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Important Issues When Hiring a SCA Compliance and Benefit Administration Partner

September 3, 2019

When hiring a partner to manage your health and welfare spend, make certain it is a firm that is interested in the success of your business. When you hire your partner, you assume fiduciary responsibility therefore, it is important to ask very critical questions.

Since you are assuming a level of risk, you should document your selection process and monitor the services provided to determine if you need to make a change.

Some items to consider in selecting a provider: 

  • Information about the provider’s affiliations, financial condition, experience with employee benefits and 401(k) plans, and assets under their control
  • For 401(k) plans or other qualified retirement plans, a description of how the provider will invest plan assets or how it will handle participant investment directions, and its proposed fee structure
  • Information about the company, experience and qualifications of the professionals who will be handling the plan’s account such as:  
    • Any recent litigation or enforcement action that has been taken against the  company
    • The provider’s experience or performance record 
    • Whether the partner plans to work with any of its affiliates in handling the plan’s account
    • Whether the partner has fiduciary liability insurance
    • What reporting is available, the level of detail and can they show you where every penny has gone on demand
    • An account review process and benefit plan reviews
    • Copies of the trust agreements being provided
  • There are additional actions you should take when monitoring a service provider:
    • Review the service provider’s performance
    • Read any reports they provide 
    • Check actual fees charged
    • Ask about policies and practices such as trading, investment turnover, and proxy voting
    • Follow up on participant complaints