PLANADVISER - July/August 2021 - 22

research / 2021 PLANADVISER Small-Plan Services Survey
it time- and cost-effectively? And what is my role? "
In the past, individual advisers worked as the sole operator
for one plan and, therefore, bore all of the professional
responsibilities,
including
communications,
investments
and more. In its growth, the retirement plan industry has
created fiduciary specialists dedicated to exclusive aspects of
retirement planning that advisers can partner with to create
a more efficient practice.
One example is working with a 3(38) investment manager.
These fiduciary advisers select, manage, monitor and benchmark
plans' investment offerings, consolidating a number
of responsibilities that were previously part of the advisory
offerings. By adding a partner such as a 3(38), financial
advisers can free up time to focus on plan design
and work with participants one on one, which
can solidify client relationships and grow
the adviser's practice.
Additionally, plan advisers can
still charge fees to smaller plans
for their services, adds Parks. " All
my career, I've heard the saying
that there is no money in small
plans, but small plans often
grow up to be big. You may not
make it all right away, but if you
nurture that relationship, you'll
be helping and adding a valuable
service to these plans. "
Adding varied perspectives
means business owners are also
more likely to reach all or most of the
plan goals they want
to achieve, says
David Flores Wilson, a managing partner in
Sincerus Advisory in New York City. " We [alone]
are just not going to build up expertise in all of those areas, "
he says. " If we're finding the right advisers who we can bring
in at every lifecycle of the business, the business owners can
then be closer to the goals they want to achieve. "
Providing services to small businesses is another way to
diversify one's advisory practice while growing the portfolio,
says Patterson. Additionally, he notes, using today's timesaving
solutions/products as well as automated plan features
can simplify administration, freeing the adviser to focus on
generating business.
Consider the Types
When it comes to the types of retirement plans traditionally
used by small employers, the savings incentive match plan
for employees (SIMPLE)-in either an individual retirement
account (IRA) or a 401(k) version-the simplified employee
pension plan (SEP) and the solo 401(k) are a trio of options.
All three types are effective designs that often require little
preparation for a smaller client, says Josh Sailar, who, as a
partner in Blue Zone Wealth Advisors in Manhattan Beach,
California, works with small-plan employers.
For instance, the SEP is available to any size business
and does not have a filing requirement or the same start-up
and operating costs as a standard retirement plan. " A SEP is
the go-to in terms of the benchmark, " says Sailar. " There's
no need to take on that additional cost complexity. " Further,
small-plan sponsors may find it easier to first offer a SEP, then
later to choose a more complex option such as a 401(k).
SIMPLEs require employers to provide a match or make
nonelective contributions, says Parks. They also have a
lower contribution threshold, $13,500 this year, compared
with $19,500 for 401(k)s. For SEPs, contributions may not
exceed the lesser of 25% of the participant's compensation
or $58,000 this year.
" Small employers stay away from a 401(k) because they
think it's too complex and believe they must offer a match,
but a SIMPLE is just as complex and, while not as
expensive, has a mandatory match, which is a
cost to the company. "
While Parks believes SIMPLEs and
SEPs to be suitable options for select
companies, he urges employers to
consider a safe harbor 401(k) instead,
due to its loan-provision and hardship-withdrawal
features. A safe
harbor 401(k) is also a qualified
retirement plan, meaning it is a
protected asset in the event of a
lawsuit or bankruptcy filing, Parks
says. SEPs and SIMPLEs, however,
are also protected plans.
If an employer does not want
to offer a complex plan, it can join
a pooled employer plan instead, says
Parks. PEPs may be a fitting option for
employers and advisers worried about fiduciary
risk. They allow a small employer to group
its plan resources with those of peers while delegating the
responsibilities to a third-party plan provider. A single
administrator for all of the plans will package, make available
and oversee the benefit offerings, with the employer
paying select fees.
For advisers interested in working with small plans, Parks
recommends they, first, define their role in the plan and
what they will or will not offer. Second, find plan providers to
partner with that will have the plan's best interest at heart,
that can achieve efficiencies and take on responsibilities that
an individual adviser cannot.
Lastly, Parks says, advisers interested in this space should
keep an eye out for SECURE 2.0, which has passed the House
Ways and Means Committee but has yet to move to the
full House. Not only would multiple employer plans (MEPs)
become an option for small 403(b) plans if the bill passed,
but tax credits for small businesses would be raised to 100%.
Patterson concurs, adding that most advisers overlook
the tax savings opportunities when offering a plan to small
businesses. " These savings [would] become even more meaningful
with the passage of the SECURE Act [2.0], which was
designed to incentivize smaller businesses to set up retirement
plans for their employees, " he says. -Amanda Umpierrez
22 | planadviser.com July-August 2021
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PLANADVISER - July/August 2021

Table of Contents for the Digital Edition of PLANADVISER - July/August 2021

Publisher’s Note
Data Points
Compliance News
Trends
Proposals That Please
2021 PLANADVISER Small-Plan Services Survey: Small Wonders
‘Like’ Me
Building Out Referral Networks
Look Toward The Future
Now A Fiduciary
Cybersecurity And ERISA
Q&A
PLANADVISER - July/August 2021 - Cover1
PLANADVISER - July/August 2021 - Cover2
PLANADVISER - July/August 2021 - 1
PLANADVISER - July/August 2021 - Publisher’s Note
PLANADVISER - July/August 2021 - 3
PLANADVISER - July/August 2021 - Data Points
PLANADVISER - July/August 2021 - 5
PLANADVISER - July/August 2021 - Compliance News
PLANADVISER - July/August 2021 - 7
PLANADVISER - July/August 2021 - 8
PLANADVISER - July/August 2021 - 9
PLANADVISER - July/August 2021 - Trends
PLANADVISER - July/August 2021 - 11
PLANADVISER - July/August 2021 - 12
PLANADVISER - July/August 2021 - 13
PLANADVISER - July/August 2021 - 14
PLANADVISER - July/August 2021 - 15
PLANADVISER - July/August 2021 - Proposals That Please
PLANADVISER - July/August 2021 - 17
PLANADVISER - July/August 2021 - 18
PLANADVISER - July/August 2021 - 19
PLANADVISER - July/August 2021 - 2021 PLANADVISER Small-Plan Services Survey: Small Wonders
PLANADVISER - July/August 2021 - 21
PLANADVISER - July/August 2021 - 22
PLANADVISER - July/August 2021 - 23
PLANADVISER - July/August 2021 - 24
PLANADVISER - July/August 2021 - 25
PLANADVISER - July/August 2021 - 26
PLANADVISER - July/August 2021 - 27
PLANADVISER - July/August 2021 - ‘Like’ Me
PLANADVISER - July/August 2021 - 29
PLANADVISER - July/August 2021 - 30
PLANADVISER - July/August 2021 - 31
PLANADVISER - July/August 2021 - 32
PLANADVISER - July/August 2021 - 33
PLANADVISER - July/August 2021 - Building Out Referral Networks
PLANADVISER - July/August 2021 - 35
PLANADVISER - July/August 2021 - Look Toward The Future
PLANADVISER - July/August 2021 - 37
PLANADVISER - July/August 2021 - Now A Fiduciary
PLANADVISER - July/August 2021 - Cybersecurity And ERISA
PLANADVISER - July/August 2021 - Q&A
PLANADVISER - July/August 2021 - Cover3
PLANADVISER - July/August 2021 - Cover4
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