5 Reasons to Hire a Financial Advisor for Your Retirement Plan


When managing a retirement plan, plan sponsors are faced with decisions that can affect the entire organization such as plan design, investment line-up, and who the recordkeeper will be. Unfortunately, many plan sponsors are not experts in qualified retirement plans or the ERISA laws that govern them. Decision makers for the retirement plan usually have other job responsibilities that don’t allow them to give the proper attention to ensure the plan is compliant, efficient, and beneficial to participants. Plan sponsors are considered fiduciaries of the plan, which means they must act in the best interest of the plan participants. ERISA law is complex and sometimes difficult to interpret. Hiring a plan advisor can help plan sponsors keep the plan efficient and compliant4. Employers should consider hiring a retirement plan advisor for the following reasons:

  1. 1. Plan advisors can help limit the plan sponsor’s risk of large losses resulting from lawsuit penalties, mishandling, audit fines and noncompliance penalties1.Most 401(k) advisors have knowledge in ERISA or have ERISA counsel at their disposal. Legal expertise is important because plans have many moving parts. Most, but not all Plan advisors serve as investment fiduciaries to the plan and help with the plan sponsor’s duties in managing the plan.
  1. 2. Plan advisors can leverage their resources to educate participants about the plan and improve overall plan health1. In many cases, plan sponsors do not have the time, manpower or expertise to properly educate participants about the plan. Plan advisors are (should be) licensed investment professionals that can conduct seminars and meet with participants to encourage them to participate and prepare for retirement.
  1. 3. Plan advisors can assist with complicated merger, acquisition and transfer cases that involve a high level of due diligence and attention to detail. Many plan sponsors do not have the time to comb through plan documents, amendments, investment policy statements, and fund lineups to determine the best course of action when major plan changes occur. Plan advisors can analyze and apply their expertise to help with plan transition.
  1. 4. Plan advisors can help protect plan sponsors and participants from excessive fees. The fees are often obscure and difficult to understand at the participant level4. Independent plan advisors can negotiate with recordkeepers to ensure the fee is competitive. On the fund level, plan advisors can review the fund lineup and incorporate funds with appropriate fees. Independent plan advisors can also identify and eliminate indirect fees that are hidden in the plan’s investments.
  1. 5. As investment professionals, plan advisors can ensure the proper investment options are available to participants. Advisors will monitor fund performance and replace underperforming funds.

Hiring a financial advisor for your retirement plan can reduce the workload for the plan sponsor and assist with the duties required to manage the plan. 2. Plan advisors can help the plan sponsor understand and manage their fiduciary responsibilities and also serve as a dedicated point of contact for participants seeking guidance.

At Innovative, we function as an independent Registered Investment Advisory firm that specializes in advising on complex plans that require a high level of due diligence and attention to detail.

If you would like more information on how Innovative can help manage your retirement plan, please contact resources@iifria.com or call us at (856)-242-3328.

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