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What Can an Advisor Do On a 401(k) Plan for You and Your Employees?

As a 401(k) administrator, you do not have to be stranded on a proverbial island. Financial advisors can provide you with a plethora of help. Let's talk about what an advisor can do on a 401(k) plan for you and your employees.

The Advisor Can Coordinate

401(k) plan maintenance can be complicated, with many players and moving pieces. Sure, there is financial advice. But there is also recordkeeping and administration. And then there is interaction with payroll.

It is a lot for one person to keep track of, especially if that person is not experienced in 401(k) upkeep.

But 401(k) financial advisors are experienced in working with these various parties and can act as a coordinator between them.

As a coordinator, your 401(k) advisor should be able to fix problems quickly. They know who is responsible for what, and how the puzzle pieces all fit. They know the right questions to ask, and the right people to ask them to.

The Advisor Can Help Select Investments

Employers / plan sponsors often need help selecting which investments to offer in a plan. And when employees come asking questions, it helps to have a professional nearby. These are two typical roles that 401(k) financial advisors play.

An experienced 401(k) advisor will help you create an investment strategy that meets your obligations to your employees. Preferably, the advisor will do so with fiduciary liability---they are legally bound to act in your employees’ best interest.

On top of that, a good 401(k) advisor can create plans and programs that will push employees towards higher rates of long-term success. This could be done through selective investment choices, from proper incentives (e.g. employee matching), or from consistent maintenance of the plan.

This maintenance is yet another feature that advisors can help with (whereas the typical employee administrator might not have experience). This maintenance can include:

Reviewing the plan's investment menu

Checking in with the plan's funds’ managers

Determining if the recordkeeping is on par

Negotiating lower fees, if merited

The Advisor Can Educate the Participants

A 401(k) plan is only as effective as the participants make it. And a 401(k) financial advisor can take on the role of financial educator for those participants.

Such education can occur in group settings or one-on-one. It's up to the needs and wants of the participants, the plan administrators, and the financial advisor. A mix of group and one-on-one is typically the ideal middle ground.

In this role, the financial advisor might:

Evaluate what employees need from the plan

Help enroll employees into the plan

Focus on long-term financial education

Discuss investment options within the plan

Work with former plan members (retirees and ex-employees) on their best options


By no means is this list exhaustive. For example, a financial advisor is a perfect person to help 401(k) plan administrators with their fiduciary compliance and risk responsibilities.

For the average employee plan administrator, a good financial advisor is a true 401(k) Swiss Army Knife, with many tools and diverse strengths that always come in handy.


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