3 Things that are Important to Plan Sponsors of Pharmacy 401k Plans Right Now
There have been numerous studies over the past few years about the topics on which plan sponsors are focused. As with many things, these tend to change and fluctuate depending on what's hot at the time. After reading one of these surveys, the Waypoint team decided to review all the conversations and emails from the past year to see what plan sponsors of pharmacy 401ks think is important. The results may surprise you.
Let's first start with what we originally thought sponsors of pharmacy 401ks thought was important. When we think about pharmacy retirement plans, we typically view them through the prism of an investment advisor because that is a role we often plan with pharmacy retirement plans. This means that we often think about things on the investment level and how plan participants can use these to secure a better retirement. Therefore, naturally, this is what we thought most plan sponsors wanted to focus on because we feel this is a tremendous part of the success of any retirement plan. We also feel that the solutions we offer are elite in the retirement plan world. What we found is that many wanted to focus a great deal on this, but there were some pharmacies that had other priorities with their specific retirement plan.
Plan sponsors look at retirement plans from a variety of perspectives. Some look at it as a benefit to attract, reward and retain employees. Others look at it as a way to help finance their own personal life after pharmacy. Some even look at it specifically as a tax deduction to the company when they have very robust years. There is no right or wrong answer when it comes to the ultimate purpose of these types of plans. However, we did find out that there are three main topics that relate to pharmacy retirement plans that sponsors wanted to discuss. They are below.
- Reducing plan risk and potential fiduciary responsibility - the message about fiduciary responsibility is starting to resonate with plan sponsors. It is also starting to resonate in Washington, D.C. The Department of Labor is now entertaining making all investment advisors and brokers fiduciaries on retirement plans, and eventually all other investment accounts. Right now, only independent Registered Investment Advisors (like Waypoint) share fiduciary responsibility with the plan sponsors (like you). If you have a broker from a large brokerage firm, the broker most likely doesn't share fiduciary responsibility with you.
- Understanding the fees and expenses of the retirement plan - there has been tremendous publicity about the fees and expenses associated with retirement plans in America lately. When the new fee regulations were released (if you don't know what these are, then please contact us immediately), all investment advisors and brokerage firms were given ample time to prepare. By preparation, I mean many of them were given time to determine a way to still confuse business owners to what the actual fees are. We read one shortly after they were released that was 76 pages long. The client asked us to determine what the fees were, and we couldn't even decipher the report. It is important that you allocate enough time to get a true picture of the fees and expenses in your plan.
Retirement readiness of the participants - this is becoming more and more of a concern for pharmacy owners because the age of their employees is increasing. The proper education and proper amount of education is important for success here. This is an area that most investment advisors and brokers need significant improvement. The model of only seeing the participants one time per year is not enough now. Participants need significant access to the advisor and tools to help them achieve their retirement goals.
