When it comes to selecting an advisor for your 401(k) plan, the decision is about more than qualifications—it’s about focus. Advisors who spend the majority of their time managing ERISA plans operate in a completely different world than those who primarily handle private wealth clients. Yet, far too often, plan sponsors unknowingly select generalists who only have a handful of retirement plans in their portfolio.

This decision might not seem like a big deal at first glance, but it can have significant implications for your plan’s compliance, participant success, and your fiduciary responsibilities.

The “Specialist Advantage” in a Changing 401(k) Landscape

Retirement plan management isn’t what it was a decade ago. Today, the space is shaped by:

1. Tightening Regulations: With the Department of Labor and IRS increasing oversight, compliance demands are higher than ever.
2. Heightened Litigation Risks: Plan sponsors are under a microscope, facing lawsuits over fees, fund selection, and fiduciary processes.
3. Evolving Participant Needs: Employees expect more—customized education, competitive plan designs, and digital tools that make retirement planning easier.

Navigating this environment requires more than a passing familiarity with 401(k) plans. It requires an advisor who knows this space inside and out.

The Generalist Pitfall: Why Time Matters

The question to ask any potential advisor is: What percentage of your time is spent on ERISA plans versus private wealth management?

Advisors who primarily manage individual wealth clients often allocate only a small fraction of their time to 401(k) plans. While they may bring excellent investment expertise, they might lack the in-depth knowledge of plan design, benchmarking, fee transparency, and fiduciary requirements that a specialized advisor can provide.

Here’s the reality: managing a handful of 401(k) plans doesn’t make someone an expert. And when your advisor is learning on the job, you’re the one taking on unnecessary risks.

The Risks of a Generalist Advisor

Plan sponsors who work with advisors who don’t specialize in ERISA plans may face challenges such as:

• Missed Compliance Deadlines: From 5500 filings to fiduciary reviews, compliance is not forgiving.
• Overpaying on Fees: Generalists often lack the benchmarking data and expertise to ensure your plan fees are competitive.
• Missed Opportunities for Plan Improvements: Plan design, participant engagement strategies, and fund selection all require deep retirement plan expertise.

Why Specialized Advisors Are Critical

Advisors who focus primarily on 401(k) plans bring more than technical knowledge—they bring value:

• Fiduciary Partnership: Specialists often act as co-fiduciaries, sharing responsibility and reducing liability for plan sponsors.
• Tailored Plan Design: Specialists understand how to customize plans to boost participation and maximize employee satisfaction.
• Proactive Fee Monitoring: With access to industry benchmarks, they can ensure your fees are fair and transparent.

Questions Plan Sponsors Should Be Asking

To find the right advisor, start with these questions:

1. How many 401(k) plans do you currently manage, and what is the average plan size?
2. What percentage of your time and your team’s time is spent on ERISA plans?
3. What experience do you have helping plans improve participant outcomes?
4. Can you outline your process for ensuring compliance with fiduciary regulations?

Final Thoughts

Choosing a 401(k) advisor isn’t just about credentials—it’s about specialization. In today’s complex retirement environment, working with an advisor who dedicates the majority of their time to ERISA plans ensures that you’re not just compliant—you’re offering a plan that your employees can truly depend on.

Because when it comes to retirement, your employees deserve more than just “good enough.” They deserve an expert.