FAQs About Institutional Employer-Sponsored Plans

By |2019-12-06T11:27:28-06:00December 9th, 2019|

When many employer-sponsored retirement plans are first created, they are typically offered as retail 401(k) or 403(b) plans. But as plan assets grow, these plans can often benefit from institutional pricing and institutional features for participants. Here are some frequently asked questions about institutional plans:

When is your employer-sponsored plan large enough for institutional rates?2019-12-03T11:19:33-06:00

Generally, plans with assets over $1 million can qualify for institutional rates.

Do you need a specific number of employees to qualify?2019-12-03T11:19:14-06:00

No, all you need is sufficient assets in the plan.

What kind of expenses should I be concerned with?2019-12-03T11:18:50-06:00

You should pay close attention to fund expenses, advisor compensation, fiduciary fees, and general administrative expenses.

What is the difference between fund expenses for an institutional and a retail plan?2019-12-03T11:18:28-06:00

Retail plans often have extra expenses built into each investment option, which can cause total fund expenses to exceed 1.0% of plan assets. Institutional plans don’t have extra expenses built in, so the costs are generally under 0.25% and help plan sponsors meet their fiduciary obligations under ERISA.

I currently work with an advisor on my retail employer-sponsored plan. Will I still have advisor support with an institutional plan?2019-12-03T11:18:03-06:00

Yes. In fact, with an institutional plan your advisor is more likely to sign on as an ERISA 3(38) fiduciary. This will shift more of the fiduciary responsibility to your advisor and away from the plan sponsor.

What are some other benefits of an institutional plan?2019-12-03T11:17:27-06:00

Financial planning services for plan participants, risk-managed strategies, ongoing plan due diligence, and no conflicts of interest, among others.

How do I find out more about institutional plans for my business?2019-12-03T11:01:39-06:00

The best way to learn more about institutional employer-sponsored plans is to put out a request for proposal (RFP). Be specific in your RFP, asking for institutional pricing, the services of an ERISA 3(38) advisor, and risk-managed strategies.

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About the Author:

Mark’s commitment to objective, independent wealth management led him to establish The Appleton Group LLC in April of 2002. With over 26 years of experience in the financial services industry, Mark serves as portfolio manager for our private client group, and co-manages all assets held in our suite of portfolio strategies. His responsibilities include risk analysis, asset allocation, market research, and institutional client development. Mark also serves as both Principal and CEO of Appleton Group LLC. He earned his Accredited Investment Fiduciary (AIF) designation in 2016.
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