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It’s Time to Review Your 401k Investment Lineup

As a retirement plan sponsor, you have a fiduciary responsibility to your employees to act in their best interest, and a chief component of that responsibility includes carrying out investment decisions with skill and prudence.

In order to do so effectively, it’s important to regularly review your plan’s investment lineup. A qualified retirement plan advisor can assist in providing direction on investment diversification, guiding you through difficult markets and reducing unnecessary risk in order to best benefit plan participants.

During a plan investment review, your advisor may discuss the following:

  • What asset classes are included within your plan investments?
  • What criteria are you using to judge success?
  • Are you monitoring funds that are underperforming?
  • Are you benchmarking investments based on absolute or risk-adjusted returns?
  • How are you preventing event risk?
  • Are you providing appropriate target date funds based on your target demographic(s)?

Plans heavily exposed to company stock and underexposed to equities, for example, could indicate a lack of diversification and require a shift in focus.

Overall, your retirement plan’s investment portfolio should maintain emphasis on risk-adjusted returns with a long-term strategy to best gauge success. As a valuable recruiting and retention tool for employees, your plan requires thought and diligence to monitor and maintain, and a regular review alongside a qualified advisor can help you navigate the complexities and set appropriate goals for the future.

In addition to reviewing your plan’s investment lineup, you should also consider reviewing:

  • Your investment policy statement;
  • IRS operational compliance requirements; and
  • Participant rates and overall plan health.

Many plan design changes require a brief notification period before a new plan year begins; thus, for plans with a December 31st year-end, now is the time to schedule a review. How long since your plan’s last review?

Our Retirement Plan Advisory Team offers complimentary investment reviews for 401k and 403b plan sponsors and administrators. To schedule your investment review, please reach out to us.

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Jeremy Robert

Jeremy Robert

CFA
Senior Investment Analyst

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