Mid-size businesses play an essential role in ensuring that the American workforce is retirement ready. Numbers from the National Center for the Middle Market indicate that mid-size companies:
- Represent 3% of all U.S. companies
- Provide 48 million jobs
- Consistently project positive revenue growth
These factors offer mid-size businesses more agility than a large firm (typically, 1,000+ employees) and often provide more growth potential than small enterprises (typically, under 100 employees) regarding workforce and revenue. If you’re a mid-size business, it’s likely that you already have a 401(k) plan in place. But based on your growth, you may be wondering if it’s time to switch providers. If you don’t have a 401(k) plan yet, you also need to evaluate providers in the same ways, to determine if and how they meet your business’ needs, as well as the needs of your employees.
Here are three ways you can start to evaluate 401(k) providers based on what matters most for your mid-size business:
Appropriate employer and employee fees for your size
Fee structures often depend on the number of plan participants, meaning costs are lower if service providers can spread costs over higher numbers of participants. As your organization has grown, there may be opportunities to reduce the fees. Examine what you’re paying (or would pay) for record-keeping, administration, and management fees. Are they reasonable when compared to similar providers and for organizations of your size? Check out this article, Is Your Company’s 401(k) Too Expensive? to look for areas where you could save on expenses.
Investment fund options and advising
When you’re examining if your provider is the right fit for your mid-size business, be sure their investment strategy matches the needs of your growing employee base and doesn’t overload your HR team. You want to work with a provider who understands the varied needs and retirement goals of your larger employee base. If your small business plan had limited options, you might want to find a provider with access to a more extensive variety of investment funds and additional administrative and employee support.
Easy access to information for employees (Less work for your HR department)
Hopefully having more employees means you also have more participants in your 401(k) plan. Ensure your employees have access to the service they need from your provider and that the service model fits your growing organization. You’ll want a provider who can customize the information they provide to meet the demographics of your various employee segments. You may have relied on in-person advisers for your small business; however, as you’re growing it may be time to find a provider that offers online tools for secure, 24/7 access to information and investment advice.
Regardless of size, every company will get more out of their 401(k) plan when they partner with a firm that understands their journey, specializes in meeting the needs of businesses your size, and has scalable service and education options for employees.
If you’re looking for a great 401(k) plan for your mid-sized business, click here to schedule a call with Human Interest and we’d be happy to answer any questions you may have!