Beyond the Bull Market: How Banks Can Prove the Strength of Their 401(k) Plans

Process Matters More Than Market Tailwinds—and Why Your Employees’ Future Depends on It
Rising markets can make your bank’s 401(k) plan look flawless—but looks can be deceiving. Employee account balances climb, performance reports shine, and everything seems on track. Yet real strength isn’t measured by absolute returns alone. A truly resilient retirement plan delivers competitive results over the long term and performs well relative to peers, not just during a market upswing. For community banks, this distinction is more than financial—it’s about keeping a promise to the employees who make your institution thrive.

What ERISA and the DOL Expect from Banks
As a 401(k)-plan sponsor, your bank takes on fiduciary responsibility under the Employee Retirement Income Security Act (ERISA). The Department of Labor (DOL) enforces these rules, and their expectations are clear: act in the best interest of participants, ensure fees are reasonable, follow your plan documents, and regularly monitor your investment lineup.

This isn’t just a “check the box” requirement. Banks can be held personally liable if they fail to follow a prudent process. And we know community banks take pride in genuinely caring for their employees, which makes these standards even more important. Regulators are already well-versed in examining banks on compliance and oversight, so retirement plan governance is an area where a clear, well-documented process isn’t just about satisfying rules—it’s about protecting your employees’ financial future.

Why Documentation is Your Best Friend
Think of documenting your 401(k) oversight like preparing for a regulatory exam: it’s not enough to say you’re managing risk—you need to show the evidence. A disciplined, well-documented process separates a compliant, competitive plan from one that leaves participants exposed. For banks, that typically includes:
• Investment Policy Statement (IPS): A written framework guiding how funds are selected, monitored, and replaced.
• Regular Benchmarking: Comparing your plan’s funds not just to broad indexes, but also to peer funds in comparable asset classes.
• Fee Reviews: Ensuring participants aren’t paying more than necessary for administration or investment management.
• Scheduled Committee Reviews and Minutes: Recording discussions, decisions, and the rationale behind every action.
Even small lapses in documentation can be costly—both in terms of compliance risk and missed opportunities for participants.

Looking Beyond the Numbers
Many banks focus heavily on absolute returns, and it’s easy to see why: a 15% gain on a large-cap fund certainly looks impressive. But what if similar peer funds returned 18%? Over decades of retirement saving, even a seemingly small difference can have a meaningful impact on employees’ long-term outcomes.
This is why relative performance is so important. By benchmarking your fund lineup against peers, you can see where your plan truly stands and make informed adjustments to keep it competitive. Imagine finishing a quarterly review only to discover that despite strong-looking numbers, your employees’ investments lag behind comparable options—having a documented process ensures these insights lead to action.

Prudence Over Prediction
Banks aren’t expected to predict market highs and lows or select perfect funds every time. What matters is prudence: a repeatable, evidence-backed process that demonstrates fiduciaries are acting in participants’ best interests. For community banks, this mindset should feel familiar—just as you wouldn’t run a lending program without policies, procedures, and documentation, the same standard applies to retirement plan oversight.
It’s not about chasing returns; it’s about building a system that stands up to scrutiny while giving your employees confidence in their retirement future.

Final Thought
When markets are strong, it’s easy to overlook gaps in your 401(k) plan. But true fiduciary diligence requires going deeper—measuring relative performance, evaluating fees, and ensuring every decision is documented. For banks, getting this right isn’t just about compliance; it’s about protecting your employees and reinforcing the trust that lies at the heart of community banking.

About Impact Retirement Advisors
Impact Retirement Advisors, the endorsed 401(k) provider for the California Community Banking Network, offers an industry-leading investment selection and monitoring process tailored specifically to your bank. Because a strong process drives strong outcomes, we provide complimentary, full-scale investment fund reviews for any CCBN member bank. This gives you a clear view of how your funds are performing compared to peers and how your plan stacks up against others—ensuring it’s not just compliant and competitive, but positioned to deliver meaningful, long-term retirement results for your employees. We’d be proud to partner with you to strengthen your plan, enhance fiduciary oversight, and give your team the confidence that comes from a retirement strategy built to succeed.

Isaac Coutier
Investment Advisor Representative
C: (952) 378-6983
www.impactretirementadvisors.com
Isaac@impactretirementadv.com

DISCLOSURES
The views, opinions and content presented are for informational purposes only. Advisory services offered through Impact Retirement Advisors, LLC., an Investment Adviser registered with the U.S. Securities & Exchange Commission. The information is not intended to be, and should not be considered, impartial investment advice or an offering of investment advisory services. The information contained herein may be subject to change at any time without notice. Past performance is not indicative of future results.