasing the potential investment results with a more robust investment fund lineup. In addition, the client hired an adviser that was registered to act as a fiduciary thus taking a lot of the fiduciary liability from the plan away from the investment committee.

 

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