When it comes to designing and deploying a retirement plan for your company, it’s best to follow a proven path that offers employees prudent investment options from reputable, established and conflict-free providers. The consequences resulting from a lack of adequate planning and oversight, unsuitable investments, hidden fees, conflicts of interest and other pitfalls can adversely impact the financial well-being of your employees for years—even decades.

At Lutz Financial, we work with clients every day to build highly customized employee retirement plan solutions. While no two companies are alike, our work in this area is driven by a core set of tenets and guidelines. Accordingly, we recommend 8 tips to help ensure your company’s retirement plan is soundly devised and deployed.


1. Work with an ERISA 3(21) or 3(38) fiduciary.

A 3(21) fiduciary is a co-fiduciary, meaning your company retains all decision-making powers. A 3(38) fiduciary has decision-making powers with respect to plan investments. Whichever route you choose as plan sponsor, working with a 3(21) or 3(38) will provide you confidence that the advisor is acting in your best interest, and not their own.


2. Exclude any revenue-sharing funds from the plan.

Revenue sharing adds additional fee layers on top of those already charged through daily management of mutual funds. Fees for record-keeping, brokerage services, and other purposes aren’t necessarily transparent within an employee retirement plan, and transparency helps ensure that you get what you pay for. Today, there are enough great funds available to companies that don’t use revenue sharing, so there’s no need to use plans that do.


3. Don’t work with an advisor who is affiliated with a single fund family or captive insurance company.

In the small plan market, many advisors are affiliated with organizations that limit their ability to be completely independent. In these instances, self-dealing is an all-too-easy proposition, and that works contrary to the interests of participants and your company.


4. Work with a fee-only registered investment advisor.

This relationship simplifies interactions with your advisor and provides peace-of-mind, knowing that your advisor will never peddle specific incentive-based investments to plan participants. Fee-only registered investment advisors are required to always work in the best interests of you and your employees and disclose any conflicts. This assures fair treatment and again, transparency.


5.Select funds based solely on what is in the best interest of the plan participants.

This includes risk-appropriate, passively managed funds (i.e., index funds). The goal here is to maintain low costs, help participants get on the right track early, and encourage them to stay the course, which greatly improves their odds of success.

One quick note regarding passively managed versus actively managed funds: The S&P SPIVA Scorecard shows that over the past 15 years ending December 31, 2016, only 17 percent of U.S. equity mutual funds have survived and outperformed their benchmarks. Why put your participants in something that has a 17 percent chance of success? Instead, focus on keeping costs low and provide participants with lots of diversified options through passively managed investments in a variety of different asset classes.


6. Offer your participants pre-allocated globally diversified index portfolios that encompass varying degrees of investment risk.

Don’t just provide a confusing list of investment choices. Provide diversified portfolios of those choices with varying degrees of risk. Show participants how to properly use the investment options available to them and maximize diversification to their advantage. Each participant’s portfolio should be the right portfolio for them.


7. Work with an advisor who is committed to servicing the plan and educating the participants.

Your advisor should spend all the time necessary to help participants understand the true benefits of investing tax efficiently for the long term and avoiding the pitfalls of speculation and market timing. This includes being available as needed to answer questions, meet one-on-one with participants or discuss plan options.


8. Benchmark plan performance against peer groups, and issue a request for proposal (RFP) for investment solutions every 3-5 years.

Benchmarking ensures your plan is performing on par or better than similarly structured plans—and soliciting bids for investment solutions makes sure your participants receive a good value for the services provided.


A firm like Lutz Financial is ideally suited to helping your company devise, deploy and administer an employee retirement plan based on these guidelines. That said, company officials – be they human resources administrators, executives or ideally, both – must engage in the process from the outset, and keep it on their radar over time. Doing so will help ensure that specific expectations and deadlines are met and plan objectives stay on track.


Important Disclosure Information

Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Lutz Financial), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Lutz Financial.  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing.  Lutz Financial is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice.  A copy of the Lutz Financial’s current written disclosure statement discussing our advisory services and fees is available upon request.





Chris Wagner is an Investment Adviser at Lutz Financial. With 15+ years of relevant experience, he specializes in providing company and corporate retirement plan consulting and investment advisory services. He lives in Elkhorn, NE, with his wife Kristin, and children Brynn and Owen.

  • Retirement Plan Consulting
  • Investment Product Analysis
  • Provider and Fee Benchmarking
  • Fiduciary Guidance
  • Plan Design Analysis
  • Investment Advisory Services
  • Participant Education
  • National Association of Plan Advisors, Member
  • Certified Plan Fiduciary Advisor®
  • Chartered Financial Consultant
  • BSBA in Marketing, Midland University, Fremont, NE
  • American College of Financial Services, Bryn Mawr, PA
  • Knights of Columbus, Member
  • St. Wenceslaus, Volunteer Coach


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