Alpha Pointe Capital

Price isn’t the only 401(k) Savings- Your staff’s Time may Produce Greater Savings


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Price isn’t the only 401(k) Savings-
Your staff’s Time may Produce Greater Savings


I got a call the other day from one of my emerging industries 401(k) prospects. It was from the CFO of a large cyber company in Maryland. They had grown through a couple of federal contracts but also acquired another company that offered B2B services.

This was interesting because I’ve never spoken with the CFO. I was familiar with her, and she has an excellent reputation, but I had developed a relationship with the Dir. of Human Resources. So, this was a little surprising…

After a brief introduction, she dove into the problem.

She explained, “HR is being consumed with administration and they spend more time on the 401(k) plan than they do on other important HR tasks. What can you do about that?”

If this wasn’t an important question my reply might have been something along the lines of “Oh, there’s an app for that” or “How about an easy button.” (Yes, I recycle very old jokes) But this is a serious issue this company was facing. Unfortunately, this is a bigger issue than you think.

Many companies don’t realize there are solutions to help streamline administrative tasks. The streamlining of employer admin duties is something certain 401(k) providers offer. Another important solution helps with fiduciary duties. I’ll be writing about fiduciary solutions in the future On Pointe 401(k)…

Answering the CFO’s question was relatively easy. There are quite a few ways. For example, payroll integration, scheduled uploads, data mapping, investment management, fee/expense management, participant communication, onboarding, and enrollment are a few of the topics we discussed.

She was surprised because it seemed to her that most of HR’s time was spent on most of those tasks. She asked if it was OK to schedule another call and if she’d invite HR.

I’ll fast forward…

Now we have the CFO, the Dir. of Human Resources, and the HR Specialist all on a call to discuss how to simplify 401(k) administration.

Apparently, the HR team was having trouble keeping up with their many other responsibilities. Not only was the HR team of 4 overburdened, but 2 were non-exempt employees used to assist with these tasks, thus overtime pay was being used. This is how the CFO got involved and for good reason. She was on their side and trying to free up their time which they needed.

After hearing about all the services that could be available to them, the HR team was visibly relieved. Now for the hard part… the CFO then asked me about the cost.

Often, we can find a way to produce cost savings through a reduction of fees in the investment menu, third-party administration, and advisory. But my answer sort of surprised her.

“How much would you pay to have a new 401(k) provider significantly reduce the administrative time and responsibility?” I asked.

She nodded her head but still asked for clarification on costs.

I probably deserved that… so I mentioned the best way to address the costs was to benchmark the plan we would submit proposals to a couple of my client’s favorite providers.

Next time you have your meeting about the 401(k), you might consider including a time audit to see how much time your HR staff is spending on 401(k) admin duties.

Even better, you may want to consider benchmarking your plan to find other savings well! BTW you can schedule your benchmark HERE  or visit our website  for more info.


James S. Gibbons CPFA
Alpha Pointe Capital-Founder/Wealth Manager

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