In today’s complex financial landscape, providing employees with access to a robust and well-managed retirement plan is no longer a luxury—it’s essential. However, managing a retirement plan is a multifaceted responsibility that requires specialized knowledge, adherence to ever-changing regulations, and a commitment to optimizing employee outcomes. This is where a retirement plan advisor becomes indispensable.
This article explores the critical reasons every employer should engage a retirement plan advisor, focusing on their role in ensuring compliance, enhancing employee engagement, managing investment options, and reducing fiduciary risk.
Retirement plan regulations are intricate and subject to frequent updates. From the Employee Retirement Income Security Act (ERISA) to the SECURE Act 2.0, employers must navigate a web of requirements to avoid penalties and maintain plan integrity.
A retirement plan advisor serves as a guide to regulatory compliance. For instance, under SECURE Act 2.0, new provisions such as mandatory auto-enrollment and increased catch-up contributions for certain age groups (optional provision) require plan adjustments. Advisors ensure these changes are implemented correctly and communicated effectively to employees. They can also assist with Department of Labor (DOL) audits, ensuring that plans adhere to fiduciary standards and reporting requirements.
Selecting and maintaining a diversified investment lineup that meets the needs of employees is a cornerstone of an effective retirement plan. Without the expertise of a retirement plan advisor, employers may struggle to evaluate funds, manage investment costs, and adapt to market changes.
Advisors provide critical insights into investment strategies, ensuring that plan offerings align with participants’ long-term financial goals. They can also monitor investment performance and recommend adjustments as needed.
Employers who sponsor retirement plans act as fiduciaries, meaning they are legally required to act in the best interests of plan participants. However, fiduciary duties can expose employers to significant legal and financial risks, particularly in cases involving underperforming investments or excessive fees.
Retirement plan advisors help mitigate fiduciary risk by assisting employers in selecting and monitoring plan investments. They do this by acting as an ERISA 3(21) and/or ERISA 3(38) investment fiduciaries in performing these tasks, taking on the fiduciary responsibility on behalf of plan sponsors.
In addition, advisors conduct benchmarking studies to ensure that fees are reasonable and investments are competitive. They also document decision-making processes, which is essential for demonstrating compliance with fiduciary responsibilities.
Despite offering retirement plans, many employers struggle with low employee participation or insufficient savings rates. A retirement plan advisor can help bridge this gap by designing plans that meet the diverse needs of a multigenerational workforce and by providing education on the importance of retirement savings.
For example, advisors often implement financial wellness programs that educate employees on topics such as budgeting, emergency savings, debt management, and maximizing employer matches. They also leverage technology available through recordkeepers and other plan providers, such as online calculators and mobile apps, to make retirement planning more accessible and engaging. By fostering a culture of financial literacy, advisors help empower employees to take control of their financial futures.
The use of advanced technology in retirement plan management is growing fast. From artificial intelligence (AI) to data analytics, new tools help employers optimize plan performance and participant engagement. However, navigating these technologies requires expertise that many employers lack.
Retirement plan advisors can help leverage technology to automate administrative tasks, analyze participant behavior, and improve plan efficiency. For example, AI tools can identify employees who are underutilizing their plans and recommend targeted communications or interventions. Advisors can also help employers implement cybersecurity measures, another critical aspect of modern plan management. Advisors can help ensure that sensitive participant data is protected against breaches.
The right plan design not only helps attract and retain employees, it can help improve their chances of achieving retirement readiness. Advisors can play a crucial role in driving actionable plan design changes that can really make a difference. According to Fidelity’s 2024 Plan Sponsor Attitudes Survey:
The economic environment significantly impacts retirement plans, and employers need to stay ahead of trends to ensure optimal outcomes for participants. In 2025, inflation, interest rate fluctuations, and global market volatility are key concerns.
Retirement plan advisors bring the expertise needed to navigate these challenges. They can provide your employees with education and guidance on issues such as rebalancing their portfolios, reassessing their risk for tolerance, adjusting asset allocations, maintaining a diversified portfolio, and keeping a long-term perspective. By staying informed on economic conditions, advisors help employers ensure that their employees stay on track with their investment strategies and focused on achieving successful retirement outcomes.
Managing a retirement plan is a time-intensive process that requires ongoing attention to detail. By outsourcing some plan management tasks to a qualified advisor, employers can focus on their core business operations while ensuring that their retirement plans are in expert hands.
Besides offering ERISA 3(21) and 3(38) investment fiduciary services, many advisors can handle administrative tasks such as vendor negotiations, helping to set up payroll integration, Requests for Proposals (RFPs) and participant communications. They can also act as a single point of contact for plan recordkeepers and other plan providers, simplifying the management process for employers.
In 2025, the role of a retirement plan advisor is more critical than ever. From navigating complex regulations and reducing fiduciary liability to enhancing employee engagement and optimizing investments, advisors bring invaluable expertise to the table. By partnering with a retirement plan advisor, employers can ensure that their plans not only comply with legal standards but also deliver meaningful value to participants. In a world of economic uncertainty and evolving workforce needs, having a trusted advisor is not just a best practice—it’s a necessity.
Informational Resources: BenefitsPro: “80% of Plan Sponsors Rely on Advisors, as Retirement Landscape Becomes More Complex (November 4, 2024); National Association of Plan Advisers (NAPA): “Plan Sponsor Satisfaction Driven by Advisor Services Beyond the 401(k): Report” (August 19, 2024); Pension & Investments: “Ten Ways Retirement Plan Professionals Add Value to Plan Sponsors” (accessed January 23, 2025); PLANSPONSOR: “The Value Financial Advisers Bring to Plan Sponsors” (May 31, 2022).