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The Benefits of Hiring a 401(k) Fiduciary Advisor

The 401(k) is the most popular retirement plan companies use to provide tax-advantage investment and retirement savings opportunities for their employees. The 401(k) plan has grown in popularity over the last 45 years, and it is the most widely used financial tool for most Americans building the wealth and income they need for retirement. Yet, effectively managing a 401(k) comes with its set of challenges.

Navigating these challenges becomes more manageable with the support of a knowledgeable advisor. Without a team of specialized, fiduciary 401(k) advisors, employers and their employees may be left to navigate the difficulties on their own. At HFG Trust, our 401(k) Fiduciary Advisor Service provides exceptional support and knowledge to business owners while also offering personal financial planning advice to participants who may not otherwise have access to it.

The Benefits of the 401(k)

401(k) fiduciary advisor HFG Trust

The rise in popularity of the 401(k) is primarily due to employers shifting away from pension plans. This transition has made it more beneficial and yet more challenging for both employers and employees when navigating the many aspects of a 401(k).

For companies, the primary benefits of a 401(k) plan are the customization options of each plan and reduced administration costs. Many 401(k) service providers, through advances in technology, have developed streamlined systems to decrease administration costs, even for very small businesses. Another benefit to the employer is the transfer of investment risk to employees; employees are responsible for selecting from a list of investment options, and thus, their own investment performance.

For employees, the main benefit is the opportunity to accumulate the wealth they will need in retirement by utilizing their employer’s contributions or match to expand their ability to save money for the future. Other benefits include the ability to select their own investments and account portability after leaving the employer. 

Challenges with the 401(k)

With a 401(k), the primary hurdles for the employer are keeping up with the changing compliance rules and available features, choosing the right service providers, keeping plan costs low or reasonable for the service, and selecting a great investment lineup for the plan. The landscape of retirement savings is ever-changing, and these topics should be revisited periodically.

Employees face key difficulties, primarily grasping the importance of consistent early participation in a career for compounding investment returns. Other roadblocks to successful retirement savings include choosing suitable investments and managing overall risk, resisting the urge to periodically alter investments based on emotions or expectations, and avoiding the temptation to tap into their retirement account, especially when transitioning between jobs. These are problems that contribute to low levels of retirement success.

The Employee Investment and Financial Advice Challenge

Most employees do not have access to or seek out a personal financial advisor until late in their working career. There are several reasons for this, and they are interrelated:

  1. Most young people have not, or think they have not, accumulated enough investment assets for a financial advisor to work with them on an individual basis.
  2. Most 401(k) plans do not have a financial advisor, let alone a team with multiple Certified Financial PlannersTM (CFP®).
  3. Most advisors on a 401(k) plan do not act in a fiduciary capacity when dealing with participants.
  4. People are faced with all kinds of financial obstacles throughout their life. Without access to a fiduciary advisor, who acts in their best interest, can make navigating these financial complexities particularly challenging.

The reasons mentioned above make it difficult for many employees to obtain the knowledge and resources they need for a secure retirement.

Understanding HFG Trust’s 401(k) Fiduciary Advisor Services

401(k) fiduciary advisor services HFG Trust

At HFG Trust, we have a team of specialists who are trained in understanding the 401(k) landscape to assist the business owner. We do this by:

  1. Reviewing the plan design regularly to confirm it is accomplishing the goals.
  2. Providing annual due diligence and administrative support to the plan sponsor to complete the yearly tasks required for ERISA plan compliance.
  3. Conducting ongoing investment research and selecting appropriate investments for the participants.
  4. Working with the employer when they have questions or when dealing with the other service providers.

In addition to providing employer support, the HFG Trust 401(k) team consists of  fiduciaries, Certified Financial Plannerstm, who assist employees as needed with their personal financial planning goals. The same types of analysis we provide our wealth management clients, we use to assist plan participants. Here is a summary of the financial planning topics we help employees with:

  • Retirement “On-Track” analysis and planning
  • Investment risk analysis and recommendations
  • Tax Planning
  • Estate Planning
  • Social Security and pension planning
  • Insurance planning

Typical Case Study

A couple years ago, HFG Trust was hired to provide advisor services of a 401(k) plan that was not meeting the needs of the employer nor the employees in various ways:

  1. There was no longer an advisor helping with the plan and both the employer and employees were left to navigate everything on their own. 
  2. There were several key features the plan was not utilizing, preventing the owners from getting the full benefit.
  3. The costs were very high for the level of service.
  4. Employees did not have someone to contact to ask their own personal financial planning questions or seek advice. 

We helped educate the owners of the changes needed to accomplish their goals. We assisted with the transition of the plan to a new service provider in order to improve service and reduce plan costs, discussed the need to change to a Safe Harbor 401(k) and other features, and met with employees about the importance of participating and maximizing the employer match. 

Today, the plan has significantly improved overall engagement. The owners have a knowledgeable team of financial advisors to discuss the plan with and can maximize their personal and spousal deferrals to reduce their current tax liability. Employee participation and engagement has drastically improved, the average deferral rate has increased significantly, and they are able to contact us directly for personal financial planning questions.

The 401(k) plan is a widely embraced financial tool for Americans aiming to secure retirement wealth and income. Yet, managing a 401(k) poses challenges for business owners, and many employees lack financial guidance. Simplify these challenges by leveraging HFG Trust’s 401(k) Fiduciary Advisor Service. For the right advisor solution for your company’s 401(k), connect with our 401(k) team at Community First Bank | HFG Trust today. Our team takes on the heavy lifting for you.

Steve Palm, CFP®

Financial Advisor


This memorandum expresses the views of the author as of the date indicated and such views are subject to change without notice. Community First Bank, HFG Trust, and HFG Advisors have no duty or obligation to update the information contained herein. Further, Community First Bank, HFG Trust, and HFG Advisors make no representation, and it should not be assumed that past investment performance is an indication of future results. Moreover, wherever there is potential profit there is possibility of loss. This memorandum is being made available for educational purposes only and should not be used for any other purpose. The information contained herein does not constitute and should not be construed as an offering of advisory services, banking services, or an offer to sell or solicit and securities or related financial instruments in any jurisdiction. Certain information contained herein concerning economic trends and performance is based on or derived from information provided by independent third-party sources. Community First Bank, HFG Trust, and HFG Advisors believes that the sources from which such information has been obtained are reliable; however, it cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. This memorandum, included the information contained herein, may not be copied, reproduced, republished, or posted in any form without the prior written consent of Community First Bank and/or HFG Trust and/or HFG Advisors. HFG Advisors, Inc, is a wholly owned subsidiary of HFG Trust, LLC. HFG Trust, LLC is a Washington state-registered Trust company and wholly owned subsidiary of Community First Bank.