WHAT IS 401k BENCHMARKING?

Liability protection for you - top performing portfolios for your employees

Benchmarking is a process where you compare your plan rates and investments to other investors working with similarly structured portfolios.

There are three main categories a financial advisor will assess when benchmarking your 401k plans:

1. Plan
design

2. Funds
and Fees

3. Recordkeeping Services

These three areas are compared to the averages of similarly structured portfolios to determine whether a change in financial strategy is needed. The results of these findings are then documented, showing the process, and any needed updates, took place.

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1. PLAN DESIGN

During a design assessment, you will compare the types of investments and portfolio diversity you give to your employees. This is the bedrock of your portfolio as it dictates what percentage of long-term, short-term, high-risk, and low-risk investments you are incorporating into your plan.

2. FUNDS AND FEES

While this is something each company and each employer handles differently, it is worth looking at the industry standard to make sure you are neither charging too much or too little for managing your plan's portfolio. This encompasses aspects such as whether your fees are asset-based or participant-based, and how much is spent in management costs, trustee fees, and recordkeeping.
What is Benchmarking
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3. RECORDKEEPING SERVICES

Finally, not all record keeping services are made equal. Even within the same company, services can have a range of tiers available to your employees. Assessing whether your record keeping services are worth the cost is another important way to ensure unnecessary fees don’t accumulate and your employee accounts are under the best management possible.

It is your responsibility as a fiduciary to carry out these assessments, document them, and have them available for review.

If the portfolios in your care experience loss due to a breach of these fiduciary responsibilities, you could find yourself personally liable for the mistakes. This could result in you being personally responsible to reimburse lost earnings.

READY TO BENCHMARK YOUR PLAN? YOU’RE ONLY ONE MESSAGE AWAY.