401k Plans LLC has released a digital platform equipped for advisers working on small business retirement plans, specifically to help plan fiduciaries avoid risk.
According to the firm, the platform will be offered as an institutional “white labeled” solution for a small quantity of broker/dealers or large adviser firms, and may incorporate 401(k) providers, “approved investment options,” 3(21)/3(38) fiduciary programs, and reporting and analytical dashboards.
The tool allows advisers to complete an eight-step due diligence process, where the adviser has the option to “download and update publicly available information for a plan,” according to 401k Plans. Additionally, advisers can calculate total plan costs and asset allocation by fund category. In doing so, the platform will compare total plan cost to the benchmark average, derived from plan data and market-based pricing.
Advisers will receive a tailored due diligence document—given the results—and will have a provider assigned as well. The document will include required compliance language and disclosures from broker/dealers. After presentations from retirement wholesalers, 401k Plans says advisers can elect their winning provider on the digital app, while also accelerating this transition process to said provider.
401k Plans created the platform after studies showed a high number of plan transactions are processed by unexperienced advisers. In addition to offering the tool for advisers, third-party administrators (TPAs) will also have the opportunity to utilize the platform, 401k Plans says.
“In the small plan market, it is estimated that greater than 80% of transactions are completed by “generalist” financial advisors who may not have the expertise, tools or capacity to follow a prudent process where anything more than total cost is measured”, says Scott Buffington, financial services innovator at 401k Plans. “Retirement ‘specialist’ financial advisers have the knowledge but may not have the capacity to spend the hours needed to complete a proper due diligence process for a small plan. We will also provide access to TPAs’, as they play such a valuable role supporting advisors and providing guidance to plan sponsors.”
Access to the app will be offered, by invitation, to advisers from participating investment managers, 401(k) providers and TPAs, says 401k Plans.