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A couple gets retirement consulting servicesRetirement plan consulting services are used by companies to help oversee retirement savings options for employees. A retirement plan consultant can offer guidance on a variety of issues, from choosing which plan to implement to ensuring the plan meets tax and regulatory guidelines. Consulting services for retirement plans can be offered by individual financial professionals or by a consulting firm. If you participate in a 401(k) or similar plan at your job, a retirement plan consultant may play a part in how that plan is administered. A retirement calculator can tell you how much you will need to retire and an estimate of how close to that target you will come given your current savings and investment practices.

Retirement Plan Consulting, Definition

Implementing a retirement plan for employees can sometimes be a complicated process, as there are various rules and guidelines companies need to follow. For example, if a company wants to offer its workers access to a qualified retirement plan, they’ll need to make sure that plan follows guidelines set by the Employment Retirement Income and Security Act (ERISA).

Retirement plan consulting takes the guesswork out of offering a retirement plan to employees, since employers may lack the necessary knowledge and expertise when it comes to how these plans work. A retirement plan consultant can be hired independently to offer advisory services for companies of all sizes.

What Do Retirement Plan Consultants Do? 

Happy retired coupleRetirement plan consultants can offer a wide range of services, and they can serve a variety of clients. For example, retirement plan consultants can work on behalf of employees and employers but they can also work with financial advisors, third-party retirement plan administrators and payroll providers to manage retirement services. Among the services retirement plan consults offer is evaluating how COVID-19 affects retirement planning, but there are many other services they offer, including:

  • Retirement plan selection. If a company is planning to offer a retirement plan to its employees for the first time, retirement plan consultants can give advice on which plan to choose.
  • Plan changes. Retirement plan consultants can also offer guidance on making changes to an existing retirement plan or changing to a new type of plan altogether
  • Investment oversight. Retirement plan consulting services can include managing the plan’s investments to make sure they’re aligning with the employer’s objectives and goals.
  • Plan documentation. A retirement plan consultant can help with creating key documents related to the plan, including an investment policy statement. This document outlines the goals and objectives of the plan and the steps the plan manager will take to achieve them.
  • Plan participant education. Retirement plan consultants can take responsibility for educating employees about the plan benefits and how to participate.
  • Regulatory management. Setting up and maintaining a retirement plan means keeping up with federal regulations. A retirement plan consultant can ensure that a company’s retirement plan is checking off all the required boxes to be compliant.

That last task is particularly important since retirement plan sponsors are held to a fiduciary standard. This means they’re required to act in the best interests of plan participants and they also assume liability for the company’s retirement plan.

Retirement plan consulting services can help plan sponsors carry out their fiduciary duties because they’re knowledgeable about things like ERISA, pension plans and other regulatory guidelines. This can help ensure the plan is being run properly and isn’t violating any federal regulations.

Aside from that, retirement plan consultants can offer additional services to their clients. For example, they can review a company’s retirement plan to look for areas where performance or participation could be improved. That might entail looking at employee participation rates and how assets in the plan are allocated.

A retirement plan consultant can also help with ensuring a company’s plan is on par with what other employers in the same industry are doing. For example, that might mean introducing features like auto-enrollment or automatic salary deferral increases. That can help a company’s plan stay competitive, which can be important for attracting and retaining employees.

One of the most important services a retirement plan consulting may offer is a fee audit. Fees, including plan management fees, administrative fees and investment expense ratios, can take a large bite out of employees’ retirement portfolios. Retirement plan consultants can review the plan’s fees and the fees for its underlying investments to help improve cost efficiency.

What Retirement Plan Consulting Costs 

Retirement plan consultants charge fees for their services just like any other type of financial advisor or investment advisor. These fees, which can be charged as a flat annual fee or as a percentage of plan assets, can be based on:

  • The type and complexity of the plan
  • The number of employees a company has
  • The scope and frequency of education services being provided to employees

Fees can cover consulting services but they can also include administrative and record-keeping fees. Individual investments included in the plan that are recommended by the consultant can also carry their own fees.

Similar to how other financial advisors operate, retirement plan consulting services can decrease the annual percentage fee as assets under management increase. So if an employer has a retirement plan they need help with that has $5 million in assets, they might pay a 0.5% annual management fee. But once the plan assets top $25 million, the fee might drop down to 0.15% instead.

Retirement Plan Consulting for Employees

If you’re participating in your retirement plan at work, the most likely way you’ll interact with a retirement plan consultant is through plan education.

For example, you might be given a pamphlet or brochure about the plan when you’re hired. This brochure might be prepared by the plan consultant. Or you might be invited to a workshop or webinar led by the consultant that offers an overview of how the plan works. There are also other retirement planning resources you can access to supplement these.

The main thing to remember is that retirement plan consultants are hired by your employer to help make the best decisions for the plan to benefit all participants.

The Bottom Line

Retirement planning consultant at workRetirement plan consulting services play an important part in retirement planning at the employer-employee level. Make sure you understand your investment options and all fees. If you’re enrolling in your employer’s retirement plan for the first time, be sure to ask the right questions. For instance, it’s important to know whether you have a defined benefit plan (also known as a pension plan) or a defined contribution plan, such as a 401(k). You should know the amount you’re required to defer from your paychecks to qualify for the full employer matching contribution and, the vesting schedule and the guidelines for taking out loans or making hardship withdrawals if needed.

Tips for Retirement

  • Consider talking to a financial advisor about your overall retirement planning strategy and the best ways to make use of your employer-sponsored plan. If you don’t have a financial advisor yet, finding one doesn’t have to be difficult. SmartAsset’s financial advisor matching tool can help. With this online tool, you can get personalized recommendations for professional advisors in your local area in minutes. If you’re ready, get started now.
  • If you don’t have a retirement plan at work, consider other ways you can invest for retirement. Opening an individual retirement account, for example, is one way to save money on a tax-advantaged basis. A traditional IRA allows for tax-deductible contributions while a Roth IRA allows for tax-free withdrawals in retirement.

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Rebecca Lake Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She's worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
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