I always say that plan sponsors need a solid team: an experienced financial advisor, a competent third-party administrator (TPA), and a knowledgeable ERISA attorney. But let’s talk about that word—experienced. Like “reasonable fees,” it’s one of those terms that gets thrown around like it actually means something. The problem? It’s vague.
Experience isn’t just about how many years someone’s been in the game. Years in the business is just one data point. I’ve met financial advisors with 30 years under their belt who still couldn’t tell you what an investment policy statement is. Real retirement plan experience might mean how many plans a provider actually works on, how well they understand plan design, or whether they do the little things that others overlook—like participant education or staying on top of fee disclosures.
A few years back, a financial advisor—who’s made quite a name for himself—pushed back when he heard I stress “experience.” He had 3½ years in the business and took offense, thinking I was just talking about years. He told me his commitment to doing the right thing for clients beat out plenty of 35-year veterans. My response? Preaching to the choir, buddy—I’ve seen what “experienced” really means.
Let me take you back. I spent 2½ years at a law firm. We had ERISA partners who were supposedly the best in the business. But they came from the multiemployer (Taft-Hartley) world—a whole different animal than single-employer 401(k) plans. Some of them didn’t know the first thing about revenue sharing, plan fees, or participant education. One of these partners even served as a trustee on the firm’s 401(k) plan. He never hired a financial advisor, never reviewed investments with the other trustees, and never gave participants any education. The firm’s fiduciary liability? Through the roof. Would you hire that guy to advise your plan just because he’s a partner and has “ERISA” in his title? I wouldn’t.
At another firm, I worked with one of the top ERISA attorneys in the country—again, from the multiemployer side—who didn’t know what revenue sharing was or why plan sponsors should care about administrative fees. Let that sink in.
Same story for financial advisors. You can have someone managing a billion dollars, but if they don’t have any real experience with retirement plans—or worse, they’ve got dozens of plans but do nothing beyond showing up for the annual review—it doesn’t mean much. No investment policy statement, no participant education? That’s not retirement plan support, that’s checking a box.
And TPAs? Some are great, but others can’t handle anything outside the cookie-cutter box. Daily valuation? Forget it. Defined benefit? Out of their depth. New comparability? Not a clue. Just because someone can administer a plan doesn’t mean they should.
The bottom line: “experience” isn’t one-size-fits-all. Plan sponsors need providers with the right experience for their plan’s size, structure, and complexity. That doesn’t always mean the longest résumé—it means the best fit.
So how do you find the right fit? Word of mouth helps. So does asking the right questions. Don’t be afraid to dig. Ask about plan design experience, fee benchmarking, participant education, and compliance support. If they stumble? That’s your answer.
