You wear a lot of hats at your small business. Sometimes it may seem like you are wearing all of them. But for some tasks, like employee benefits, it’s best to pass the hat. These are time consuming tasks that are unrelated to your actual business. It just makes sense to outsource them.
Putting together a health insurance package might be one of those tasks. Health insurance options can seem endless – as can the costs. Besides, there are plenty of experts who can put together a benefits package. So why not outsource this productivity killer? An entire industry of small business benefits advisors is eager to help. Many can put together a package that includes health benefits like medical, dental, vision and disability insurance.
Your benefit advisor may even offer to set up a retirement plan for your business. But a 401(k) must be run in the best interest of plan participants. So make sure to work with a conflict-free 401(k) expert. One who can handle administration and compliance – and take on much of the liability for investments and administration.
What is a Small Business Benefits Advisor?
That’s a good question! A self-described small business advisor can come in many forms. For example, insurance agents can help business owners select the right health insurance plans to offer the best health care options for your employees.
A captive agent represents a single insurance company, and is an expert on that company’s products.
An independent agent offers insurance from several companies. This may broaden the universe of choices that could be a fit for your growing enterprise.
Both captive and independent agents represent an insurance company or companies.
Or, you could get help with employee benefits from an insurance broker. The broker represents the buyer rather than the insurance company. A broker’s job is to help your small business select the appropriate health plans or other benefit options. Like the insurance agent, the broker is an intermediary between the business and the insurance company. Both agents and brokers are paid commissions on policies sold. A broker also may be part of a benefits group that offers other services. These services might even include retirement benefits.
Some insurance experts consider themselves benefits consultants. A consultant might help a small business choose and administer benefits. Once the benefits package is put in place, the consultant might handle related filings or documentation. Other services might include employee education and help filing claims.
Your small business may pay a commission on the insurance and a fee for other services provided.
To stir this pot further, agents and brokers may call themselves advisors. Like consultants, the advisors may design benefit packages and provide services after the sale.
These advisors and consultants don’t go so far as to serve as a co-employer like a PEO. You can read more about PEOs at our blog post here.
A benefit advisory firm might be a group of independent insurance brokers. Or independent agents may supplement their traditional business with advisory services.
More insurance agents and brokers are adding advisory services to help small businesses. And why not? Navigating the health insurance market is difficult. Choosing benefits for your company is not like shopping for office supplies. What business couldn’t use help selecting health or disability insurance?
Should You Get Your 401(k) From Your Small Business Benefits Advisor?
Some small business advisors/consultants can offer comprehensive benefits packages. These can includes a 401(k). That’s a tempting proposition. If you are already paying a firm to handle health insurance, why not let them run your retirement plan too?
Here’s where it’s important to remember that a 401(k) is not just another benefit. A qualified retirement plan must benefit employees. But a fund line-up with revenue sharing fees to pay for other services may not be in the participants’ best interest. So if your small business advisor is running your 401(k), make sure the fees are transparent and the investments free of conflicts of interest.
Speaking of transparency, when checking out any 401(k) provider you should know exactly what duties they will perform. And it’s critical to understand what liability they will assume.
Further, it’s not always the case that bundled services are less expensive. New technology means that independent providers can compete with bundled services. But it can be difficult to compare fees. It’s hard enough to find all the fees associated with a stand-alone 401(k). Comparing fees can be more difficult if the advisor bundles the 401(k) with other services.
So even if you don’t have the human resources staff to oversee the company’s 401(k), an unbundled approach may be best choice with the right provider.
Want the Convenience of Bundled Service from an Independent 401(k) Expert?
Getting the company 401(k) through a firm that provides other services may seem like the best use of your time. But at ForUsAll, we also believe that plan sponsors should not have to stretch company resources to run a 401(k). That’s why we offer 3(16) fiduciary services on our plans. That means we can manage everything from the day-to-day operations of your 401(k) to signing the Form 5500.
On the investment side, ForUsAll can act as your independent advisor and 3(38) fiduciary. We select and monitor the investment line-up and take on the liability for those decisions.
We also believe that efficiency and transparency are the keys to investment success. If there are simpler ways to pay each vendor and disclose that payment, then why use revenue sharing methods that are less transparent?
If you are looking to outsource the administrative and investment duties of your 401(k), talk with us. See if ForUsAll 401(k) makes sense for your business. Click here to schedule a time to talk to us.