The principles and methods used by Crossroads Investment Advisors, LLC to construct and administer 401(k) and other retirement plans have been referred to as the “crown jewel” of plan administration.
Our retirement plans provides a host of advantages for both plan sponsors and plan participants, including the following:
- An unbundled plan structure
- Strict fund selection
- Preset mixes of funds to help participants invest with confidence.
UNBUNDLED PLAN STRUCTURE
The first advantage to a Crossroads retirement plan is that we use an unbundled plan structure, meaning the administrator, custodian, and manager of the plan are all separate entities. Some bundled plan providers offer the administration of the plan for “free” and then pack your plan with hidden costs and funds with high fees—whether those funds are performing well or not. Our unbundled approach provides four important benefits:
- Crossroads acts as the plan fiduciary, or trustee;
- Improved performance through greater flexibility in fund selection;
- Transparency of fees; and
- The ability to use some fees as business deductions.
1) We're the ones actually managing your plan.
In recent years, more and more bundled plan administrators have removed themselves as fiduciaries, because they have a conflict in choosing funds for the plan. In many cases, a bundled administrator will select internal funds that underperform. Crossroads has no such conflict of interest. Our interests are directly in line with the plan participants'. With Crossroads acting as a fiduciary it removes the plan sponsor's burden and liability in choosing funds for the plan.
2) Flexibility = improved performance
Bundled plan providers usually stock 401(k) plans with their own mutual funds, only including outside funds upon request. Some providers may even limit the number of outside mutual funds, which have historically improved returns for plan participants. Crossroads evaluates many funds and then selects funds that feature superior management and produce consistently strong performance over time. When funds are selected by Crossroads we continue to communicate with their senior management team and evaluate performance making changes when necessary.
3) Transparency of fees
Transparency of fees is not only important to ensure that you aren't paying too much for your 401(k) plan, but it is also important from a legal standpoint. Recently, several large corporations were sued by plan participants because they didn't know how much they were paying in fees. With and unbundled plan structure you always know what costs are involved because they are fully disclosed to the plan sponsor.
4) Using fees as business deductions
Being able to deduct certain fees as business expenses provides a tax break to your company, but there is another layer to this benefit as well. When other companies add fees to the mutual funds in the plan to pay for your “free” plan administration, that means you are paying more out of the funds you've saved for retirement. So paying for administration fees from your business assets provides a business tax deduction and keeps more money in your retirement account.
STRICT FUND SELECTION
The second advantage to a Crossroads 401(k) plan is our fund selection process. Over the last 25 years, the advisors at Crossroads have interviewed and analyzed literally hundreds of mutual funds and mutual fund managers. They know what it takes for a mutual fund to perform well. Crossroads adds only the best-in-class mutual funds to your 401(k) plan and then keeps constant vigilance over those funds to ensure all the qualities of a good mutual fund are still present. If a fund loses its way, we replace it.
PRESET MIXES OF MUTUAL FUNDS
The third advantage of a Crossroads managed 401(k) plan is that we provide actively managed, diversified mixes of funds so that participants aren't left alone to try to figure out what funds to invest in and at what time. This advantage has been the most comforting and most lucrative benefit to the plan participants we serve. Participants are still free to design their own mix of funds if they choose, but we've found that for most people this is a daunting and risky task. Crossroads provides five different preset mixes of the mutual funds within the plan based on different levels of risk tolerance. These are designed to optimize the performance of you retirement account according to your personal financial goals. Again, these preset mixes are actively managed, meaning they are watched over and adjusted over time based on the changing market environment. If you choose to be in one of our preset mixes, you won't need to worry constantly about whether you're in the right mutual funds because we'll be taking care of that for you. All five of our preset mixes have outperformed their benchmarks as shown in the chart below.
In dealing with company 401(k) plans and individual retirement accounts, we at Crossroads Investment Advisors, LLC pride ourselves on integrity, versatility, and industry knowledge and expertise. Please speak with us today to discuss how we can help you optimize your retirement savings and plan for the future.