Regularly, plan sponsors looking to outsource certain necessary services formally contract specialists, such as:
Third Party Administrators
These professionals generally execute a service agreement describing their services, fees, and responsibilities in performing various compliance functions in the operation of your plan. Their agreements often spell out what they are NOT responsible for, which may mean as plan sponsor, you are still liable for certain administrative functions.
These are professional firms who provide a platform for the plan investments, a web site for participant daily access, and plan participant record keeping services. They may also custody the plan assets, if a financial institution, or may partner with a third party custodian to hold the assets, at the plan level. Record keepers who provide most services including custody are generally referred to as bundled providers. Those who provide participant record keeping services in conjunction with a third party financial institution are often referred to as unbundled providers.
FINRA Financial Advisers
These professionals often consult and present bundled solutions with a record keeper providing the core services above, however, they may select a plan menu, have the plan sponsor sign off on it, enroll and educate participants, periodically meet with the plan sponsor, etc…for an asset based fee, or other indirect compensation built into the bundled fee charged by the record keeper, or imbedded in the actual investment product itself. These professionals rarely act as fiduciaries under this approach.
SEC Registered Investment Advisors
Plan committees often want to share or outsource most fiduciary liability and hence, seek out professionals who will acknowledge their fiduciary status with the plan in writing, in collaborative form without discretion under ERISA 3(21) or with discretion, as an investment manager, under ERISA 3(38). These professionals will often will often craft the investment policy statement, keep minutes of committee meetings, provide quarterly performance monitoring reports, and make recommendations on selecting, monitoring and replacing investment menu options periodically. In addition, they may oversee the selection and monitoring of a default investment suite of funds under ERISA 404(c)5. Finally, most advisers provide an executive summary at least annually of all fees and expenses, including the application of any revenue sharing payments received from the custodian/record keeper which they receive from the funds on the plan menu.