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We are changing 401k providers. Do I have to "accept" the Financial Advisor that ADP is providing or can I interview several and select the one I like?

Jan 30, 2013 by John from Monroe Township, NJ in  |  Flag
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4 votes
Alfred F Level 13


ADP and Paychex are notorious for using the ploy of payroll integration as a main selling feature for their particular platforms.

They also work with local advisers for these types of plants in hopes that the advisers will refer other clients back for payroll services

In our fifty-years of retirement plan consulting I have seen many changes In the industry and ADP and Paychex are just two of a myriad of product proliferators.

As the prior adviser posted it would behoove you to spend some extra time understanding the landscape of vendors and solutions so you end up with a plan that matches your demographics And price points.

Ideally you should end up with a full open architecture platform without being bound to revenue-sharing and approved products on lists which are predetermined by the platform

If you want any additional help feel free to reach out.

And by the way you are not bound to the advisor being recommended by ADP

You could go out and interview any number.


2 Comments   |  Flag   |  Jan 30, 2013 from Wayne, PA

While I am the Plan Administer, the decision to move to ADP was made to take advantage of payroll integration and is non-negotiable. Thanks

Flag |  Jan 30, 2013 near Monroe Township, NJ
Angela M. Thomson, CFP®

I think you need to approach the owner or decision maker. When people in the industry telll you it is not the best option, there may be cause to listern. There are also other payroll companies out there that work well with indepent 401(k)'s

Flag |  Jan 30, 2013 near Narragansett, RI

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4 votes

Just a quick point here - no, you don't have to go with any suggested advisor. If you've already selected ADP as the vendor, then when you do a search for an advisor, look for one who has experience working with them.

Each vendor has strengths and weaknesses and you'll want someone familiar with the usual stumbling blocks and way of service. Example: ADP has a form for everything and they like THEIR forms only! But, sometimes you need to put particular information on the form as a work-around to accomplish what you want to do. Also, the "seamless" integration isn't always seamless, especially on the smaller plan product. You'll want an advocate on your side who has already navigated some of this so you don't add work to your/your administrative staff's plate trying to figure it out yourself.

(And now for the shameless plug: I just put a guide up on my page for selecting an advisor.)

Comment   |  Flag   |  Feb 21, 2013 from Alexandria, VA

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hi John, You do not have to use ADP advisors. I would also tell you that I am sure there are better providers out there than ADP. I would suggest before you implement the change, take a good look at our sources that disclose their fees and investment selection. Slowing down the process by a month is insignificant if it means getting the right plan. Good luck

Comment   |  Flag   |  Jan 30, 2013 from Narragansett, RI

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3 votes

Hi John - To answer your question directly: NO! If this is an advisor paid for by your company I would see if your company would be willing to pay for an advisor of your choice. If the ADP advisor's fee is baked into your fees, I would definitely take exception to this if you do not want his/her advisor services. You shouldn't pay for something you do not want!

Comment   |  Flag   |  Jan 30, 2013 from Long Beach, CA

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John, if you are a responsible plan fiduciary, you are required to preform a prudent due diligence process when selecting any service provider, including a financial advisor for the plan. This means you are ultimately responsible for selecting a quality and cost effective advisor for the plan (assuming you determined the plan should have an advisor). Simply accepting the advisor suggested by ADP is not prudent without the due diligence process. If you are only a participant, then you can get advice from anyone you want. You may be wise to take advantage of the availability of advice from the plan advisor that your plan sponsor has chosen, but you do not have to take any advice from anyone.

If you care to clarify your role in the plan and the circumstances of the particular situation, I would be happy to be more specific.


Comment   |  Flag   |  Jan 30, 2013 from Austin, TX

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Beware of record keepers that have created a commodity service. In other words, the provider offers 401k recordkeeping as an additional service at a very low cost. They hire the minimum number of employees and use systems that can automate all functions. While recordkeeping service has gotten better due to technological advances, there are so many variables involved with a plan that good, qualified employees are necessary to avoid going afoul of the many rules that plans must follow.

The IRS and DOL do not care that a plan was done at low cost and by incompetent processors. They put full responsibility on the plan trustees to make sure the 401k plan is administered correctly. Be sure whoever you hire is capable of keeping your plan in compliance. The best investment advisor for a 401k plan is a person who has worked in the retirement space a long time. You can choose whoever you decide is capable for your ADP plan.

Comment   |  Flag   |  Jan 30, 2013 from Montgomeryville, PA

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2 votes
George Cones, JD Level 20

We would suggest you look for a fee-only advisor, who can hopefully show you how to build a plan using "unbundled" service providers. That means, the record keeper is separate from the custodian, and the advisor is separate from them both. An advisor could also help you understand the cost involved in any approach. Costs can vary dramatically, and is no predictor of quality of the offering. Getting a few bids would help you show you have done your due dilligence, and may help you understand the landscape better.

Depending on the assets in the plan, you may find that you can have a plan with significant number of choices, using a combination of index ETF's and/or best-in-class active managers.

Comment   |  Flag   |  Jan 30, 2013 from Wilmington, DE

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If you are the plan sponsor, that is, acting on behalf of the company and responsible for selecting the company 401(k), then you can select another financial advisor. My guess is that you are an employee and your company has already selected a new provider, you have had contact with the financial advisor of the plan, and you have not been impressed.

Every 401(k) has a financial advisor for the plan. Among other duties, they help select the investment options that are available in the plan. These investment options should make available all of the major asset classes available. As an employee, you have to invest your contributions amongst the investment options available. Depending on your risk tolerance, you should be able to set up an appropriate portfolio ranging from conservative to aggressive. You may not love all of the actual investment choices offered, but they should still cover the major asset classes. Typically they will also offer a default investment option that is considered a reasonably safe investment along with a risk-based group of asset allocation funds and/or an age-based group of funds that will automatically get more conservative as you get closer to retirement age. In just reading this, you may be thrown off by the terminology, but when you look at the actual investment choices being offered, I think it will start to make sense.

The financial advisor of the plan may or may not, offer to you as an employee, recommendations as to where to allocate your money. You, and not the financial advisor manage your account. If he is the financial advisor of the plan, you, as an employee, have no control over that. But you don’t have to accept him as your personal advisor. You can take none, some, or all of his advice.
Though you can, and should, seek assistance if you feel you need it, you make your own decisions on how to invest. You should have received an employee handbook. Some of them are quite helpful. It will include a ‘Risk Tolerance‘ questionnaire. and a lot of the questions may seem to not make sense; go with your instinct. There are no right or wrong answers to the questions, Score yourself, and see where you fall among the spectrum of conservative to moderate to growth. This in itself will be a big starting point for you.

You can seek the assistance of trusted friends and neighbors. If you have a financial advisor, you can seek advice there as well.. You can do your own research and develop your own investment style; just be disciplined. You can subscribe to companies that will provide you advice on how to allocate your account. They will charge what they consider a nominal fee.

1 Comment   |  Flag   |  Jan 31, 2013 from Delray Beach, FL

Hello John, This is Chris Augelli from ADP Retirement Services, VP Product Marketing and Business Development. I saw your question earlier in the thread and wanted to offer some input that may help. ADP does not recommend FAs nor is it affiliated with any FA. You may choose to work with ADP directly or through an FA of your choice.

If you need more information, we’d be glad to provide it. Drop our Client Service leader an email at tracy.cafaro@adp.com and she’ll be sure to get your questions answered.

Flag |  Feb 02, 2013 near Florham Park, NJ

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