Name: 401(k) Benchmarking: Optimize Your Clients’ Plans
Uploaded: 2026-09-10T19:00:11.577Z
Duration: 28 min 55 s
Description: 401(k) Benchmarking: Optimize Your Clients’ Plans

Transcript for "401(k) Benchmarking: Optimize Your Clients’ Plans": Hello and welcome to today's Paychex webinar for financial advisors. It's called 401(k) Benchmarking Optimize Your Clients Plans. If you're looking for trusted guidance in your role as well as resources to continue your advisory skills and growing your book of business, you're in the right place. I'm Stephanie Schifano and I'll be moderating today's presentation. Before we dive in, let's cover some quick housekeeping items. At the right of your console, you'll find the docs column with related resources, including a printable copy of the slide deck that we're going to go through today and a question and answers column where you can type in your questions. We have a few team members in the back end helping to provide answers privately. While we can't guarantee a response to every question, please note that all questions are received and they help us to build and create future resources to strengthen your business. Occasionally, you may see an audience poll. When the poll opens, a blue alert card will briefly appear at the lower left of your console. Click the button on it or open the poll column at the right marked with a red dot to view the poll. There are no wrong answers. Select your response. Click submit and you'll receive a confirmation message. Please note this presentation does not constitute legal advice and is for informational purposes only. And now I'd like to introduce you to today's speaker, Dan Campanelli. Dan is the retirement advisor channel manager at Paychex. He has been in the investment industry for forty one years. Thirty one of which have been spent in retirement. Dan is responsible for relationship management in sales for all broker deal, RIA, and investment partners that work with Paychex. At this time, let me invite Dan in and take it away, Dan. Thanks, Stephanie. I appreciate it. So, you know, today, we're really gonna be talking about the benchmarking here, and I just have to move the slide. Apologize for this because there we go. I had to find my arrows. So, today's agenda, we'll talk about benchmarking defined. It'll give you a really good idea what benchmarking your plan is. Hopefully, a lot of you already know, highlights of what it is, but we wanna dig a little deeper to make sure we're doing the right thing for our clients. You know, why do we you know, why would you offer this service as an adviser? What are the benefits to the clients, strategic advantages for you? You know, what else can, you know, kind of of doing benchmarking for your clients? The process, like, what are the areas to consider and then, you know, what you do after the review. So, you know, defining benchmarking is this is super high level, but it's, you know, having a client meet with a specialist, obviously, that's you, to review the four zero one k plan, discuss overall performance, make any adjustments needed to optimize the plan. So that sounds pretty basic, but it's very detailed. Overall performance is overall performance of the plan, and there's many features of the plan. It's not just investment performance or, you know, having the right percentage of, participants in the plan. There's a lot of to look at in overall performance. And, of course, making any adjustments to optimize it for that client. There's no, silver bullet plan that works for every client or plan feature or adjustment. It really is customized to that client. So, you know, again, why as a financial advisor would you wanna offer this service? Obviously, the the review is gonna help educate, clients on a plan, health, and performance. Again, overall performance and, you know, do they have a really healthy plan? Many clients, as you know, especially in the small to midsize business, they wanna have a a retirement plan. They need to have it in place probably to attract and retain, you know, good dollar employees to be competitive. But they want it to be quiet. In other words, they want it to just run and do its thing, and not pay a lot of attention to it. But the problem is somebody should be paying a lot of attention to it, and, you know, that would be you as their adviser. Obviously, check for any compliance red flags. You know, that's key, for clients because you don't want, things to be found after the fact. You wanna make sure things are, handled. If there's any issues with the plan, any compliance, any way that they're running the plan that are incorrect, that should be corrected as soon as possible, for to avoid any future, you know, potential penalties or cost for making these these, changes. Obviously, aligning the plan with current needs. This is really key because, you know, a client can have a plan for five, ten, fifteen years, and their company can be very different, not just the makeup of the company, but the employees, the the the direction the company is going. And you wanna make sure that the current plan is aligned with current needs. And, obviously, that is not something that should only be looked at every five to ten years. It's something should be looked at regularly. And then, of course, just discuss any concerns with the client, you know, that about plan performance, provider service, or administration, anything that, you know, that can be done to help improve this for the client, you know, with the end results being a healthy, strong, retirement benefit for their employees. So the benefits to your clients. Right? Obviously, one of the first ones, potential cost savings. If the client hasn't had a plan review in a number of years, it could be a newer client of yours, it could be a plan you've taken over, or even a plan you may have set up a a while ago. If you haven't done a complete plan review, then you wanna do this because you wanna review the fees to make sure that there there's no unnecessary fees involved. You wanna uncover those as soon as possible. Again, the fees of a plan from the time it starts with the, you know, one provider. And years down the road, there can be very different needs, of the client and uses and different fees, that may be still being charged if they don't need to be. Obviously, check to ensure pricing is within industry standards. Whenever you do a benchmarking, that's one of the things you're doing is making sure the pricing that they're paying fits within industry standards. That's not an outlier. Obviously, this will help clients with peace of mind. Right? They feel assured that their plan is in compliance because somebody, for lack of, I guess, a better term, is at the wheel. Someone's driving. Someone's paying attention, and it is in compliance. They're not a, retirement plan compliance benefits specialist in most cases. So that's one of the things that they're looking for, not only their their four zero one k provider to be, but also their financial advisor, on the plan to be. Also, again, spotting any errors or red flags, that could be, potential, and also be proactive. As I mentioned, when employees you know, for employees has needs change for the company. And then, you know, for the client, it's a competitive advantage. We said most clients, you know, that have this plan have it to attract and retain employees, and they wanna have a best in class benefit, to help them, in in a tight labor market. I mean, if you look at any of the statistics over the years in the small to midsize space, it's a super competitive labor market, and it's sometimes harder for small to midsize companies to get the right talent. So you need to have that competitive advantage. Alright. So what are the advantages for you as the adviser? Obviously, this could enhance your services. You know, many clients may look at you, and I guess, enhance your services and elevate your role, go together because clients, you know, in general, would look at their financial adviser as their investment adviser, and, like, that's it. They think you're okay. That's that's my person that knows investments. What you wanna do is be able to show that you're you can help them with other business needs, you know, you know, that they may not be thinking of you for. So this can enhance your services, elevate your role, gives you a competitive advantage because if you look in the retirement plan industry at top tier retirement plan specialists, this is something they do on a regular basis with their clients. And then and I've seen over the years many cases where, you know, an advisor may lose a plan to another advisor, and it turns out it was because the new advisor was going and showing them everything that they'll do on a regular basis that should be done to run the plan, and the, adviser that had the plan didn't either do it or didn't point out that they could do it. So, again, giving that competitive advantage, it's key. And, obviously, it can help you start new wealth and retirement conversations with clients. So the more you're seen as a consultant to the client for their, their, overall financial needs, the better it can be for you, again, enhancing that relationship. So some key these are the, you know, six areas of review, you really wanna make sure you're covering in a benchmarking. Right? So plan design, you know, is this the right design for this client? The fees, the investment performance, participation rates, you know, how much are participants deferring the referral rates, and then actually their provider performance. So we'll take a quick look at these. You know, areas to review, plan design. Right? Which employees are eligible for the plan? How are contributions structured? Is it a safe harbor plan? It is not a safe harbor. Is there auto enrollment? What's the vesting schedule for the client? You know, what are the rules for four zero one k distributions? And does the plan offer loans? So there's a lot of plans out there. I've seen over the years that for whatever reason, the owner was trying to be paternalistic and didn't offer loans, but that did turn off some employees. So, you know, things like that can be looked at. Fee structure. You know, what are the administrative fees? There's not just one set of fees in the plan. There's billable fees. There's investment fees. There's transaction fees. There's, you know, any any fees, that can be charged need to be reviewed. So administrative, transactional, and provider fees. Are they in line with industry standards? That's really what you wanna compare. And then other areas of your investment performance. Right? So this is not just in a retirement plan, it's not about, hey. I have to have my clients in top tier, top quartile, top, you know, decile, investments. It's you know, is it growing? Are they providing reasonable returns? If you look at any of the litigation with large plans over the years on investments, the, you know, the courts have been very direct on reasonable returns in their decisions. That's really what you're looking for. You know, are they performing well against their peers? Right? That's the whole thing is that are they performing well? They don't have to be the top funds, the top investment options. They have to perform well because the retirement plan is a long term, program. You know, that's what you're looking for, long term consistency. And does does your client have the appropriate investment mix? You know, depending on when the plan started and how much the client or, prior adviser may have been paying attention to the plan, you know, maybe it's set up from ten, fifteen, twenty years ago. And, you know, there's certain investment, areas missing that, should be included, or it could be the case where there's way too many funds for the participants to choose from. What about participation rates? Right? How many participate how many, employees are participating in the plan, and what is their the amount they're deferring? What about by age group? Are we seeing that, you know, there's a there's a gap in a certain age group or maybe by their income segment, by their length of time employed. So a lot of these are great topics to review and you may be like, well, where do I get that information? You know, obviously, the current provider of plan will have all of this information. A lot of times the the, client's website, which a lot of times as an adviser, you have access to through your adviser, website, you'd be able to pull reports that are easily designed exactly for this. They'll show dissipation rates by by age, by segment, like the time employed, or you can do ad hoc reports. So many times, this is all available. Even the client may not know it's available. You really wanna just pull that information. Other things to look at, right, how much are they actually putting in the plan, as a percentage of their income? You know, what is that average referral rate? You know, what is it across aging income, length of time employed? And then what about provider performance? Is the plan integrated with payroll? There's so many ways to integrate with payroll. Obviously, at Paychex, that's one of our strengths when they're on our own payroll. But what about if they're not on our payroll? Is it an can they integrate? Is the provider positively rated by industry peers? Right? Who are they with? Are they positively, seen in the industry? And do they provide prompt service and support? Right? So is the client getting what they need when they need it, you know, from their their provider? You know, obviously, that's one of the things we you know, Paychex would help you do, even though I mean, that's why we're having this webinar. We wouldn't offer this if it wasn't something we're super familiar with. But when you look at, a complimentary review, it's free for your clients. It it's not super difficult to do, and you don't need to have a retirement plan with us or with any provider to do, a review. Typically, you would want to just re request a you can do as simple as request a proposal, or ask the, you know, the different record keepers to compare the client's current plan with their what they offer. And many times, you'll find and and in our case, when we've done a lot of these reviews over the years, you can see from a few years ago, a study we did, we should we were saving clients 25% on average. A lot of times that was because their plan hadn't been looked at in a number of years. And, obviously, doing benchmarking is something that that, should be done on a regular basis. Now one of the things that you'll see is the IRS does provide a four zero one k plan checklist. So this is kind of a guide, to to use with clients where, you know, it it contains compliance requirements, operating a qualified plan. Obviously, at Paychex, we can help, answer any of these compliance questions that you may have or the client may have, and also guide you. And the IRS or the DOL actually says with retirement plans, they don't have it as a rule, but it's recommended that a client should be benchmarking their plan every one to two years. It's not a hard and fast rule like some of the other, guidelines. But, again, you wanna be doing this so that you're, you know, you're not being blindsided by another adviser who's coming in and saying to the client, oh, this is what I'll do, and the client didn't know you could you could do that for them. So making that part of your practice on a regular basis is really key. You know, once you do a review, what are the things you have to worry or bring to the client? It's all gonna depend on the review, of course, but maybe there's something that would can simplify their administration, ensure compliance, increase participation. You know, for smaller plans, it's not uncommon to add a three thirty eight investment manager. If you're familiar with that, that's where it's a preset lineup where a a third party investment manager selects, monitors, and deselects the investments based on stated guidelines that they have to follow. So, you know, that's giving peace of mind to a a plan sponsor that somebody is at the wheel with the investments where and it's not something that you would have to do an analysis of every, you know, six months or every year for these smaller, or midsize plans where there's a lot of investment review for a plan that may not be creating a lot of revenue. And the other option is outsourcing to a three sixteen administrative fiduciary. A three sixteen, administrative fiduciary is basically taking on a lot of the administrative duties of you know, that the plan sponsor would would be responsible for. Some of the basic things are they actually do, send off the notices to the, to the participants. They make sure they get their timely and then they track it in case the plan's ever audited. They're also, usually filing the 5,500 for the client. You know, basically, the plan administrator, the named plan administrator where when you use a three sixteen, the outside firm is that named plan administrator. But the plan administrator is responsible for filing the 5,500, so it takes a lot off of their plate. And what about auto features? You know, is there auto, enrollment, auto escalation, reenrollment? Is that maybe needed, especially if the plan's been around for a long time? Has a number of or newer participant employees that have been there for a while, and maybe it's the client's just been doing things like sending them an enrollment link and and that's it. And nobody's been educating them. So maybe auto, you know, adding auto enrollment or reenrolling a plan through auto enrollment, would help or auto escalation. I can use the the simple story of my own son who was in his early thirties. And a few years ago, when he changed jobs, he came to me and said, hey. You know, what should I do with my plan? He knew what business I was in. So I I helped him set it up, and they offered auto escalation. So I told him to to just select that. So when I talked to him earlier this year, I just said, so what percentage are you putting into your plan now? And and, he said, let me look. And he just looked on his phone. Of course, knew exactly where to go. Said and he's not a financial person, by any means. But he looked at his phone, he said, oh, yeah. I'm currently doing 9%, you know, plus the firm, you know, obviously was matching. It was a safe harbor, so they were putting in 4%. So I'm like, at his age, putting in 13% total between him and the company's exactly where he needs to be. So, you know, auto enrollment with auto escalation is is so helpful, and he obviously never felt the, 1% increase per year. So, you know, there's stories like that all over the place, but it the the typical participants are not that familiar with their plan. And by putting in a feature like that, it can only help them in the long term. The other options, you know, pool employer plan. A pool employer plan bundles all of those things together at $3.38, the $3.16, and it it has the least amount of, fiduciary responsibility on the client. You can't say the client never has fiduciary responsibility, but it outsources the most that they're allowed to, when you have a full employer plan. That also allows advisers to to more flexibility to focus on participant outcomes so you can focus on that and new client acquisitions than having to do investment reviews or or get stuck in the middle of administrative, you know, quandaries that the clients, run into. So, you know, right before we wrap up, I see we're about twenty minutes in, which is good because we, limited this to thirty minutes. Just a quick background on Paychex Retirement Services. Obviously, we're in this this field. We move faster. You can move mountains. I wanna give you a quick update on a few things we're doing. We currently have a a an adviser referral network, that we've introduced just recently where if you introduce a, client to Paychex Retirement Services and client starts a plan with us, we'll introduce you to three new retirement opportunities. And you may wonder, well, where do you get your retirement opportunities? Well, if you know Paychex, you know, we have, tens of thousands of clients that don't have an adviser, and we are regularly, we, putting in front of them the advantages of an adviser and asking if they would like to talk to an adviser, at which point we will introduce, advisers to those clients. So, you know, that is a great program to to help you if you have a build growing business. You wanna add more, clients to your business. We have forty eight hour plan set up for small startups. We can get plans up up and running in forty eight hours. That's important because of the fact that when you're dealing with a a small plan, you're usually dealing with the owner who wants to make decision, get it going, and get back to running their business. So getting the thing going quickly is is great. Obviously, we are you know, we have one of the largest pooled employer plans, on the street out there with over 40,000 participating employers. And we're also providing you as advisers. If you have a plan with us, you've been getting these notifications on when these different participant milestones happen, that could create opportunities for you. These milestones include somebody terminates with a balance. You know, we're notifying you through our, through an email if you had any each week, if you had anybody terminate with a balance above $10,000. You can go in and change that balance to any level you want, but we're letting you know when that's happening. We're letting you know when someone becomes eligible for catch up contribution. Somebody is qualifying for RMDs. Somebody who's recently entered the or become eligible but not entered the plan or only auto enrolled. Again, reasons to potentially reach out help those participants, help that client. And, also, we have, payroll integration with over a 100 leading payroll providers mentioned earlier. It's great if they're on Paychex or Paycor payroll, which, Paychex owns. They're completely integrated, same system, but we've also, integrated with over a 100 non Paychex, payroll, providers to make it easy for these businesses. Alright. So this is for you, Stephanie. Alright? Yep. Absolutely, Dan. So thank you so much for everything you shared. We have a ton of people, asking questions. I do have a couple questions for you. But before we do that, a poll question should pop up at the right of your screen. So please mark your response and hit submit button. The question is, would you or your clients like to schedule a benchmarking review with Paychex retirement specialist? So everything Dan talked to you about today, you can actually schedule time with somebody here at Paychex to go through that plan review and make sure that it's set up correctly for your clients. With that, Dan, like I said, a couple of questions. First thing I wanna say to you is I love when you shared the story about your son with the auto escalation. Whenever I hire employees, I automatically convince them to just do that because you're right. You don't even notice that 1% every year. And I love that Paychex as a company offers it to us as employees also. But the first question I have is if I wanted to do a plan review, what documents do I need from a client to start that plan review? Yeah. Good question. There's a number of documents, but there's a few key ones that you would probably know immediately and a few you may not be thinking of. So, obviously, you need some kind of a statement of, you know, their their overall plan stats, like how many, employees does the company have, how many participants in the plan, total assets, probably a lineup of the investments. You don't need to show how much money is in each fund or who owns what, but just what are the current investments so you can you know, when you gather this information, you can share it with, you know, the the partner firms like Paychex to say, okay. Compare what you offer to this. So investment line. One of the most common ones, due to legislation a number of years ago is getting the, four zero eight b two fee disclosure. That's key because it highlights it shows where all the fees are in the plan, not just the billable fees that the client's paying, but all the fees that you should be reviewing when you do a benchmarking. So and and some of these four zero eight p twos are fairly short, five, six pages. Others are 25, 26 pages. You know, most providers like Paychex have a team that's very familiar at reading them and being able to pull out exactly where the fees are and then show you side by side. Okay. Here it is with the current plan. Here's our amount. That's a benchmarking with one provider. If you do this with two or three providers, now you've done a true benchmarking for that client. So, you know, those are two of the ones. Obviously, you could easily pull a 5,500 from one of the, the either the DOL site or one of the, fifty five hundred fifty five hundred tool sites. But, typically, the the provider like us, in our case, our whole step team, can easily pull that to see any more information that they need. And then, you know, I I those are really the key, but then the more you can provide, the better. So, you know, things like the adoption agreement. That may not sound like, what do I need that for? Well, that's the plan design. Right? How is the client the plan currently designed? And that's in the adoption agreement. What plan features are they using? And when we've done adoption reviews adoption agreement reviews, it's amazing sometimes to see boxes checked that I'm like, why would this company check that box? That doesn't that shouldn't apply to them, and they don't realize that's a feature in their plan that they should or should not be using. So that's having that adoption agreement as well. So, you know, I would say at least those three, which is kind of a list of, the investments currently, a you know, along with how many people are in the plan and and the number of employees the company has, the participants, that kind of information, the fee disclosure for the 408B two fee disclosure, and the current plan adoption. Those are three key that will help you you and any firm like Paychex do a good analysis so you can compare what you're doing, what they're currently doing to what the other providers have. Dan Campanelli, thank you. That was awesome. And I think great for everybody. I'm sure they had an opportunity to write it down because you repeated it a couple of times, which I loved. The next question I really, really like because it's if I do a review for my client and it shows everything is good with their current plan, what should my client do and then what should I do with that knowledge? Good. Good. Another good question. So one of the things that their clients should be keeping this and sometimes advisors will keep this for the client, what they'll call a a fiduciary toolbox or a fiduciary file. So anytime you do a benchmarking, even if the client's not going to move their plan, they say, no. Everything's great. Don't need to make any changes. My fees are in line. My investments look good. I've got all the features I need. This shows that the plan they have is is strong right now. That should still go into a fiduciary file and be kept for future reference to show that, yes, we do you know, as a plan sponsor, I am comparing this to make sure that I'm helping you know, doing the best thing for my participants. I'm giving them something reasonable on fees. I'm giving them something reasonable in investments. So that should be kept in a fiduciary file, and I would recommend the adviser keep it as well. Awesome. Dan, thank you so much. I know we planned for about a half hour for this presentation. So what I'd like to do is just show everybody where they can go to find the resources. So as a reminder, you can find an array of resources related to today's topics in the docs column along with the printable PDF of the slide deck that we just shared with you. We'll also send a follow-up email to all the registrants with a link to the on demand recording within the next business day. And you'll be able to access the resources when viewing it on demand also. If you haven't yet completed the brief survey that launched previously, we encourage you to complete that now before we close. We value and appreciate your feedback as your response helps us improve future resources like this to support your business as we move forward. With that, I just want to thank you again, Dan, for sharing your expertise with us today. And thank you all for joining 401(k) benchmarking optimizing your clients plans. If you'd like to review the needs of your business with a member of our wholesale regional team, you can click the talk with our team button at the upper right hand corner of your screen to request a free consultation. Thanks again for joining us and have a great day. Thank you, everybody.