Individuals responsible for their company’s qualified retirement plan face numerous difficult decisions when selecting plan service vendors. As technologies change, and as plan sponsors seek to shift additional responsibilities to external vendors, the complexity of the assignment increases. In selecting providers for the plan, each vendor’s fees, capabilities and experience must be assessed in each of several key areas, including:
- Administrative, recordkeeping and trust service capabilities
- Access to a broad range of quality fund options
- Ability to insulate the company and its key executives from fiduciary liability
- Employee communications and investment education capabilities.
Service arrangements are typically offered under three different structures, defined as follows:
- Bundled: All services and plan funds are coordinated through one vendor; investments may include funds from multiple fund families.
- Partially Bundled: Services and funds are provided by different vendors under an alliance agreement, with the coordination of trust, investment and recordkeeping services handled by the primary vendor, not the plan sponsor.
- Unbundled: Services and funds are provided by unrelated vendors; the plan sponsor plays a role in the coordination of trust, investment and recordkeeping services.