Arrogance is a bad trait for a 401(k) plan decision maker

Regardless of the business you’re in, one of the worst thing you can do in being the decision maker for your retirement plan is that you know better than most retirement plan professionals.

No plan sponsor likes to get the unsolicited phone call from the retirement plan professional that their plan is too expensive or that the funds should be replaced. However, when you keep on running a plan so poorly, maybe the problem could be with you and there is nothing wrong with admitting that you could use some help. Retirement plans are completely different from any type of business or human resources function, so its OK to seek help. The worst thing you can do is think that you know best especially when you don’t have the background to make an educated decision.

I have always mentioned the certain issue of a former human resources director at a former place of employment. She clearly runs the human resources department as her own little fiefdom. I assume that, because her poor management of the firm’s 401(k) plan would get her fired at any place else. The 401(k) plan was poorly run before I arrived at that firm. The 401(k) plan offered no investment education to plan participants and investment options weren’t changed in a decade because there was no financial advisor retained by the firm. While I suggested interviewing certain TPAs or selecting certain financial advisors, she knew better than I did. Of course, the plan is still poorly run. I know that for a fact because I was recommended by outside advisors to help them with a severe plan error. Of course, the human resources director can hold a grudge (I did lambaste her for the past 4 years) and my offer to help was rebuffed. Her management of the 401(k) plan has always led to problems with the 401(k), so how good is it? It would be better for her to have hired a fiduciary who can assume a good chunk of the liability of the fiduciary process of the plan and the day to day administration, but she knows best. She would rather stand Pat, than improve the plan.

Arrogance may work in business, but it is a character trait that spells doom for a 401(k) decision maker.

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