Broker Check

The F Word

February 23, 2022

Your Solution to Managing a 401(k) Plan

Have you examined your fiduciary status in your book of business?

Have you ever been asked to manage a 401(k) plan?

Plan sponsors need advisors, too.

Managing a 401(k) can be a lucrative business, as you can imagine it means you have the AUM of an entire plan on your books and the opportunity to be the trusted face of 1 or 1,000+ participants. Assets in 401(k) plans tend to grow consistently, which can create a consistent source of revenue growth for you as an advisor. And who could forget the opportunity to be introduced to more participants that could become wealth management clients down the road?

Why aren't more firms talking about it?

This could be because plan sponsors need advisors who understand their complexities and fiduciary responsibilities. defines fiduciary as: "a person to whom property or power is entrusted for the benefit of another." As you can imagine, it's A LOT for a single advisor to take on.

But without that F word, advisors can feel overwhelmed at the amount of risk they're taking on, especially when asked to manage a 401(k) plan. WealthPlan can help alleviate that stress.

A Quick History

Most plan sponsors would form a committee to monitor and screen those funds, and then that committee would be on the hook for those funds selected. As you can imagine, most committee members are not exactly investment experts(we can't all be). Therefore, they would just select their favorite funds and put them in the plan. Government oversight increased significantly as participants were not always getting the best investment options, they would typically underperform, and that would cause strife and be the root of this legislation.

Eventually, the government allowed advisors to sign up as a 3(21) Fiduciary or a 3(38) Fiduciary. These two fiduciary status options really allowed 401(k) specialists to set themselves apart in the retirement plan industry. With this in mind, WealthPlan* chose to act as a 3(21) investment fiduciary analyst. This choice allowed us to do all of the research to recommend to the plan sponsor which funds to remove or to keep. The plan sponsor basically had "veto power", but WealthPlan was able to do all of the tedious monitoring and screening.

"This set us apart immediately and plan sponsors loved the idea of someone they could trust doing the duty they are tasked to do," – Wade Behlen, AIFA®, Managing Director of WealthPlan's Retirement Plans/Foundations

Fast forward to today: we now act as a 3(38) fiduciary investment analyst. Making this move allows the plan sponsor to put all of the risk onto us as the advisor, as they no longer necessarily have veto power on those changes. WealthPlan also takes on that risk of the duty of monitoring and screening. In simple terms, WealthPlan has done the due diligence in choosing the right tools that allow us to demonstrate a written investment policy statement and process for how these funds will be monitored and reviewed.

"Advisors who are dabbling in the retirement plan space, do not and should not have to take the risk of the investment fiduciary analyst." – Behlen

Why Our Advisors are Choosing to Work with Our Retirement Team

One of the main reasons WealthPlan's advisors succeed with our 401K & Retirement Solutions team, is the fact that our team has been taking on that fiduciary analytics risk since 2007. You, as the advisor, are still invited to be a part of the process. However, WealthPlan's team takes the lead as the quarterback on the plan, allowing you to focus on what your strengths are: spending time building relationships with the plan participants and inevitably growing your book of business. You'll be the Rob Gronkowski to our Tom Brady.

Ready to learn more about our offering? Schedule a call with our consultation team now.

WealthPlan's* retirement team has three licensed accredited investment fiduciary designations (AIF). Our Director holds the highest level of accreditation called accredited investment fiduciary analyst (AIFA).