If anyone deserves a great workplace retirement plan to help them prepare for retirement, it is certainly nonprofit workers who do so much to help others and improve communities, quite often for lower pay than they might get in the private sector.
We are honored to serve them.
The Nonprofit had approximately 100 employees and a $7,000,000 plan. They were receiving very little service and communication from the local representative of the insurance company that managed the plan, and more than 15% of plan assets were held in the low-returning fixed account.
The nonprofits' CEO hired Mariaca Wealth to analyze their existing plan and make recommendations for improving the plan and its adoption by employees.
Plan Review Findings
Mariaca Wealth conducted a thorough plan analysis and presented these initial findings:
- The plan investment lineup was made up of proprietary funds managed by the insurance company.
- There was no periodic plan cost and investment-lineup benchmarking, so the nonprofit had no easy way to know if their plan was competitive.
- Current plans fees were significantly above market.
- There was no formal education or financial wellness plan.
- The lack of communication and education from the plan advisor likely contributed to the high percentage balance in the plan's stable value fund.
- The organization had no plan committee or oversight process to evaluate and monitor the plan, service providers, plan costs and investment lineup performance.
- There was no plan compliance file that could demonstrate effective monitoring and oversight in the event a surprise plan audit.
- Mariaca Wealth helped the nonprofit establish a plan-oversight committee comprised of executive, human resources, and general staff.
- Mariaca Wealth worked with the committee to facilitate an RFP process to solicit proposals with specific plan requirements.
- Based on this process, the committee selected a new plan provider and hired Mariaca Wealth to serve as the plan's 3(21) plan investment fiduciary.
- Fees for the plan were reduced by approximately 50%, and due to a new financial wellness program that continues today, fixed account balances have remained below 5% per year.
- Five years later, after a new RFP process, the plan moved to another provider, further reducing expenses. The plan remains there today, although Mariaca Wealth continues to do a provider RFP every five years to ensure the plan remains competitive.
Because a plan's participants bear most if not all of the retirement plan's fees, its pricing must be competitive and transparent. And, it is in everyone's best interest because plan costs reduce investment performance for all plan participants.
Ongoing Standard of Care
- Mariaca Wealth serves as a 3(21) plan Investment Fiduciary for all retirement plan clients.
- Mariaca Wealth assists each plan client with creating a plan Investment Policy Statement and implementing an ongoing fiduciary oversight process designed to help the plan sponsor meet their fiduciary responsibilities.
- All Mariaca Wealth retirement plans use providers with transparent fee structures where each plan role and component (plan advisor, third party administrator, record keeper, trustee, plan investment lineup) provide clear and straightforward pricing.
- The Mariaca Wealth Financial Wellness Program (OR keep it all lowercased minus Mariaca Wealth) provides ongoing financial, economic, and retirement planning education structured to help improve financial skills and outcomes. This content is provided in-person, virtual, and video education sessions.
- Quarterly Plan Reviews include:
- Investment lineup monitoring and performance reporting (target funds in the top quartile for performance and bottom quartile for costs) using Fi360 and Morningstar
- Fixed account balance monitoring
- Model portfolio allocation monitoring
- Annual advisor fee benchmarking from Fi360
- Plan loan monitoring
When you select Mariaca Wealth Management as your plan investment advisor,
to deliver a retirement plan that:
Is fully open architecture
Has an open and transparent fee structure with no revenue sharing agreements
Has nonproprietary funds that are index-based and passive
Includes a financial wellness plan that provides ongoing in-person, video and virtual education focused on educating and empowering participants to make informed investment and retirement planning decisions
Important Disclosure: The above case study is hypothetical and for illustration purposes only. This case is not intended to provide any customized investment or retirement plan advice. Nothing in this case should be considered as a recommendation or advice to buy, sell or continue to hold securities or other investments, or take any specific action regarding any tax matters. No portion of the content should be construed by a client or prospective client as a guarantee that they will experience the same or certain level of results or satisfaction if Mariaca Wealth is engaged to provide retirement plan advisory or investment advisory services.