I’m asked all the time about retirement plans setting up committees to manage their plan and I’m a little torn on the matter since I’m not had such a great experience with committees in outside plan activities. So I’ll voice my concern about retirement plan committees.
When I worked at that semi-prestigious law firm (sorry Lois), I was convinced that if the Managing Attorney (Lois) didn’t want something done, she created a committee for it. It seems that they have more committees than attorneys. The head of the corporate law department has more hats as committee chairperson than the store Lids has. When I was interested in social media just like another associate attorney, Lois made a point to create a social media committee. Of course, she didn’t pick the two associates that knew anything about social media. Instead she picked the media guru and the computer tech guy, both who were not attorneys. I’m sure they are doing great work 4 years later.
The point is not to knock the law firm (but it’s fun), but it’s the point that setting up committees to carry out a purpose isn’t enough, they actually have to carry out that purpose. The committee must to actually function and govern the task at hand. They can’t be too big because too many chiefs spoil the tribe. They need strong leadership, committee chair intent on getting stuff done instead of talking about getting stuff done. There needs to be someone who is the decision maker to avoid having major decisions being left in vacuum and not being acted on.
So if a retirement plan sponsor wants to create a committee, I would suggest they tread lightly. A retirement plan committee is like the gym equipment you buy, it has to be used to be effective. A committee that does nothing is just window dressing and does more harm than good id the required fiduciary work undertaken by the committee doesn’t get done.