Working at a smaller company has many benefits and many challenges. One of the biggest challenges is that there is a lot of work to be done and few people to do it. So creating unnecessary work for employees that are already burdened with plenty to do is not smart.
One way a small employer can improve their efficiency is to simplify the management of their employer based retirement plan. Administering a retirement plan is serious business and comes with fiduciary obligations and liability as well. Not to mention that it is good to try and do the right thing for your fellow employees.
It is considered to be a good practice for smaller employers to have an Investment Committee and an Investment Policy Statement (IPS). Employers use these to assist them in successfully running the plan. Congratulations to any smaller employer that has a Committee and IPS – you are further along than many other small companies.
One piece of advice we have for small companies is to set-up your plan so your committee only needs to meet once a year. Using a short, concise IPS and primarily index funds are two ways you can simplify your plan and reduce your need to meet on a more regular basis. If larger firms want to meet semi-annually or quarterly, that is up to them. But smaller employers don’t have the staff or time to set aside for meetings that can be avoided.
Of course, you may still need to have unscheduled meetings periodically, though hopefully infrequently, based upon organizational changes or industry issues. But scheduling just one Investment Committee meeting a year should keep your plan current, save you time and money, and help you focus on the day to day stuff that comes with your job.