For many business owners, offering a 401(k) or 403(b) plan is part of the benefits package — a necessary tool to attract and retain talent. What often gets overlooked is that sponsoring a retirement plan comes with significant fiduciary and regulatory responsibility. In today’s environment, that responsibility carries real risk. But it can also be an opportunity.
Dedicated retirement plan advisors offer services designed to help owners navigate these complexities. At their core, retirement plan advisors support company-sponsored plans, like 401(k) plans in the for-profit space and 403(b) plans for nonprofits, by helping employers meet their obligations under the Employee Retirement Income Security Act of 1974 (ERISA), the federal law governing retirement plans.
Companies that offer retirement plans have a duty to act in the best interest of their participants, including selecting and monitoring investments, reviewing service providers, managing fees and ensuring the plan’s design aligns with regulatory requirements and company goals. These responsibilities are ongoing and required by law — and hiring a recordkeeper does not necessarily eliminate the employer’s fiduciary liability.
That’s where a dedicated retirement plan advisor that includes ERISA 3(38) investment fiduciary oversight can make a meaningful difference.
Key Differences between a 3(38) and a 3(21)
Under a 3(38) arrangement, the advisor assumes full fiduciary responsibility for investment oversight. Unlike a 3(21) advisor, who acts as a co-fiduciary sharing responsibility and providing recommendations the employer must approve, a 3(38) investment manager is delegated the authority to select, monitor and replace investments. Understanding what level of fiduciary support the company has is one of the most important questions plan sponsors should ask.
Three Reasons to Hire a Retirement Plan Advisor with 3(38) Investment Fiduciary Oversight Services
#1: Leverage expertise and minimize risk. In practice, few employers have the expertise to manage all fiduciary responsibilities internally. Recognizing their responsibility to act prudently in fulfilling these duties, many plan sponsors will hire a dedicated retirement plan advisor to fill the gap. Specialized advisors can do things like evaluate investments and document every step, acting as a “quarterback,” coordinating among recordkeepers, third-party administrators and other service providers. They review the plan document for red flags, identify excessive fees, assess whether appropriate oversight is in place and help reduce overall plan risk.
Plan risk is not theoretical. Litigation related to poor oversight has increased, affecting companies of all sizes. Employers that assume their plan is “fine” because it has been in place for years may be exposing themselves to unnecessary liability.
#2: Customize plan design to align with business needs. Beyond investments, thoughtful plan design is critical and another reason to consider outside professionals. Retirement plans are not one-size-fits-all. The provisions inside a 100-plus-page plan document can dramatically affect compliance outcomes and employee experience.
Plans should align with business goals. Whether it’s aimed at enhancing employee retention, managing costs or supporting a diverse workforce, the plan should reflect a company’s objectives. It should also promote employee engagement, through features like automatic enrollment and escalation that encourage employees to take proactive steps toward their financial future.
A thoughtful plan design should help ensure compliance by staying ahead of regulatory changes. It should also adjust to changing needs to ensure it grows with the company and its employees.
#3: Increase employee education and adoption. Even the best-designed plan won’t drive strong outcomes if employees don’t understand how to use it. Many smaller and mid-sized companies lack the internal HR resources to provide meaningful financial education.
Retirement advisors can bridge that gap with customized tools, educational videos, enrollment support and one-on-one sessions that address financial wellness. They also coordinate with recordkeepers to ensure employers are fully leveraging available participant resources.
Perhaps most importantly, retirement plans are not “set it and forget it.” As companies grow, hire, downsize or restructure, their plans must evolve.
Who Needs This Service? Everyone.
While larger employers, often those with $10 million or more in plan assets, are more likely to have a dedicated advisor, smaller and mid-sized businesses should also consider this safeguard. Smaller businesses may assume they don’t need help or that the cost outweighs the benefit, not realizing the liability they are carrying.
The reality is simple: Businesses, big and small, don’t know what they don’t know. An experienced retirement plan advisor can scrutinize plans, identify gaps and help ensure it is working hard for employees while remaining compliant with the law. As companies grow, the stakes only increase. Leaving a retirement plan to chance isn’t just risky, it’s a missed opportunity to strengthen businesses’ and employees’ financial futures.
Ana Ake, QKA®, AIF®, CPFA®, QKS, is a vice president, retirement client advisor with UMB Bank n.a., Retirement Plan Services. She advises clients across the Arizona and California markets, leveraging her knowledge of plan governance, compliance requirements and fiduciary best practices to help employers strengthen their retirement programs and improve participant outcomes. Ake holds multiple industry-recognized credentials: Certified Plan Fiduciary Advisor (CPFA®), Qualified 401(k) Administrator (QKA®), and Qualified 401(k) Specialist (QKS®).
Retirement Plan Services is a division within UMB Bank, n.a. (a subsidiary of UMB Financial Corporation). Products and services offered by Retirement Plan Services are not FDIC Insured, are not Bank guaranteed and may lose value.
