I grew up in the 1970’s and 1980’s, so many of the toys I had are a little quaint when you see the toys of today. I had Star Wars figures, but outside of Luke, Leia, Chewbacca, and C3P0, I always had those characters that were in the movie for five seconds. Speaking of toys, one toy that is forgotten wasn’t a toy, but an art project. That is paint by numbers.

Too often, many financial advisors take a paint by numbers approach when it comes to the retirement plan needs of their clients. The not so good financial advisors will look at a plan sponsor’s retirement plan needs and think 401(k) plan with a comp to comp allocation will work all the time. The excellent financial advisor will consult with a retirement plan advisor at a full service third party administration (TPA) firm or an ERISA attorney and determine which specific plan design works best for the plan sponsor and the needs of all the employees. That may take the form of a 401(k) plan with a comp to comp allocation, but sometimes it may not. Sometimes, a new comparability plan design with a 3% non-elective safe harbor contribution works best. Sometimes a cash balance plan or a floor offset works best.

As with my complaint with some of the bundled and payroll provider TPAs, all retirement plans don’t fit within the small boxes that their administration and plan document permits. Sometimes, the best design for plan sponsors fall outside the boxes and into the hands of an unbundled, full service TPA. It takes the good financial advisor to know when to ask for help in plan design, otherwise the plan sponsor and their highly compensated employees may be living money on the table.