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New Year, New Fiduciary Game Plan


The end of the year – or the beginning, for some – is an optimal time for organization-wide or department-specific strategic planning. Many have already worked through a planning process – or are about to do so – for the new year.

We’ve now lived around 22 months in the COVID-19 world. We’re in an incredibly challenging labor market, with employers competing to attract and retain talent. Much of that competition occurs at the top line, with a focus on salary or hourly wage. But most employers are finding that they need a way to be different. A way to stand out. A way to show a different connection with employees, which leads to a better quality of life and greater fulfillment.

This sets up the new year as a perfect opportunity for plan fiduciaries to dive into their retirement programs, undertake a strategic planning exercise, and work toward a new gameplan. Here’s one potential outline for the first committee review of 2022.

Plan Data. Last year at this time, we suggested there had never been a better time to focus on the information in the recordkeeper’s quarterly report. Early 2022 brings a similarly important opportunity to closely review that information.

The starting point is to examine trend lines over the last 1-, 2-, and 3-year periods for a handful of measurements: (1) participation rate; (2) deferral rate; (3) average account balance; (4) median account balance; (5) participants capturing the maximum match (if any); (6) utilization of “do it for me” diversified investment offerings; (7) Roth utilization; and (8) loans.

Is your plan headed in the right direction? Are your employees participating and saving at least as well as they were prior to the pandemic? For those who have stuck with the plan, are they aware of the improvements in their account balances – particularly if they’ve invested in a portfolio with stock market exposure? Are the loan numbers headed in the right direction?

The simple question is: does the plan data look how you’d like it to look? What looks great, what is stuck in neutral, and what warning signs can we identify?

Investment Lineup. As we have experienced an explosion in participants’ elections of target date funds or managed accounts, as well as plan sponsors’ use of those offerings as the qualified default investment alternative (QDIA), the many other plan investment options have become less relevant. This isn’t to suggest they do not merit any attention. But gone are the days when committees would spend 80% of their meeting time on investment options holding less than 20% of a plan’s assets.

The starting point is to examine: (1) the plan’s QDIA and the ongoing conviction that the QDIA best suits the plan participants; (2) for plans offering target date funds (TDFs), their performance during the drop in early 2020, as the market rebounded in 2020, and throughout the strong market in 2021; and (3) how participants are using managed accounts or any other goals- or risk-based offering? As we wrote last quarter, QPA is planning to deliver its Target Date Deep Dive report, which will help with any TDF-related questions and provide an extra layer of protection for plan fiduciaries.

Is the QDIA appropriate moving forward? When did the committee and investment consultant last apply the Department of Labor’s TDF tips to the plan’s TDFs? What choices are self-directors making? How are participants using the “do it for me” solutions?

Participant Services. Many of us hoped we would begin 2022 with a clear path toward a year of in-person meetings. Depending on your organization’s policies, locations, size, and preferences, that may or may not be the case for your organization. However, uncertainty should not be an excuse for not preparing a plan.

QPA teams are entering the first quarter with the hopes that clients will want to talk about education and the flexibility to plan in-person, virtual, and/or hybrid meetings. Committees will be well-served to engage in big picture discussions about not only their employees’ retirement plan engagement and performance, but also their big picture financial wellness needs.

What do your people want? What do they need? How can the HR/benefits staff work with your plan consultant, education team, and recordkeeper to meet that demand?

Brainstorming Mindset. I deleted an entire section of this newsletter before typing this section. How much do you really want to read today?!? Better yet, how long can your retirement plan strategic planning meeting last?

To the extent it’s helpful, we suggest that the meeting not be intended to answer all the questions. Attack it with an inquisitive, challenge-what-you-think-you-know, brainstorming mindset, and the meeting will identify problems and potential opportunities. Your consultants can then leave the meeting with marching orders to research potential solutions and to follow up with options and recommendations.

It’s a new year. New challenges. New opportunities. New plan of attack. Let’s roll.

Full Bio Matthew Eickman, J.D. is the director of ERISA services for Qualified Plan Advisors and the branch manager of Prime Capital Investment Advisors' (PCIA) Omaha branch. Matthew provides fiduciary training, Investment Policy Statement oversight, and design and vendor benchmarking. He is also a member of the firm’s Investment Advisory Committee and the QPA Steering Committee. He holds his FINRA series 66 registrations, and his life and health insurance licenses in multiple states.

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