When looking at a company’s financial statements, they should be viewed as similar to a report card in school – organizing and summarizing business performance during a selected period of time. The base numbers are derived solely from decisions and events that actually occurred in a company. Those numbers will determine if a company has been more or less successful as time goes forward.

If a plan has sizable changes in net assets, total assets, contributions, or in general all accounts and doesn’t visit with their current financial advisor to assess the fees associated with managing these funds, a company can be subject to paying significantly higher fees without even knowing it.

Most financial advisors and 401k recordkeepers are geared towards managing smaller plans, or significantly larger plans. Not many providers are able to provide scalable growth strategies, which is why when a change in net assets occurs over the past three years, companies will typically end up spending more in fees than they should be.

What does it mean when a company changes due to positive growth? Several things can occur from this – higher fees, plans needing to be located into a different plan bracket, and employees not receiving full one-on-one financial planning support are just a few issues that can arise.

Benchmarking a plan also becomes significantly more critical when there is sizable growth in the plan. Benchmarking means that either the plan administrator or the advisor shop the plan every year to ensure the best rates and service. If this isn’t happening, the plan administrator can’t claim to be a fiduciary under ERISA regulations. 

When there is sizable growth, it means there is more room for improvement when it comes to the fees and investments. Regulators want to make sure that the fiduciary understands the enhancements and savings they can offer to employees due to the growth rate.

In conclusion, a plan administrator needs a financial ally that will help them take advantage of every opportunity that would materially benefit the company’s employees. If you’re interested in learning more about what Gate Key Financial can do for your company, please don’t hesitate to contact us today.