Meet the people behind the plan. Your retirement plan was designed by professionals with you in mind. Learn more about the people who work to make sure you have a successful retirement plan.
Registered Investment Advisor (RIA): RIAs are financial professionals who are paid to advise their clients about the benefits of different investments. Generally, RIAs are compensated by receiving a percentage of the assets that they manage. For example, they might collect 0.5% (equal to 50 basis points or “50 bps”) annually from the assets in your retirement plan. RIAs have a fiduciary responsibility to provide objective advice and to disclose any conflicts of interest to their clients, thereby significantly lowering the overall fiduciary responsibility of the plan sponsor.
Stockbrokers and Insurance Brokers: Brokers sell investment products, such as mutual funds and group annuities, to retirement plans. (Group annuities are insurance products that invest in mutual funds, and typically have relatively high expenses and contract termination fees.) A broker’s salary comes from a commission on products sold. Brokers do not have the same fiduciary responsibility to provided objective advice and disclose conflicts of interest as RIAs. Because brokers do not serve as “co-fiduciaries” for the plan, it is important that the plan sponsor be knowledgeable about the services being offered by a broker in order to make decisions that are in plan participants’ best interest.
Third-Party Plan Administrator (TPA): TPAs are financial professionals who are familiar with the regulatory complexities of retirement plans. Many plan sponsors utilize TPAs to handle such tasks as designing a retirement plan, and ensuring the plan’s compliance with government regulations. An experienced TPA can be very useful in managing your retirement plan and keeping it in good standing with the IRS and DOL. Many TPAs exist primarily to sell investment services, but do not specialize in plan administration. It is best to find a TPA whose sole source of revenue is from retirement plan administration and compliance services.
Recordkeeper: 401(k) recordkeepers are responsible for managing the day-to-day operations of the plan. Recordkeepers are important because 401(k) savings are held in an “omnibus account”, in which investments are pooled together for all participants in the plan. The recordkeeper keeps track of who has what, and in which investments. Recordkeepers are also responsible for tracking participant contribution rates and investment selections, providing account statements, and maintaining records of outstanding participant loans. Mutual fund and insurance companies often provide recordkeeping services “free-of-charge” as a way of attracting the plan’s investments. In such arrangements, recordkeeping services generally are not the highest priority and recordkeeping expenses are built into higher investment fees. Many plan sponsors therefore utilize a recordkeeper like TRPC, while purchasing investments from an outside RIA or broker.
TRPC’s area of expertise is as a recordkeeper, offering the latest technology and excellent participant services. We prefer to partner with local professionals in your community, such as TPAs, RIAs, and brokers, and believe that our clients should benefit from a quality local relationship when one is available. We can, however, fill any gaps in services that are not provided close to home.