PLANADVISER - May/June 2021 - 17

client in a more dynamic direction,
versus merely a collaborative process
with the committee. " I've seen 3(38)
clients come to the exact same place as
those without a 3(38), " Goss says.
Flip the Committee Narrative
Without the benefit of a 3(38) fiduciary,
retirement plan committees sometimes
give key plan design decisions
the short shrift, says James Sampson,
director of Hilb Group Retirement
Services. " [As a 3(21) adviser], if we did
an hour-long committee meeting, we'd
spend 50 or 55 minutes on the investments
and be left with just five to 10
minutes to talk about employee education,
increasing participation, financial
wellness and customized metrics, "
Sampson says. " These ideas, as important
as they are, would be shoved in
almost like a footnote. Now we can flip
that around and talk about the changes
and the benefits we've made for them
and spend the bulk of the meeting on
action items. The investment part is
the boring part. The rest of it is fun. "
Acting as a 3(38) is also far easier
for advisers, enabling them to both
control the investment process and
streamline fund lineups, introducing
efficiencies, Sampson says. " When we
see that a fund is up for replacement,
we can make that change across our
book of business, as opposed to going
through the meeting notes and getting
their approval, which can take one to
three months, " he says. " As soon as
we have our internal 3(38) committee
meeting, we can make those changes. "
3(38) Business Pricing
Some 3(38) advisers charge up to 20%
more, as they feel they are taking on
added discretionary risk, Scheinberg
says. However, some charge the same
as 3(21) fiduciaries, as they feel they
are doing the same amount of work,
and some even charge less, he says.
The fees can be flat or asset based, but
just because a plan has more assets
does not make it linearly deserving of
a higher fee, he says.
The discretionary services that
3(38) fiduciaries provide vary widely
and should be charged accordingly,
Scheinberg says. -Lee Barney
Plan Leakage
Twenty-two percent of net contributions to
workplace retirement savings plans made
by those age 50 or younger are withdrawn
early in the form of hardship withdrawals,
loans or cash-outs due to a job termination.
Source: The Congressional Joint Committee on Taxation
Employer Plan Growth
State-run plans, PEPs, SIMPLE plans expand access
LEADERS in the retirement plan industry are optimistic that legislation and
serious commitment on the part of employers will expand the availability of
workplace retirement plans, according to " Hope for the Future: The Opportunity
for Transformative Enhancement of Retirement Plans, " a new paper by
Voya Financial.
" Despite expected headwinds of economic challenges and societal turmoil,
experts strongly suggest that we may see significant progress made in retirement
plans by 2030, " Voya says in the report. " Survey respondents believe this
progress will be supported by a combination of factors, including technological
advancements, legislative initiatives and greater employer commitment. "
The Georgetown University Center for Retirement Initiatives estimates
that 57 million private-sector workers, or 46% of those who work in the
private sector, are without access to a retirement plan through their employer.
Georgetown says this is particularly true for employees at small businesses
and among lower-income workers, younger workers, minorities and women.
To expand the availability of workplace retirement plans, different entities
are taking different approaches:
* Twelve states now provide a state-run retirement plan; Oklahoma and
New York state lawmakers are among the latest to introduce bills to create
state-run retirement programs for employers lacking a retirement plan to
offer to their workers.
* Pooled employer plans (PEPs), made available this past January 1 through
the Setting Every Community Up for Retirement Enhancement (SECURE) Act,
show promise as an option for small employers.
Additionally, two pieces of legislation that would expand retirement plan
coverage are under discussion:
* Senators Susan Collins, R-Maine, and Mark Warner, D-Virginia, introduced
the SIMPLE Plan Modernization Act to provide greater flexibility and access to
small businesses and their employees seeking to use a SIMPLE [savings incentive
match plan for employees] plan as a retirement savings option.
* Senators Collins; Maggie Hassan, D-New Hampshire; James Lankford,
R-Oklahoma; and Michael Bennet, D-Colorado, presented the Military Spouses
Retirement Security Act, a bill that would help spouses of active-duty service
members save for retirement, by increasing their access to employer-sponsored
retirement plans. -Lee Barney
planadviser.com May-June 2021 | 17
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