In Blog, Wealth Management

What is an Investment Committee Meeting?

Managing a retirement plan is typically straightforward; however, there are several key activities that all plan sponsors and investment committee members are responsible for. One of these is providing effective management of their 401(k) plan, as stipulated in the Employee Retirement Income Securities Act of 1974 (ERISA).

Proper plan oversight will involve regular (often bi-annually, or once a year) meetings of the investment committee to review core aspects of the plan’s performance and management. This includes determining whether the 401(k) plan is still aligned with the plan sponsor’s objectives as an organization and is serving the best interests of all participants.

The investment committee meeting is a time for the plan sponsor (i.e., the company or organization responsible for selecting a plan, determining plan eligibility, and sometimes making matching contributions) to provide a performance overview, review plan operations, recommend changes, and address concerns from committee members.

Plan sponsors that have partnered with a financial advisor for their 401(k) plans will often find the plan’s financial advisor can help facilitate and streamline the investment committee meeting process. This usually takes the form of an annual review meeting.

Key Information to Prepare for Your Investment Committee Meeting

Before the investment committee meeting, consider each of the areas below to help determine the meeting’s structure and what information will be reviewed:

Meeting Logistics

Ensure that all committee members and other relevant attendees are provided with meeting details, including the date, time, location, and a detailed agenda with presentation materials.

Plan Performance & Investment Selection

Prepare to review total plan performance during the time period since your last meeting, and whether changes to fund selections should be considered. An independent, objective standard of performance measurement should be used to benchmark performance and make investment decisions. For instance, at Sapling Wealth Management, we use an independent 3rd party platform to score, rate, & track investments. This information helps us determine and advise our 401(k) clients on how to achieve the right balance between risk tolerance, optimal performance, and fee management.

Plan Design & Participation

Regularly evaluate whether the 401(k) plan aligns with your organization’s core objectives and best serves the interests of all participants. Put simply, is the plan working for your organization? For example, a strategically selected and managed plan should be a valuable resource in talent attraction.

The concept of “total benefits” is growing in popularity, which means that employees are evaluating more than salary alone when considering potential employers. Now, employees consider health benefits, ancillary benefits, 401(k) plans and employer contributions, and many other “perks.” At Sapling Wealth Management, our goal is always to ensure our clients have a plan which serves their real objectives, including the ability to help attract top-tier talent, increase employee retention, and help owners, partners, & employees build wealth long-term.

Consider eliciting and presenting participant feedback when determining the effectiveness of your plan. This feedback might include whether participants understand all of their options, if they feel information is easily accessible, and whether they plan to participate if they aren’t currently doing so. This information can help make any needed adjustments and plan accordingly.

Plan Operations & Education

To make sure that your organization’s 401(k) plan is well managed, plan to discuss operational activities and other housekeeping items like the following:

  • Share insights into the costs associated with plan administration, financial advisors, and other individuals or institutions involved with plan operations.
  • Determine if actions need to be taken regarding former employees with low balances or unused accounts that might pose a costly administrative burden.
  • Review key decisions made or items accomplished since the last committee meeting and schedule or assign communications resulting from the current meeting, including to plan participants.
  • Helpful communication items could include new or recirculated informational content to employees, reviewing the employee onboarding process if plan adoption is low, or further education for committee members on plan governance and fiduciary responsibilities.

Common Questions at Investment Committee Meetings

It’s helpful to prepare for some of the commonly asked questions you may face from either investment committee members or plan participants about various topics, including:

  • Employer contribution percentages (whether they are offered, will be offered, or are planned to change).
  • Where they can personally receive more information or guidance on investing.
  • Changes to federal regulations or other policies that could affect contribution eligibility, contribution limits, fund performance, or individual access to retirement funds.

Additional Resources

The job of Third Party Plan Administrators (TPAs) is to manage and execute plan operations. Many plan sponsors partner with a trusted financial advisor for more strategic plan consulting. A financial advisor can provide key insights for more effective plan management, and provide education around investment strategies that help plan participants make the most of their 401(k), based on their goals, abilities, and understanding.

Sapling Wealth Management provides multiple service options that are tailored to our clients’ needs and plan size, making sure that the quality financial advice is affordably within reach. If you’d like to explore partnering with Sapling Wealth Management as the financial advisor for your business, please contact us to start a conversation.

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