The Rosenbaum Law Firm P.C. Blog

Most plan sponsors mean well. They want employees to retire comfortably. They hire professionals. They respond when issues arise. In everyday life, that counts for something. Under ERISA, it counts for almost nothing.

Fiduciary responsibility is not judged by motive. It is judged by process. Courts do not ask whether a sponsor tried hard. They ask what steps were taken, when decisions were made, and how those decisions were documented.

This is where many well-intentioned sponsors get tripped up. Providers are hired, but not reviewed. Fees are negotiated once, then assumed reasonable forever. Meetings happen, but minutes do not. Problems are fixed, but the analysis behind the fix is never recorded.

From the sponsor’s perspective, these gaps feel technical. From a plaintiff’s perspective, they look like negligence.

A prudent process doesn’t require perfection. It requires consistency and evidence. It shows that decisions were informed, alternatives were considered, and actions were taken for the benefit of participants—not convenience.

The uncomfortable truth is that good intentions often create complacency. Sponsors assume that because they care, they are protected. But ERISA doesn’t measure care. It measures conduct.

The sponsors who sleep best are not the ones who hope nothing goes wrong. They are the ones who know that if something does, they can show exactly how and why decisions were made.

Intent may start the journey. Process finishes it.

When participation is low or complaints start to surface, plan sponsors often assume the issue is money. Not enough matching. Not enough generosity. Not enough incentive. In reality, most participant dissatisfaction comes from something far simpler: confusion.

Employees struggle to understand what they are offered, how it works, and who to ask when something goes wrong. Enrollment materials conflict with recordkeeper screens. Notices arrive with legal language but no context. Contributions don’t post when expected. Loans and distributions feel mysterious and slow. Over time, frustration replaces trust.

From a sponsor’s perspective, this confusion can feel out of reach. After all, providers are responsible for communication. But fiduciary responsibility doesn’t disappear just because the confusion wasn’t intentional.

A confusing plan is a risky plan. When participants don’t understand fees, investments, or processes, they make poor decisions—or disengage entirely. That disengagement can later be framed as harm, even if no one meant for it to happen.

The irony is that many sponsors pay for services designed to reduce confusion but never confirm whether those services are actually delivered in a way employees understand. Education exists in theory, not in experience.

Clarity doesn’t require constant meetings or flashy tools. It requires coordination. It requires consistency. And it requires sponsors to occasionally step into the participant’s shoes and ask whether the plan makes sense to someone who doesn’t live in it every day.

Employees rarely hate retirement plans. They hate feeling lost.

For many plan sponsors, the story is the same. The plan was set up years ago. Employees participated. Contributions flowed. Nobody complained. From the sponsor’s perspective, the 401(k) worked exactly as intended. And for a long time, that was true.

The problem is that “working” and “holding up under scrutiny” are not the same thing.

A plan that functioned smoothly in 2004 can quietly become misaligned in 2026. Fees that once seemed reasonable drift out of range. Investment lineups stop reflecting best practices. Participant demographics change, but the plan design does not. The workforce gets younger, more mobile, and more skeptical—while the plan remains frozen in time.

What often triggers concern isn’t a slow decline. It’s an event. A key employee leaves and asks uncomfortable questions. A new CFO wants benchmarking data. A merger forces a review. Or a lawsuit headline makes its way into the boardroom. Suddenly, decisions that went unquestioned for decades are being examined through a fiduciary lens.

The dangerous assumption is that longevity equals prudence. ERISA does not reward consistency for its own sake. It rewards a prudent process, applied continuously. A plan sponsor who hasn’t revisited provider relationships, fees, or governance in years may feel loyal—but loyalty is not a fiduciary defense.

Plans don’t usually fail because they were neglected once. They fail because they were never revisited. The longer a plan goes without a meaningful review, the more expensive that first real look tends to be.

Ask ten plan providers what “value” means and you’ll get ten different answers. Better technology. Faster turnaround. More services. Lower cost. None of those are wrong. But none of them are complete.

Most providers define value by what they deliver. Sponsors define value by what they don’t have to worry about.

That disconnect causes frustration on both sides. Providers feel underappreciated for the work they do. Sponsors feel uneasy without being able to explain why. The missing link is understanding that value in the 401(k) world is primarily about risk reduction, not features.

A provider adds real value when they prevent problems the sponsor never sees. When a correction never becomes necessary. When a poorly designed idea is quietly redirected. When a document trail exists before anyone asks for it.

The industry often treats value as something that must be visible to justify a fee. In reality, the most valuable work is usually invisible. It’s foresight. It’s restraint. It’s knowing when not to say yes.

Providers also underestimate how much sponsors value confidence. Not bravado. Confidence rooted in experience. The calm assurance that someone has seen this situation before and knows how it ends if handled poorly.

Value isn’t about doing more. It’s about doing the right things, at the right time, for the right reasons—and being able to explain why.

Providers who understand that don’t need to compete on price. They compete on trust. And trust, unlike features, doesn’t depreciate.

Most plan providers sell expertise. Far fewer actually provide it.

Selling expertise is easy. It lives in credentials, marketing language, dashboards, and conference bios. It shows up in phrases like “comprehensive,” “custom,” and “best in class.” None of those words require judgment. They require confidence.

Providing expertise is harder. It shows up when a provider slows a client down instead of rushing them forward. It appears in uncomfortable emails explaining why a shortcut isn’t prudent. It happens when a provider documents decisions that would be easier to leave undocumented.

The gap between selling and providing usually reveals itself after onboarding. That’s when the sponsor expects insight and gets process. Or expects leadership and gets silence. Or assumes someone is thinking ahead, only to learn later that everyone was just reacting.

True expertise isn’t flashy. It’s often invisible when things are working. But it becomes very visible when a provider anticipates a problem before the sponsor even knows to ask the question.

Many providers believe technical accuracy equals expertise. It doesn’t. Accuracy is the baseline. Expertise is knowing when accuracy isn’t enough—when context, timing, or judgment matter more than the correct answer in isolation.

Sponsors don’t need providers who sound smart. They need providers who act responsibly. The ones who earn long-term trust aren’t the loudest voices in the room. They’re the ones whose fingerprints are on the decisions that never became problems.

Selling expertise gets clients. Providing it keeps them—and protects them.

Every plan provider has lost business to a competitor they know—deep down—is worse. Less experienced. Less careful. Less capable. And yet, that competitor walked away with the client. It’s tempting to blame price, but price is usually just the excuse.

The real reason good providers lose is that they sell complexity to people who are afraid of it.

Plan sponsors don’t wake up wanting sophistication. They want certainty. They want to believe nothing will go wrong, and if it does, someone else will handle it quietly. Worse providers are often better at selling comfort. They promise ease. They promise that everything is standard, simple, and already handled.

Good providers, on the other hand, tend to tell the truth. They explain tradeoffs. They raise concerns. They talk about fiduciary risk, governance, and process. That honesty can sound like friction to a sponsor who just wants the problem to disappear.

Ironically, the very traits that make a provider good—judgment, caution, and experience—can feel like obstacles during the sales process. It’s easier to sell certainty than competence, even though competence is what actually protects the client.

The mistake good providers make is assuming quality speaks for itself. It doesn’t. Quality has to be framed. Sponsors don’t need to hear everything that could go wrong. They need to understand why thoughtful resistance today prevents expensive damage tomorrow.

Good providers don’t lose because they’re worse. They lose because they fail to explain why being careful is worth paying for. Until that gap is closed, the market will keep rewarding reassurance over responsibility.

Empower recently reported that it added approximately 500,000 net new retirement plan participants in 2025 as part of what it termed a record earnings year. It’s the kind of headline that gets shared on LinkedIn, quoted at conferences, and sometimes recited back to committees as proof that “things are trending in the right direction.” But as plan providers, we have to separate PR metrics from fiduciary reality.

On the surface, participant growth is a compelling statistic. A half-million new participants suggests momentum, broad distribution, and continued demand for retirement services. But growth metrics are not the same thing as participant engagement, improved outcomes, or plan health — all of which are the fiduciary yardsticks sponsors will ultimately be judged by if something goes off the rails.

From a governance perspective, more participants can actually heighten risk. Larger participant populations amplify operational complexity: testing nuances multiply, communication challenges expand, and the probability of service breakdowns increases. Simply adding accounts does not immunize a provider or a sponsor against missed notices, calculation errors, or compliance oversights.

Moreover, headline growth tends to lull committees into complacency. Boards see big numbers and assume that means good performance. But these figures are backward-looking and aggregate by nature. They tell you what happened, not why it happened or whether the underlying process would withstand scrutiny. Fiduciary prudence is about documenting decisions, evaluating services relative to fees and outcomes, and understanding participant behavior — not cheering vanity metrics.

So when a provider touts half-a-million new faces, the right question isn’t “Isn’t that great?” It’s “Does that growth reflect meaningful engagement, and how are we structured so that every one of those participants is better served tomorrow than today?”

Numbers headline. Process protects.

Lincoln Financial Retirement Plan Services recently reported that average retirement plan account balances increased by approximately 8.6 percent in 2025, rising from roughly $113,700 at the end of the prior year to about $123,500. On its face, that kind of headline sounds like unqualified good news. Higher balances suggest progress, stability, and maybe even a sense that the system is working.

But numbers like these deserve context, especially from a fiduciary perspective.

Balance growth does not automatically reflect good plan design or strong participant outcomes. Markets rise and fall. Contributions accumulate. Automatic enrollment and escalation continue to do what they were designed to do. All of that can push averages upward without saying much about whether the plan is actually helping participants make better decisions or retire more securely.

Average balances also hide as much as they reveal. An increase across the plan can coexist with significant disparities between long-tenured, highly compensated employees and newer or lower-paid workers who remain under-saved. Fiduciary responsibility does not end at the average. It requires an understanding of who is benefiting and who may still be falling behind.

The real risk is complacency. When sponsors see positive metrics, the instinct is to exhale. Committees assume that growth means validation. But fiduciary prudence is not measured by last year’s results. It is measured by process, oversight, and whether decisions are being made deliberately and documented appropriately.

Rising balances are encouraging. They are also backward-looking. A prudent fiduciary uses good news as a prompt to ask better questions, not as permission to stop asking them. Markets may cooperate, but governance still matters. And in the end, governance—not headlines—is what protects plan sponsors when optimism fades.

I’ve been doing this long enough to know that the biggest threat to a 401(k) plan isn’t the Department of Labor, trial lawyers, or even bad investments. It’s a spreadsheet that someone created in 2017 and has been copying ever since. That spreadsheet has formulas nobody understands, tabs nobody checks, and assumptions that died during the Obama administration. Yet it quietly runs the plan like an unelected dictator.

Every correction project starts the same way. A sponsor swears the census is perfect because “it comes straight from payroll.” Then you open the file and discover three different definitions of compensation, hire dates that change from column to column, and a column labeled “Notes—Don’t Touch” that everyone has been touching for five years. The spreadsheet becomes the truth, and the plan document becomes a suggestion.

The problem isn’t technology. The problem is faith. People believe numbers because they look confident. A spreadsheet never hesitates, never admits it’s confused, and never says, “I might be wrong.” Human beings, on the other hand, are messy, so we trust the neat rows instead of the messy reality. That’s how you get late deposit calculations based on the wrong pay frequency or eligibility lists that still include employees who retired during the Bush presidency.

Plan providers spend half their careers arguing with files. We ask simple questions like, “Where did this column come from?” and the answer is usually, “The old bookkeeper created it.” The old bookkeeper has been gone longer than some participants have been alive, but the column remains, immortal and incorrect.

If you want to improve a plan, don’t start with investments or fees. Start with the spreadsheet that feeds everything else. Treat it like a suspect, not a witness. Until you do, the plan will be governed by a piece of software with no fiduciary duty and no fear of litigation—and that is a terrifying plan administrator.

Plan providers are therapists who also happen to do census testing. Nobody puts that in a job description, but it’s the truth. When people think about our work, they imagine compliance calendars, investment menus, and spreadsheets with more tabs than a Broadway musical. What they don’t see is the hour spent on the phone with a business owner who is worried about a partner stealing employees, or the payroll manager who insists the numbers are right even though the ADP test says otherwise. Half of the job is technical, and the other half is listening to human beings who are nervous about money, responsibility, and looking foolish.

A 401(k) plan is never just a document. It’s a collection of emotions wearing a trust agreement. The late deposit isn’t only a prohibited transaction; it’s usually a symptom of an overwhelmed staff or a company that grew faster than its back office. The failed nondiscrimination test isn’t just math; it’s office politics expressed through compensation. Before we can fix the plan, we have to understand the people who broke it, and that requires patience more than brilliance.

Providers love to jump to solutions because solutions feel productive. We quote regulations, propose amendments, and build checklists. But most sponsors need to be heard before they can be helped. When a client says the plan is a mess, what they really mean is that they feel embarrassed or scared. If we answer fear with code sections, we sound smart and accomplish nothing.

Technical skills get you hired, but emotional skills keep you hired. Sponsors rarely fire the provider who makes them feel calmer about their duties. They fire the one who makes them feel small. After enough years, every plan provider earns an invisible degree in business psychology. We still run tests and draft notices, but what we really do is guide ordinary people through complicated financial adulthood—and then, when the session ends, we upload the census file.