Category: Fiduciary Resources

5 Reasons to Work with a Financial Advisor for Your Small Business 401(k)

Mich Wells / 26 Apr 2023 / 401(k) Plan Information, Fiduciary Resources, Financial Advisors, Small Business 401k

When you own a small business, little things can make a big difference. And working with a financial advisor is one of those things. Instead of you managing your small business’s 401(k) plan, they take on all the complex, time-consuming, and potentially risky work of managing that plan.

There are tons of reasons to hire a financial advisor, so we’re highlighting the top five as they relate to your small business’ retirement plan – and importantly, we’ll show how a financial advisor can help you and your employees achieve your retirement goals.

The Role of a Financial Advisor

Financial advisors are not one-size-fits-all, even within certain subcategories. If you’re looking for financial guidance for your small business and specifically want information about retirement planning, a retirement financial advisor who serves the small business market may be just who you’re looking for.

This is a professional who specializes in helping small business employers choose, implement, and manage their 401(k) plans. They provide valuable guidance on plan options, provider selection, employee education, compliance, and fiduciary responsibility. A financial advisor acts as a partner for small business owners and sometimes takes on many of the administrative burdens of managing a 401(k) plan. (They do the hard work so you don’t have to.)

The Benefits of Working with a 401(k) Plan Advisor

Working with a financial advisor can provide many benefits for small business owners like you. Here are 5 major upsides:

1. Expertise and Experience

It’s a financial advisor’s job to stay up-to-date on the latest investment trends, regulations, and best practices. This means they’ll be ready to provide valuable insights and recommendations for your small business. They also have experience working with a variety of plan sponsors and can leverage that knowledge to help your business.

2. Plan Selection, Administration, and Compliance

A financial advisor can help you select a plan that meets your small business’s needs and your employees’ needs, too. They can also help you stay on top of meeting your compliance responsibilities in a timely manner.

3. Employee Education and Engagement

Looking for a way to engage your employees in the plan? A financial advisor can help with that! They can help educate your team on the benefits of participating in the plan, and provide ongoing support to ensure they are on track to meet their retirement goals. (Hint: many financial advisors refer their clients to the Ubiquity blog for easy-to-understand information about the whole gamut of 401(k) plan details.)

4. Fiduciary Responsibility and Liability

Financial advisors are required by the Advisers Act of 1940 to act in your best interest. They can help you understand and fulfill your fiduciary duties, such as selecting and monitoring plan investments and documenting plan processes and decisions. This can help you mitigate the risk of legal and financial consequences for your business.

5. Cost Savings

PSA: Working with a financial advisor can actually save your small business money in the long run. They can help find providers that offer transparent, flat fees and may even know of more cost-effective plan options (or good reasons to switch providers). They can help you understand the features and benefits of your plan so you can make cost-effective choices.

How to Choose the Right Financial Advisor for your Small Business 401(k)

There are five key factors to consider when selecting a financial advisor:

1. Credentials and Qualifications

Look for a financial advisor who has the appropriate credentials and qualifications: Accredited Investment Fiduciary (AIF) or Certified Plan Fiduciary Advisor (CPFA) designations. These designations indicate that the advisor has specialized knowledge and training in retirement plan management.

2. Relevant Experience

Make sure the financial advisor has experience working with small businesses like yours, and has a track record of success. Ask colleagues and trusted business contacts for recommendations.

3. Services Offered

Consider the range of services the financial advisor offers. Is their specialty comprehensive financial guidance including small business 401(k) plan selection, implementation and management services, or is it simply investment advice? Are they willing to help you with ongoing employee education and engagement?

4. Fees and Costs

Understand the fee structure and costs associated with working with the financial advisor. Look for an advisor who is transparent and upfront about their fees and who can help you minimize plan costs overall.

5. References and Reviews

Research the financial advisor’s reputation by reading online reviews and talking to other small business owners who have worked with them. Look for an advisor who has a positive reputation and a proven track record of success.