Why 401(k) Plan Sponsors Need More Than an Advisor

Most businesses that offer a 401(k) already work with an advisor. The question is whether that relationship is built for today's level of scrutiny. Retirement plan lawsuits reached near-record levels in 2025, and the Department of Labor recovered more than $1.4 billion through enforcement that year. Small and midsize employers, often without a dedicated benefits team, are feeling it most.

Your Advisor Is a Governance Decision

A good plan advisor brings discipline and continuity. They keep the history behind past decisions when committee members change, explain new rules as they arrive, and regularly compare your funds and fees with current options. That ongoing record is exactly what protects you if a decision is ever questioned.

Two Ways to Share Responsibility

There are two common structures, and the right fit depends on how involved your team wants to be.

• 3(21) co-fiduciary: the advisor recommends and monitors investments while you keep the final say. Best for engaged committees.
• 3(38) investment manager: the advisor takes over choosing and replacing investments, along with the liability. Best for busy owners who want a clear handoff.
• Pooled Employer Plan (PEP): join a professionally run plan and shift much of the administrative and fiduciary work to its provider.

Documentation Is Your Protection

In a well-known case involving Caesars Entertainment, claims against the company were dismissed because it had carefully documented how it chose its investment manager. Handing off responsibility only protects you when it is deliberate, documented and overseen.

Better Plans, Better Outcomes

Good governance helps employees too. A sustained one-point improvement in annual returns can mean nearly 25% more savings over a career, without higher contributions or more risk. If you are unsure whether your plan would hold up under review, we would welcome the chance to take a look with you.