InStep® Corporate Retirement Plan Management​

Managing your corporate retirement plan takes planning, people, and process. We built our program to be all three.

InStep® is our  process for managing the fiduciary liability and the overall success of your corporate retirement plan. It is a 5 step process that takes clients from an initial audit of their performance and policies and helps them build a ecosystem of compliance going forward. Clients that put compliance and transparency at the center of their whole process find themselves in a better legal place and can routinely answer questions in an audit, or for their employees. 

Each step of our 5 step process is discussed at length below:

Our InStep® – Fiduciary Audit will focus on 4 areas:  Our Accredited Investment Fiduciary (AIF®) will analyze and conduct a thorough audit to make sure the plan is operating within the guidelines of the plan-related documents. Documents will be reviewed in accordance with fi360’s prudent practice to make sure the financial information is reported correctly and the corporate plan is governed properly. A report will be prepared and delivered to the sponsor and investment committee upon completion.

401k Audit

In the Organize step, we start with education and documentation and reviewing salient parts of the audit. By knowing and following the rules, sponsors and their 401(k) participants expectations are met. Understanding and acknowledging roles, avoiding and if needed, properly managing conflicts of interest and protecting client assets is key from the outset. These are the steps that are included in the Organize step:

401k Organize

The Formalize step is where we put the the Investment Policy Statement together. The IPS is the cornerstone of the rest of this program. Having a written, authoritative statement on how you govern the plan will prevent litigation and insulate the sponsor, company, and plan from harm and malfeasance. It is the single most important component to managing a plan. If you don’t have one, run, don’t walk to remedy this. 

401k Formalize

Due diligence and documentation in the implementation stage is critical. In an effort to avoid confusion and contamination, down the road keep the IPS close by and follow the below screens to aid you in the decision making process. These elements will set a minimum acceptable criteria for choosing your investments and the manager.

401k Implementation

The monitor step is the core fiduciary duty you’re responsible for.  It’s where incongruence between your governance documents and your actions will cause breaches. This is where most advisors we replace have fallen off, largely because maintenance and monitoring are time consuming and there is no end. Remedies for this complacency include cycling investment committee members (noted in Organize), establishing a cadence for review, and setting priorities. Additionally, outsourcing the monitoring of the underlying assets to a third party advisor helps keep the process in check. 

401k Monitor

FAQs: Regarding Fiduciary Support in a 401k

Who is the investment manager in my plan?

By default, the employer would act as an Investment Manager. But in more sophisticated plans this role is routinely put with a 3rd party investment professional or insurance company for legal and efficacy reasons. Many employers have created investment committees to satisfy 3(38) requirements, but even in these cases it is recommended that you work with an AIF® professional to make sure the strictures of the IPS and Plan Document are followed.

If, however, there isn’t an investment committee, then the trustee would be required to fulfill the functions of this role. If the 3(38) is outsourced, it must be outsourced to an RIA firm, bank, or insurance company.

What is the risk of not having a 3(38) fiduciary involved?

The Department of Labor doesn’t require the use of a 3(38) but through an audit or, as the result of lawsuits companies find that the risk of not having one is greater than the cost of the services.  Further still, many companies find that the work and due diligence is more costly to do in-house. 

The risk associated with this role, especially as plans increase in size is a concern for many HR Executives, CFOs, and Risk Officers. Recent lawsuits have demonstrated that a large amount of the responsibility associated with the costs and performance of the 401(k) plan stem from the fund lineup, the selection due diligence process, or vendor selection.

What is covered by a 3(38) fiduciary?

The duties of a 3(38) are set by the Employee Retirement Income Security Act of 1974 (referred to as ERISA) and interpretations and additions regarding the execution of the ERISA law come from the Department of Labor.  Further still, a Plan Document can define and clarify additional rules and implementations of the law. So in many cases, a 3(38) fiduciary for a participant-directed plan provides the following on defined intervals:

  • Create and manage an Investment Policy Statement
  • Form an Investment Committee
  • Hold investment committee meetings
  • Prudently select plan investment options
  • Report on investments regularly
  • Benchmark investments
  • Replace funds and update models as needed

Should my company have a 3(38) fiduciary?

Even more than for the sake of mitigating risk, outsourcing the role of an investment manager can dramatically reduce an employer’s workload and cost on a 401(k) plan. Additionally, like with any job, there are tools and experience in the skill set that makes the plan more effective and cost-efficient.

An effective investment manager will make sure that investment lineups are cost-effective, prudent, diversified, and competitive.

InStep® Menu of Services and Fee Schedule

Investment Management Services 50 BPS
Fiduciary Services 10 BPS
Investment Policy Statement Development $ 2,000.0
Investment Policy Statement Review/Update $ 500.00
Plan Design Consulting $ 2,000.00
Fund Menu Design $ 1,000.00
Fund Performance Audit $ 1,000.00
Education Program Strategy $ 2,000.00
Fiduciary Training for Committee $ 2,000.00
Group Employee Meetings $ 1,500.00
One-On-One Employee Meetings $ 500.00
Other Specialized Committee Training Varies
Recordkeeper Fee / Service Review or Benchmarking $ 2,000.00
TPA Vendor Fee / Service Review or Benchmarking $ 2,000.00
Vendor Management/Issue Resolution Varies
Vendor Search $ 6,000.00
Vendor Transition Support $ 4,000.00
Fiduciary Training for Committee $ 2,000.00
Group Employee Meetings $ 1,500.00
One-On-One Employee Meetings $ 500.00
Other Specialized Committee Training Varies
Compliance Oversight Varies
Employee Stock Ownership Plan (ESOP) Consulting Varies
HSA Consulting Varies

Pin It on Pinterest