Art by Claire Merchlinsky
advisers what the definition of a small retirement plan is and you will get
at recordkeeper Ascensus, Kathleen Connelly, executive vice president, in
Dresher, Pennsylvania, says she considers that market segment to be plans of
$10 million or less, with those of $1 million or less being the micro plan
Jason Chepenik, managing partner of Chepenik Financial in Winter Park, Florida,
however, considers any plan of $4 million or less as small.
of the specifics of size, serving this market requires an adviser to be far
more proactive and hands-on than with larger plans.
a partner at DWC ERISA Consultants in Minneapolis, and an adjunct professor at
the University of Minnesota Carlson School of Management, says when it comes to
the work of the plan, it might be less about assets than the number of
participants. For example, once a plan exceeds 100 participants, a financial
audit must be filed along with a Form 5500. Here, advisers can help retirement
plans find a qualified auditor and guide them along the audit process.
agrees that the number of employees in a plan can make a difference in adviser
services. “If it’s a small company with 50 or fewer employees, the HR [human
resources] person does payroll, bookkeeping and many other duties,” he says.
“The person has no experience administering retirement plans. Advisers have to
do a lot of teaching, directing them to [service providers] and keeping their
that sometimes the plan is small in assets but has hundreds of employees.
“Usually, there’s a specific HR or payroll function for the plan. The adviser
may still have to do some teaching, but it’s a little easier,” Chepenik says.
Connelly, that is the overwhelming difference between small and large plans;
large plans typically have staff who focus on the retirement plan—people with
knowledge, some level of expertise and an internal structure to support them.