Risk & Business Magazine Marcotte Magazine Fall 2017 | Page 4

OUTSOURCING YOUR 401(K)
BY: DEREK BAILEY,
REGISTER REPRESENTATIVE
Outsourcing Your 401(k) Program:
A Wise Solution For Small Business
W
hen it comes to 401(k)
retirement plans, small
businesses are at a
distinct disadvantage.
Without the
substantial HR departments, compliance
personnel, and other benefits teams that
large companies enjoy, it can be difficult
to provide a cost-effective offering that
can rival those of the big organizations.
Here are some challenges to be aware of as
a small business seeking to rival “the big
guys:”
1. SMALLER BUSINESSES BEAR
DISPROPORTIONATELY LARGER
COSTS.
The administration costs are shared
over a smaller pool of participants, so
the cost per person can be significantly
higher. These costs include fees for
administrators, recordkeepers, and
advisors, among others. Many providers
assess their fees purely as a percentage
of assets; as the assets grow, so does the
revenue to the provider.
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2. AS A BUSINESS OWNER, YOU ARE
LIABLE FOR THE PLAN’S COMPLIANCE.
If the company owner is ultimately
responsible for the plan’s administration,
he or she becomes the plan’s fiduciary or
“investment expert,” personally liable for
any plan missteps. Not only can litigators
pursue owners’ business assets, but their
own personal property is on the line too.
3. YOU ARE RESPONSIBLE FOR
MONITORING YOUR 401(k) PLAN’S
INVESTMENTS REGULARLY.
Although you have a lot on your plate,
it is mandatory to spend time each year
overseeing the administration of the plan
as well as monitoring and benchmarking
the investments.
4. THE QUALITY OF YOUR 401(k) PLAN
CAN DETERMINE YOUR COMPANY’S
COMPETITIVENESS.
If fees are higher for your employees than
for those working at larger companies,
you are at a competitive disadvantage.
Employees who are dissatisfied with your
retirement plan can become ripe targets
for poaching by larger, more resource-rich
companies.
5. EDUCATION IS JUST AS IMPORTANT
AS PLAN DESIGN.
Experts agree that getting started saving
about 10–12 percent of income at a young
age is the key to being able to retire on
schedule. Your 401(k) advisor is a key
person for delivering this message to your
employees, without soliciting them for
additional products.
Marcotte’s Accredited Investment
Fiduciaries (AIFs), Bob Foster and Derek
Bailey, both industry veterans, have
designed the MAR(k) program to solve
these problems. Their breadth of retirement
market knowledge allows the program
to bundle the necessary ingredients for
managing a plan successfully. Benefits of
the MAR(k) program include the following: