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Top strategies to boost participation, pass non-discrimination tests and make your 401(k).

5 min read

Top 401(k) Advisors Do These 5 Things. Does Yours?

David Ramirez, CFA
March 3, 2023
Top 401(k) Advisors Do These 5 Things. Does Yours?
Table of contents

Ever found yourself wondering: "am I getting the most out of my 401(k) advisor?"

It’s a perfectly valid question. You and your employees pay them a lot of money out of your retirement accounts, so you want to be sure your advisor is providing as much value as possible. Sadly, word on the street is that many advisors aren’t measuring up.

Here’s how Ted Benna, the father of the 401(k), sums up the situation:
“The fund menus aren’t that much different. But advisors are getting paid as if they’re doing an original piece of work. That’s just bizarre, extremely inefficient and much too expensive."

So at this point you should be asking yourself: is your advisor doing as much as he or she can? Here are 5 things your advisor should be doing.

1. Improving Employee Participation

Your advisor should be a 401(k) specialist. That means they should be able to recommend the optimal mix of plan design and employee engagement tactics to ensure that employees are participating in the plan, and contributing enough to reach their retirement goals.

And yet, all too often, advisors don’t do enough to help employers with basic aspects of managing a successful plan, like passing nondiscrimination tests (NDTs). As it happens, these difficulties are widespread. In 2017 alone, almost 30,000 plan sponsors failed their NDTs and had to make corrective distributions.

If your advisor isn't helping to better engage your employees and help you pass nondiscrimination tests, it may be time to look elsewhere.

2. Lowering Fees

Ladies and gentlemen, I think we can all agree that fees are too high. And your advisor is letting you down if they’re not helping combat this problem. There are several things an advisor should do to help lower fees:

1. Optimize Your Fund Lineup
A good, dedicated advisor will periodically look into adjusting your fund lineup, swapping out high-cost investments for those without excess fees.

2. Renegotiate Your Recordkeeping Fees
As the industry consolidates and fees continue to drop, there are a lot of opportunities for plan sponsors to lower recordkeeping fees - whether with a new or existing recordkeeper.

3. Charge a Reasonable Advisory Fee
A good business relationship should be reciprocal! If your advisor isn’t doing a whole lot to make your plan succeed, they shouldn't be charging a whole lot either.

Of course, the problems only get worse from here if...

3. Acting as a Fiduciary

It’s not uncommon to hear about plan sponsors getting sued.

In fact, financial giant Fidelity is being sued by their own employees - who charge that the company’s plan is plagued by funds with “poor performance, high fees, lack of diversification, or [a] speculative nature.”

Last time this happened, Fidelity settled for $12 million without admitting wrongdoing.

A poor fund lineup recommended by an absentee advisor could mean HUGE penalties. If your advisor isn’t taking legal responsibility for your fund lineup - whether as a 3(21) or 3(38) fiduciary - you may want to look for one that will.

4. Offering Financial Wellness - 2023 sees rise in financial stress

Times are tough, people. The economy may be doing just fine, but the average American worker is hauling some serious financial stress into the workplace. In fact, in BlackRock's 2022 survey, they found a startling rise in the the number of employees that were not confident in their retirement 37%. it was reported that 75% of working Americans have financial stress, with 26% saying financial stress has impacted their ability to do their job.

Schwab - Financial Stress on the rise

Employers are taking note of that - and looking for solutions. A study in the Wall Street Journal revealed that 59% of employers say they are very likely to focus on the financial wellbeing of their workers this year.

And with retirement reigning as the #1 cause of financial stress, 401(k) advisory firms like Centurion Group, Resources Investment Advisors Inc. and AFS (and of course ForUsAll!) are starting to include general financial counseling as a core part of their services.

With more 401(k) advisors offering financial wellness services as added value, yours should be too!

5. Checking in Often and Being Available

Since you’ve read this far, we'd guess that you’re familiar with the following situation:

A plan sponsor’s advisor calls every quarter to ask if everything is going alright. The plan sponsor says, “Um. Yup.” Not because everything is going alright, but because they don’t have the 401(k) expertise to know that there are big issues brewing beneath the surface.

Sound plausible?

A 401(k) advisor who is around and engaged with people at different levels of the business can address issues before they have the chance to become administrative or compliance gut-punches.


You’re paying your advisor a lot of money. So if they’re not doing any of the items listed above, it may be time to consider other options.

People spend about a quarter of their lives in retirement. It’s an important benefit, so you and your employees deserve an advisor who provides real value.

So again, the important question: is your advisor pulling their weight?

Download 401(k) Employee engagement eBook
Top strategies to boost participation, pass non-discrimination tests and make your 401(k).
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About Author -
David Ramirez, CFA

David Ramirez, CFA, is a recognized 401(k) expert with over 20 years of experience in 401(k), ERISA, cash balance plans, and ESOPs. A UC Berkeley graduate, he played a pivotal role at Financial Engines, a 401(k) advisory firm founded by Nobel Laureate William Sharpe, Ph.D., where he was a portfolio manager who helped manage over $50B in 401(k) assets.  His clients included some of the largest Fortune 500 companies and state governments.

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This material has been prepared for informational and educational purposes only and should not be construed as a recommendation by ForUsAll, Inc., its affiliates or employees (collectively, “ForUsAll”)  to activate a cryptocurrency window or invest in crypto.  Investing in crypto can be risky and investors must be able to afford to lose their entire investment.  You should consult with your own advisers before activating a cryptocurrency window or investing in crypto.  ForUsAll does not provide legal, tax, or accounting advice. Please refer to your Plan's fee disclosure for more details.© 2023 ForUsAll, Inc. All rights reserved.
1 Schwab 2022 401(k) Participant Study - Gen Z/Millenial Focus, October 2022.
2 As of 12/31/2022. Employees include both current employees and terminated participants with a balance.
3 "Morgan Stanley At Work: The Value of a Financial Advisor" Morgan Stanley, March 2022.
4 Sarah Britton was a client when she provided this testimonial through an independent third party review website. She received no compensation for her remarks. There are no known conflicts of interest in the provision of her comments related to the services provided.