PLANADVISER - March/April 2020 - 35

Starting Small
So where is the best place to start? Advisers say that should
be to determine who should be on the committee. " We
recommend that the CEO, the chief financial officer [CFO]
and, ideally, the head of human resources [HR] sit on the
committee, " Lanser says. However, he says, at many small
companies, the HR executive serves in a mostly administrative
role and reports to the CFO; in that case, only the
CEO and CFO would sit on the committee and take on the
fiduciary responsibilities.
Itzoe agrees that the plan committee members should
be the " key decisionmakers-the CEO or president, the CFO
and someone else from finance, and someone from HR. "
How many members should the committee have?
Greenspring Advisors recommends three to seven people,
which works well for small companies, which often have
few employees qualified for the role. " We tend to like smaller
committees because, as they grow in size, it's harder to
make decisions, " Itzoe observes. " [Larger committees] tend
to talk about the same issues over and over, because there
are so many opinions. "
Many small companies will grow, and expectations
and best practices will need to adapt as well. As to how
the committee can evolve with the retirement plan and
company, Itzoe says, " We generally recommend starting
with at least three members to get diversity of opinion and
the ability to create a quorum. But committees can expand
as the needs of the plan and the plan
sponsor change. "
Advisers can also help set up the
important documents that will help
small-plan clients adhere to best practices.
These include the committee
charter, which typically will formalize
the purpose of the committee and
specify
the meeting minutes at the companies it serves, says Timothy
Irvin, director and corporate markets practice leader, in the
firm's New York City office. " It's as important as anything else
is in documenting their decisions, " Irvin says.
The committees at the small companies Itzoe serves
have told him that his most helpful advice has been to
meet on a regular basis. From there, it has been " implementing
a formal governance process-evaluating fees,
benchmarking the plan against similar plans, finding gaps
with current vendors, using employee engagement strategies.
We cover all of the high points that we go over with
our large plans, " he says.
When Greenspring has been hired by small companies
that already have a committee in place, Itzoe has found these
committees lack formal oversight. " Rarely have they gone
through fiduciary training or have they created a formal
charter, " he says. " If there is an IPS in place, they typically
have gotten a boilerplate version from their recordkeeper
or downloaded it from the internet. That could create more
risk because it might be prescribing things not being done. "
Dannae Delano, a partner with Wagner Law Group, in
St. Louis, says it is particularly helpful for small companies
to have a retirement plan specialist adviser and an ERISA
attorney take on the fiduciary duties. Because of the many
lawsuits being waged against retirement plans, Delano has
found that more smaller companies are hiring an adviser
and working with an ERISA attorney. -Lee Barney
3(21) or 3(38) Fiduciary Services
the minimum number of
members that are needed to serve at
a time, according to investment advisory
firm Conrad Siegel, in Harrisburg,
Pennsylvania.
Committee Training
Once the committee is formed, UBS
" starts the relationship with fiduciary
training so the committee members
know what they're responsible for, "
Lanser says. " As fiduciaries to the plan,
their primary duty is to act in the best
interest of participants. We then guide
them through the process of making
prudent decisions and educate them
about the importance of documenting
how they reached their decisions. We
educate them about best practices,
such as having an IPS, meeting regularly
and keeping minutes. "
Cammack Retirement Group keeps
RICH FUERMAN, head of defined contribution (DC) marketing at Hartford Funds
in New York City, believes small companies inexperienced in running a retirement
plan would be particularly well-served to have a retirement plan specialist
adviser oversee their investment lineup. These plans lack a larger employer's
deep-bench strength, which could handle the duties performed by a 3(21) or
3(38) fiduciary adviser.
Fuerman is seeing more small companies take this step. " They realize the
importance of their 401(k) plan and that they may not have the expertise
needed to properly run it, " he says. " Besides the critical help with the investment
menu, they can look to an adviser to help them with participant education
and communication. We're a big advocate of companies, small and
large, working with advisers. "
The vendors serving the plan can also help a retirement plan committee, be it
at a small company or a large one, by showing it, on a regular basis, improvements
being made to the plan, says Steve Rubino, executive vice president
and head of workplace at Edelman Financial Engines in Boston. " Through our
'Reach and Impact Reporting,' we show, on a semi-annual basis, the number
of participants we're reaching and the impact we're driving, such as helping
them to have more diversified holdings or increasing their deferrals, " Rubino
says. " We go over optimal plan design decisions with them to help them move
the needle for employees. " -LB
planadviser.com March-April 2020 | 35
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PLANADVISER - March/April 2020

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