In 2012, Blue Prairie Group (“BPG”) was retained by an Illinois-based hospital to deliver ongoing consulting services to its 401(k) retirement plan. BPG made several recommendations to overhaul the investment lineup, reduce the overall cost of the plan, establish an employee education program, and restructure fiduciary governance. At the time, the hospital’s plan had roughly $16 million in plan assets and 500 participants.
Strategic Plan Redesign
- Moved to a safe harbor plan design and added auto enrollment features to increase participation and encourage greater long-term savings.
- Reconfigured the employer match to encourage higher levels of savings without increasing costs.
Fee Analysis & Negotiation
- Conducted a Request for Information (RFI) from 5 qualified recordkeepers to gauge the reasonableness of recordkeeping fees.
- Worked with current recordkeeper to negotiate and reduce fees.
- Performed in-depth analysis of all funds in the plan in order to determine which funds should be retained and which should be removed due to poor performance or duplication of asset class.
- Established an employee education campaign to outline short and long-term goals for assisting participants in reaching retirement readiness.
- Established a formal Investment Committee to meet semi-annually.
- Created an Investment Policy Statement (IPS), which established the plan’s investment policy and long-term goals.
- Reduced the number of options in the core investment line-up from 25 to 19.
- Negotiated with recordkeeper to reduce fees from 45 bps to 21 bps, a 53% reduction.
- Reduced the asset-weighted portfolio cost from 88 bps down to 77 bps, a reduction of 12 percent.
- Began executing on a 24-month employee education campaign.
The net effect of these changes: the client was able to increase their BPG Plan Health Score™ from 29% to 69%, an increase of 138 percent.