PLANADVISER - September/October 2020 - 15

first committee meeting, PlanPILOT finds out beforehand if
any new members have joined. It then reaches out to them
to schedule a brief, two-part orientation, Olsen says.
The first part is a conversation an adviser has with
the new member, typically lasting 20 to 25 minutes, that
includes a high-level discussion about what it means to
be a good fiduciary. New committee members also sign
documents confirming their understanding that they are a
fiduciary, and that they have no conflicts of interest. The
orientation's second part centers on watching a brief video
that discusses the critical things to concentrate on in PlanPILOT's
quarterly investment reviews.
* Maintain people's attention during meetings. Considering
that they, like so many other people, may be working from
home, there is more potential for committee members' attention
to drift. In the past few months, PlanPILOT has learned
some lessons about how to prevent this. The advisory firm
initially would begin the meeting with all of the committee
members visible, in their individual " tiles, " and then the
on-screen visual would switch to the adviser sharing his
screen and the documents being reviewed.
" But we realized that, when we shared our screen
constantly, we didn't know if people were engaged or even
still watching, " Olsen says. Now, they keep the individuals'
tiles on the screen as much as possible. " When it comes to
the point when there's going to be discussion about making
a decision, rather than leaving the screen on the last page
of the document we've been reviewing, we come back out to
the screen of tiles and have some discussion, " he says.
Ongoing Processes
Besides a charter, it helps for a committee to have an annual
fiduciary calendar to help guide its work. " It's important
to have an established fiduciary process in place, versus
focusing on just having committee get-togethers and then
winging it from there, " Montgomery says. " Having a checklist
of its annual fiduciary duties gives a committee something
concrete to make sure it's doing what it needs to do to
fulfill those duties. "
Fiduciary Investment Advisors puts together a fiduciary
governance calendar for committees every year, specifying
what needs to be done each quarter. For example, the thirdquarter
meeting's to-do list includes a recordkeeper services
update, plan design benchmarking, and a review of participant
education and advice for this year, as well as preliminary
discussion of next year's education goals, Wetzel says.
To aid committees with key ongoing processes during
this time, the advisers suggest providing help in the
following areas:
* Investment reviews. " The most challenging part of this year,
with the market's volatility, has been to keep the committee
from panicking " -and hence making unwarranted fund
changes-or blaming itself for not foreseeing the coming
market downturn, Montgomery says. " So we re-explain
our monitoring system, and explain why it's possible for a
highly rated fund to decline in some circumstances, and why
investments such as actively managed bond funds can have
performance that differs from their index. "
* Fee reviews. It is difficult for many plan sponsors to stay
on top of all of the cost reductions currently going on for
investment products, says Senior Managing Director Michael
Annin of Mesirow Financial in Chicago. " You don't want to
be in a position as a plan fiduciary of having participants
pay higher-than-needed investment management fees-
that's where the [participant] litigation is coming in, " he says.
" There's fee compression for investment management, at the
mutual fund level and the managed account level, so it's
worth asking, 'Is there a better deal?' "
Chairvolotti Financial Inc. in Winter Park, Florida, is
benchmarking plans' recordkeeping services and fees, and,
in some cases, renegotiating with recordkeepers. " With the
recordkeeper-consolidation trend, the only way you can
know where you stand is by benchmarking fees and going to
the recordkeeper with the results, " says President and CEO
Edward Chairvolotti. " By renegotiating, we've seen some
huge reductions-as much as 50%-in participant fees. This
is a good time to renegotiate, because the recordkeepers that
are staying want to keep a plan's business. "
* Regulatory updates. One of the biggest challenges now for
committees is keeping up with all of the regulatory changes,
Annin says. " In rapid succession, we had the SECURE [Setting
Every Community Up for Retirement Enhancement] Act and
the CARES [Coronavirus Aid, Relief and Economic Security]
Act. Those are two pretty significant pieces of legislation,
and sponsors need to understand what it all means for their
plan, " he says. " One thing we're watching is the new pooled
employer plans [PEPs]. That's potentially a huge change for
employers, especially small employers that don't have the
time or interest in keeping up with all of the fiduciary responsibilities.
Something to help these employers think through
now is how involved do they want to be in their plan? Do
they want to have a say in fiduciary decisions or outsource as
much as they can? "
* Documentation. For a committee, keeping fiduciary
responsibilities fulfilled also requires taking the time to
document they have done so. " One of the basic, biggest
things is always making sure to do the meeting minutes, "
Winegrad says. " That's the first layer, in case someone [such
as an auditor] later asks questions. It's an easy way to show
that you're organized. Beyond that, when the committee
makes any major decision on the plan, it needs to be documented
why that decision was made and how it's in the best
interests of participants. "
An adviser can play a key role in ensuring that a plan's
fiduciary file stays up to date, and Chairvolotti Financial
utilizes fiduciary-management software for that purpose.
" We document the client's meetings, our investment reviews
and anything outside of the norm, such as IRS voluntary plan
corrections, " Chairvolotti says. " We do most of that work. We
have smaller companies as our clients, so they're not professional
sponsors. I tell the business owners, 'I'm a business
owner myself, a sponsor of our plan, a 3(38) fiduciary for our
plan and a participant in our plan, so I think I have a good feel
for what you need in a fiduciary file.' " -Judy Ward
planadviser.com September-October 2020 | 15
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PLANADVISER - September/October 2020

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