401(k) Case Studies
A well-established technology company needed a 401(k) to attract new employees and help highly-compensated team members.
After years of high growth, they realized their 401(k) was still the one their payroll company provided when they were a tech startup — expensive, inflexible, and hard to work with, which is pretty common for a company focused on their business, not their benefits. They asked EVOadvisers to help deliver a compelling 401(k). Here’s a snapshot of what changed.
– Tech HR Director
Disclosure: This testimonial was given by a current client. No cash or non-cash compensation was provided for the testimonial. We are not aware of any material conflicts of interest on the part of clients giving a testimonial resulting from their relationship with EVOadvisers.
Simplified the plan.
Their plan was integrated with their payroll company but was really an insurance company offering.
- Limited investment options with no pre-built allocation models.
- High cost insurance investment options – not mutual funds with ticker symbols, making it difficult to find out their true cost.
- Employee website had very limited capability to learn about investment choices and account performance.
EVOadvisers provides a main point of contact, coordinating an experienced record keeping and third party administration team at Employee Fiduciary.
- Diversified, low cost investment options with pre-built EVOadvisers allocation models.
- All mutual funds with tickers — so employees can do all the research they want. No opaque insurance “separate accounts.”
Maintenance — Simple process to let employer know key dates and timelines to be in compliance with regulations.
Amplified the experience.
Service — Insurance company provided:
- Basic support through a call center,
- No investment committee / plan oversight processes,
- No monitoring of fees, fund performance, or compensation to service providers, and
- No transparency of fees for participants.
Investments — 91% of investment options are “proprietary separate accounts of the insurance company” — little transparency on true cost and performance.
- Experienced support team to help answer plan sponsor questions.
- Provide proactive support and at-a-glance reference tools to meet plan deadlines and ERISA reporting requirements.
- Participant advice days, giving employees the opportunity to meet with a CFP® professional to discuss their 401(k).
- Customized videos and resources pertaining to their 401(k) to help onboard new employees.
- Ongoing advice on optimal plan design to meet employer’s evolving needs.
- Monitor investment positions and update models annually.
- Offer transparency to participants through use of low-cost, publicly-traded mutual funds.
Quantified (and lowered) the costs.
Total annual cost: $33,409
- Annual cost to plan sponsor: $6,250
- Annual cost to participants: $27,159
- Average reported fund expense ratio: 0.93%
Reduced plan costs by more than 29%
Total annual cost: $23,628*
- Admin costs: $4,062 (tax deductible business expense)
- Investment costs: $19,566 (average fund expense ratio: 0.08%)
*Costs are from the time the plan moved to EVOadvisers management.