Why Your Defined Contribution Plan Needs an ERISA Advisor

Are You Meeting Your Fiduciary Responsibilities?

If you are a decision-maker for your company’s retirement plan and do not have an ERISA plan advisor, you may be exposing yourself and your organization to unnecessary fiduciary risk. As a plan fiduciary, you are held to strict standards under the Employee Retirement Income Security Act (ERISA). These include the duty of prudence and the duty of loyalty, which require you to act with the highest level of care in the best interest of plan participants.

ERISA § 404(a)(1)(B) states that a fiduciary must act "with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use."

Ask yourself: Do you and your plan committee have the expertise, time, and tools needed to fulfill these fiduciary obligations? If the answer is uncertain, hiring a qualified ERISA advisor can provide significant benefits.

7 Key Benefits of Hiring an ERISA Advisor

1. Specialized Expertise and Experience

A good ERISA advisor brings specialized knowledge and handles retirement plans daily, whereas committee members often juggle multiple responsibilities. A qualified and competent advisor’s job is to help ensure that your plan remains compliant and operates efficiently.

2. Vendor and Recordkeeper Management

Advisors help you oversee recordkeepers and third-party administrators, ensuring you receive all the services you’re paying for. They can also save valuable time by handling vendor negotiations and service evaluations.

3. Development of a Prudent Investment Policy Statement (IPS)

The Department of Labor (DOL) encourages plan sponsors to adopt an IPS to guide investment selection and monitoring. An ERISA advisor helps draft and maintain this critical document, ensuring it aligns with fiduciary best practices.

The DOL's "Meeting Your Fiduciary Responsibilities" publication states: "An investment policy statement serves as a guideline for making investment decisions. While not required, it can be an important part of a prudent investment process."

4. Fee Negotiation and Cost Savings

A skilled ERISA advisor can negotiate fees with your recordkeeper and optimize your fund lineup, often reducing overall plan costs. Not always, but in some cases, these savings can effectively offset the advisor’s fees, making their services cost-neutral.

5. Fee Benchmarking to Ensure Reasonable Costs

ERISA requires that plan fiduciaries ensure fees are reasonable and necessary. An advisor conducts ongoing fee benchmarking to compare your plan’s costs against industry standards, ensuring you are not overpaying.

The DOL's 408(b)(2) regulations state that fiduciaries must "review and assess the reasonableness of plan fees periodically," with the DOL assuming this occurs every three to five years.

6. Employee Education and Financial Wellness Programs

Financial literacy is a growing concern. Many ERISA advisors provide employee education, helping participants make informed retirement decisions and improve financial wellness.

7. Flexible Fee Structures

Advisory services can typically be paid from plan assets or directly by the employer, giving plan sponsors flexible options to manage costs.

The Complexity of Choosing the Right ERISA Advisor

For committees that have never had an advisor, the process of selecting one can be overwhelming. You don’t know what you don’t know, and failing to conduct a proper search can lead to poor decision-making and potential fiduciary breaches.

"The process of hiring an ERISA advisor is itself a fiduciary act and should be conducted with the same level of care as other major business decisions." — Tibble v. Edison Int'l, 575 U.S. 523.

That’s where a qualified search consultant can help. 90 North Consulting specializes in guiding plan sponsors through the advisor selection process, ensuring that:

• The search is structured and compliant with ERISA fiduciary standards.

• The right questions are asked to identify the best advisor for your plan’s needs.

• Fees, services, and contractual terms are clearly understood and benchmarked.

Next Steps for Plan Sponsors

If your plan does not currently have an ERISA advisor, now is the time to start evaluating your options.

If you already have a plan advisor and haven’t benchmarked your advisor in the past five years, the DOL recommends periodic reviews to ensure fees and services remain competitive.

90 North Consulting can help you navigate this process. Contact us to ensure you are fulfilling your fiduciary duties while optimizing your plan for better participant outcomes.  For a preview of the process please visit https://90northllc.com/what-we-do/

We hope this newsletter inspires you to think beyond the basics of fiduciary responsibility and embrace a more holistic, impactful approach to leadership, stewardship and governance. Please feel free to share this with your network, and don’t hesitate to reach out for further discussion or resources.

Eric Dyson

Executive Director, 90 North Consulting

edyson@90northllc.com  940-248-4800

The information and content of this newsletter is general in nature and is provided solely for educational and informational purposes. It is believed to be accurate and reliable as of the posting date but may be subject to change

It is not intended to provide a specific recommendation for any type of product or service discussed or to provide any warranties, investment advice, financial advice, tax, plan design or legal advice (unless otherwise specifically indicated). Please consult your own independent advisor or legal counsel as to any investment, tax, or legal statements made.

The specific facts and circumstances of all qualified plans can vary and the information contained in this newsletter may or may not apply to your individual circumstances or to your plan or client plan-specific circumstances.