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Posted on by Jerome.Pfeffer


Posted on by Jerome.Pfeffer


As a retirement plan specialist, I find myself having regular conversations surrounding 401k regulations and procedures. Lately, many questions seem to be around best practices and 401(k) plan documents, so in this article I’d like to discuss your plan’s Investment Policy Statement (IPS) and answer a couple of common questions.

What is an Investment Policy Statement?

When it comes to your company’s retirement plan, an IPS is like a road map. It serves as an outline for fiduciaries on the investment committee and provides clear guidelines for all investment decisions and responsibilities of each party. A well-written investment policy statement should:

Does my 401(k) plan require an Investment Policy Statement?

Short answer: No. Although 90% of defined contribution(DC) plans maintain an IPS[1], the Employee Retirement Income Security Act of 1974 (ERISA) does not require it. However, if you choose to adopt one, it is important that you follow it! Failure to follow plan documents is a fiduciary violation that may carry some heavy consequences:

Class Action Lawsuits |Tussey vs. ABB, Inc., a 2012 landmark case where $36.9 million in damages was awarded to plan participants, top fiduciary violations included:  failure to follow the plan’s IPS.[2]

DOL Audits | In 2016, approximately 68% of the audited 401(k) plans were forced to pay fines, penalties, or reimbursements for plan errors: the average fine was upwards of $570,000.[3]  Among the top 3 most common ERISA violations: failure to follow plan docs.[4]

What should be in an Investment Policy Statement?

This robust document provides a framework for decision-making, it should be written out in a way that allows fiduciaries flexibility. To use the analogy from before: it should be a road map, not a chauffeur. In addition to the standard items that should appear in your plan document, consider spending some time in the following areas:

  1. Plan Purpose: Think of this as your plan’s “why,” your mission statement. Why does your plan exist? Consider including your intent to comply with the safe harbor provisions of ERISA section 404(c).
  2. Committee Roles & Responsibilities: Outline the roles and responsibilities of the investment committee, custodian, investment consultant and investment manager. Additionally, this section can lay the frame-work for committee meetings: when and what will be discussed during meetings?
  3. Fee Review: Your plan is not obligated to select the lowest cost fees, but instead determine that fees are reasonable in relation to the services provided. This section should outline a process for fee review, consider including sections on regularly benchmarking fees and doing rfp’s.
  4. Participant Education: This is a significant committee responsibility; use he IPS to outline methods, resources and frequency of education. For a more in-depth document, you may consider adopting and Education Policy Statement (EPS) as well.
  5. QDIA or TDF Review: 9 out of 10 plans have a qualified default investment alternative (QDIA) as the default investment fund[5], but many IPS documents don’t discuss QDIA processes.[6] These highly popular investment options have multiple layers of fees, different glide paths and combinations of investments. It may behoove you to add a comprehensive QDIA section covering a process for selecting and monitoring your default investment.

Why have an Investment Policy Statement?

So, if it is not required and it sounds like a lot of work, why should my company adopt an IPS? I would say the overwhelming number of pros out-weight the cons. The outline of a prudent process can add a layer of fiduciary protection if the Department of Labor came knocking on your door, after all, it is one of the primary documents the IRS and DOL request when they conduct plan audits.

Remember, if you choose to adopt and IPS, the worst thing you can do not follow it. That would be like hopping in your car, plugging your destination in on the GPS, and intentionally turning left when you were advised to make a right.

At Investment Solutions Group, we understand that process is key. Let us help you to establish a prudent process that strives to better manage liability and meet your fiduciary responsibility.

Securities and Advisory Services Offered Through LPL Financial. A Registered Investment Adviser. Member FINRA /SIPC.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. This material was prepared for Jerome Pfeffer’s use.

Plan Sponsor Use Only – Not for Use with Participants or the General Public.

[1] Callan Investments. “2017 Defined Contribution Trends Survey.” Jan. 2017

[2] Wagner, Marcia. “Legal Update: Tussey vs. ABB, Inc.” Jan. 2015.

[3] Department of Labor. “Fact Sheet. EBSA Restores Over $ 777.5 Million to Employee Benefit Plans, Participants and Beneficiaries.” EBSA Monetary Results. 2016.

[4] Donaldson, David. “Plan Management: Through the Eyes of a Former DOL Senior Investigator.” ERISA Smart. 2015.

[5] Callan Investments. “2017 Defined Contribution Trends Survey.” Jan. 2017

[6] Buckman, Carol. “IPS (Investment Policy Statement) Gaps?” 401kTV.com. Aug. 28, 2017.

Are your employees satisfied with their 401k plan?

Posted on by Jerome.Pfeffer



Posted on by Jerome.Pfeffer


Over the past decade workers have used litigation to challenge 401(k) fees, but the frequency of these lawsuits has picked up drastically since 2015.[1] The cases usually focus on excessive fees, poor plan designs, and alleged conflicts of interest.[2] Plans of all sizes have come under fire recently, even plans with less than 100 participants, which was traditionally unheard of.[2] In response, the 401(k) fee frenzy began. Many headlines would lead you to believe that plan costs are the highest ranked concern, however, according to research from Voya, plan sponsors place more importance on fulfilling fiduciary duty and retirement readiness.[3]

source for headlines [4]

Cheaper ≠ Better
It’s important to note, despite the headlines, cheaper does not mean better. ERISA guidelines specify that fees must be known and reasonable, not cheap. Regular benchmarking can shine light on plan costs and help you to compare your fees with other in your peer group.

Clearing the Air
Your employees expect a lot from you; as a plan sponsor, the decisions you make can help or hinder their ability to retire. This is where partnering with a professional retirement plan advisor could possibly reduce stress and increase retirement readiness.[5] In this article, we’ll discuss tips, tools and ideas that focus on major plan sponsor concerns, mainly: fiduciary duty and retirement readiness.

The F word: Fiduciary
In a recent study, fiduciary responsibility – for the first time ever – entered the top ranks of plan sponsor concern; nearly 4 out of 10 say they have concerns about their fiduciary duties.[6] If this rings true with you, consider this 4 step cycle may help manage your fiduciary commitment: document, assemble, monitor, implement, repeat.
Document: This may be the glue that holds everything together. In the 401(k) world, the process that got you to your decision might be more important than the decision itself. One of the best ways to approach your fiduciary responsibilities is to document everything, this includes: committee meeting discussions, service provider selections and the rationale, investment policies (Investment Policy Statement), and plan communications with employees. Ask your advisor about securely storing these items in a fiduciary vault.
Assemble: You are only as strong as your team. Your retirement committee might consist of internal and external members: including a third party administrator (TPA), an independent advisor, an actuary, and an ERISA attorney. It’s important that each member is aware of their role and that the committee:
• Adopts a charter
• Adopts an Investment Policy Statement (IPS)
• Meets quarterly and records meeting minutes
Monitor: During regular committee meetings, you should be monitoring and discussing the process around all plan documents, investments, service providers, and fees. Benchmarking your plan against others in you peer group is a great opportunity to evaluate participation rates, auto-features, deferrals and retirement readiness.
Implement: Based on the research and review of monitoring your plan set a path for implementation. Of instance, if your plan suffers from poor participation, consider auto enrollment for new participants or scoop up existing employees with a backsweeping campaign.
Repeat: Remember, fiduciary duty is an on-going process, so lather, rinse, repeat.
Retirement Readiness
I think we can all agree that retirement readiness is purpose of offering a plan in the first place. If your focus is placed mainly on fees, funds, and fiduciary then you may be overlooking a major priority! To assess the health of your plan, a great question to ask is: Are my employees on track to retire on time?
During regular committee meetings, assess your participation and deferral rates, those may be indicators of how on track your employees are. Using that information, you can put in place auto features and advanced plan design options that aim to impact your employees saving accounts in a meaningful way.

To help you monitor and enhance your plan, Investment Solutions Group subscribes to a suite of advanced reporting tools that we analyze and boil down for you on a quarterly basis. These reports and our expertise allow us to help you regularly evaluate your plan and make meaningful adjustments that inspire action to help you and your employees work toward real retirement outcomes.

Jerome Pfeffer, CRC
Managing Director
6020 Academy NE, Suite 206
Albuquerque, NM 87109
(505) 888-4015 Direct
(505) 515-0036 Fax

Securities and Advisory Services Offered Through LPL Financial. A Registered Investment Adviser. Member FINRA /SIPC.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. This material was prepared for Jerome Pfeffer’s use.

Plan Sponsor Use Only – Not for Use with Participants or the General Public.


[1] Seyfarth Shaw, LLP. “13th Annual Workplace Class Action Litigation Report.” 2017. http://www.workplaceclassaction.com/2017/01/its-here-seyfarths-2017-workplace-class-action-report/

[2] Groom Law Group. “Excessive Fee Litigation.” October 2016. http://www.groom.com/resources-1086.html

[3] VOYA Investments. “Sponsor Perceptions of Retirement Plan Services.” January 2017 https://retirementu.voya.com/landing-page/2017/01/03/sponsor-perceptions-retirement-plan-services

[4] Plan Sponsor: Managing Investment Fees Among Plan Sponsors’ Top Concerns http://www.plansponsor.com/Managing-Investment-Fees-Among-Plan-Sponsors-Top-Concerns/

[4] CNBC: What you don’t know about 401(k) Fees can cost you plenty http://www.cnbc.com/2017/04/06/what-you-dont-know-about-401k-fees-can-cost-you-plenty.html

[4] Forbes: Sneaky 401(k) Fees You didn’t know you were paying https://www.forbes.com/sites/brianmenickella/2016/07/20/sneaky-401k-fees-you-didnt-know-you-were-paying/#30ec4eb33318

[4] Wall Street Journal: Why you should check your 401k plan’s fees?https://www.wsj.com/articles/why-you-should-check-your-401-k-plans-fees-1447038127

[5] EACH Enterprise LLC. “The Practice Professional Development Plan.” Professional Development (2005): The Value of a Professional Retirement Plan Advisor. 2014

[6] Fidelity Investments. “Plan Sponsor Attitudes: 7th Edition.” Aug. 2016.

Aligning Company Goals with Effective Plan Design

Posted on by Jerome.Pfeffer


Posted on by Jerome.Pfeffer


A huge responsibility rests on the shoulders of the members of a company’s retirement plan committee. With an influx of lawsuits, headline news, and changing regulations, it’s more pertinent than ever to be aware of what’s going on. We’ve complied 5 critical questions all plan sponsors should be asking their retirement plan advisors to assess the reasonableness of their fees and the quality of service.

Are you a retirement plan specialist?

To paint the picture, let’s start out with an analogy. If you suffered from chronic headaches, would you visit your primary doctor or seek a specialist? Many would start with their general practitioner and eventually request a specialist referral when the issue was not resolved. A similar story can be told for your retirement plan.

Did you know that 91% of retirement plans are run by non-specialists?[1] Many are being serviced by payroll providers, insurance brokers, and wealth managers who may offer retirement plan services but have not specialized in retirement plans.  This means that your throbbing headache might be diagnosed with Tylenol instead of addressing the root of the problem. Actually, 67.7% of retirement plans audited by the Department of Labor in 2016 were charged corrective fines to the tune of $573,000 on average.[2].  Thus, if your advisor is not a retirement plan specialist, you may want to consider a second opinion.

Who is our Recordkeeper?

Simply stated, your recordkeeper is the keeper of all of your records; they are an important player in your retirement plan. They also keep a close watch over how much and what type of money is in your plan and account for it in the appropriate “bucket.” In addition to tracking individual assets, your record keeper may provide other services such as:

Your recordkeeper is an integral part of your retirement planning team; these questions can help you discover if your recordkeeper is suitable for your plan type.

What does our share class mean?

A, B, C, I, N, R – trying to keep track of all of the various mutual fund share classes can sometimes feel like eating a confusing bowl of alphabet soup. Each of these are available options, however, and they may not be suitable investment vehicles for your particular retirement plan.  Investment advice is unique to every situation; and from a general educational standpoint, Institutional shares (I Shares) and Retirement shares (R shares) may be a good place to look for quality investment options.

{The chart below helps display which share classes and instances may be appropriate for you. Is our plan design aligned with our company’s retirement plan goals?

This is where working with a professional retirement advisor can potentially offer a lot of value. Plan design is crucial for any corporate-sponsored retirement plan. A well-designed plan should address the expectations of the business owner (or owners), valued team members, and loyal employees.  Below are a couple of examples of plan design options that could help you prepare your employees for retirement.

Examples of Plan Design Options

Profit Sharing

Profit sharing plans offer employers both design flexibility and discretion with respect to contributions. Employer contributions are not required and can be allocated in a number of ways. Maximum employer deductions are limited to 25% of annual compensation or the annual maximum contribution limit, whichever is less.

Safe Harbor

Safe Harbor plans allow owners and highly compensated employees to maximize deferrals. However, they do require specified employer contributions, and all contributions are immediately vested.

New Comparability

This allocation method allows an employer to divide its employees into different groups and allocate contributions based on group association. Keep in mind that this is a fairly technical option and you will need to work with a Third Party Administrator (TPA) on plan specifics. However, after the testing requirements are met, an employer may provide larger benefits to certain employee groups.


Should we consider automatic features?

In addition to sound plan design, advanced features such as automatic enrollment, automatic escalation, and qualified investment alternatives (QDIA) can help prepare your employees for a more meaningful retirement. Although many plan sponsors are reluctant to make paternalistic plan changes, seven out of ten participants are in favor of more aggressive defaults[3]

70% of plan participants[4]:

Managing your company’s retirement plan can seem overwhelming at times; however, it can be an extremely valuable benefit for your employees. If issues are uncovered by asking the questions laid out in this article, you may need to evaluate some key plan components.

Investment Solutions Group can help.  We offer comprehensive plan provider review and benchmarking that includes in-depth comparisons of plan features and fee transparency. You can leverage our knowledge and experience to help manage the burden of benchmarking, RFPs, plan design, and vendor analysis.

Hope you enjoyed this article, and please feel free to contact us for additional articles and insights.


Securities and Advisory Services Offered Through LPL Financial. A Registered Investment Adviser.
Member FINRA / SIPC.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. This material was prepared for Jerome Pfeffer’s use.

Investing in mutual funds involves risk, including possible loss of principal.

[1] Demasters, Karen. “Retirement Plan Advice Offers Opportunities.” FA Magazine, 20 Mar. 2014. http://www.fa-mag.com/news/retirement-plan-advice-offers-opportunities-17325.html

[2] EBSA. “Fact Sheet: EBSA Restores Over $ 777.5 Million to Employee Benefit Plans, Participants and Beneficiaries.” 2016. https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/fact-sheets/ebsa-monetary-results.pdf

[3] NAPA Net Staff. “Participants Back Bigger Nudges.” Aug. 2016.

[4] American Century Investments. “Forth Annual Plan Participant Study.” Aug. 2016.

Financial Wellness Infographic

Posted on by Jerome.Pfeffer

Why Financial Wellness?

Financial wellness could be a simple solution for reducing employee stress creating a more favorable work environment.

Reasons to Offer a Financial Wellness Program

Posted on by Jerome.Pfeffer

Why Financial Wellness?
Could financial wellness be the answer? Companies of all sizes are constantly searching for  ways to increase employee engagement, improve productivity, build and/or retain a quality team, and enhance benefit programs. Financial wellness could be a simple solution for reducing employee stress creating a more favorable work environment.

Offering your employees a financial wellness program can have a dramatic impact on your bottom line, both on a short-term and long-term basis. By offering financial wellness programs, you can help employees make positive improvements to their financial behavior. The details of these programs will vary depending on the specific needs of the company’s workforce, but they all share the same goal: to help employees achieve balance and control over their finances, leading to a healthier, more productive workforce with less absenteeism and higher retention rates.

Personal finance issues are a huge distraction for employees and may contribute to “presenteeism”– a state in which employees are physically at work yet mentally adrift in their own troubles. Nearly half (46%) of all employees say they spend three or more hours at work each week thinking about or dealing with their personal finances[1] – that’s 156 hours (19.5 days) over the course of a full year! By offering education and support for employees to help them better manage their finances, you may be able to reduce presenteeism.

It has been said that it is more cost effective to keep an employee that to hire a new one. Employee turnover costs companies time, money, and other resources. Research suggests the average cost of turnover was 21 % of an employee’s annual salary.[3] Employees are more likely to stay with an employer that they feel cares about their well-being, and 85% of employers agree that offering a financial wellness program is the right thing to do.[4]

Health Care Costs
Whatever health condition you can think of, stress has been proven to exacerbate it. The health risks associated with stress are pushing healthcare costs higher and higher for employers and employees alike. Employers who offered financial wellness programs saw an average reduction in operating costs of $348 per employee per sick day.[5] Many plan on delaying retirement in an effort to combat low account balances. That delay can be  costly: for each employee who puts off retirement, employers could be looking at an  additional annual cost of over $5,000 in health insurance premiums.[6]

Pay it Forward
Financial wellness is like investing in your employees, offering employees greater retirement security can help employers cultivate a less stressed, healthier and more engaged workforce.[7] Whatever reason makes you decide to establish or enhance your financial wellness program, you’ll be offering a priceless asset to your employees and taking steps toward helping them control their financial futures.


At Investment Solutions Group, we care about helping you prepare your employees for retirement. We work alongside you to offer the most effective employee benefits, from well-designed retirement plans to comprehensive financial wellness programs.

Securities offered through LPL Financial. Member FINRA/SIPC.
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. This material was prepared for Jerome Pfeffer’s use.

1.     PricewaterhouseCoopers LLP. “Employee Financial Wellness Survey” (2016): Pg. 8. PWC. April 2016.
2.     Based on 2016, employer costs for employee compensation (ECEC) $34.15 per hour. Bureau of Labor Statistics. “Employer Costs for Employee Compensation- Sept. 2016.” www.bls.gov. Dec 2016.
3.     Boushey, Heather. “There Are Significant Business Costs to Replacing Employees.” Center for American Progress. Nov. 2012
4.     Aon Hewitt. “2016 Hot Topics: Retirement and Financial Well-being.” Pg. 6. 2016

5.     Financial Wellness Landscape Analysis:  An Overview of the Need for Workplace-Based Financial Wellness Programs.  ING Employee Benefits, 2013.
6.     “Aon Hewitt Analysis Shows Upward Trend in U.S. Health Care Cost Increases.” Aon  Hewitt, Nov. 2014.
7.     Nyce, Steve. “Which Employees Are Delaying Retirement and Why?” Willis Towers Watson. Sept 2014


2017 Compliance Calendar

Posted on by Jerome.Pfeffer

As we quickly approach a busy season of deadlines, it’s important to have a clear outlined schedule that your team can refer to. We have provided a complimentary retirement plan compliance and notice requirements calendar to guide you through the rest of the year, so you don’t miss a deadline.

Download your free copy!


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