Are you a fiduciary fee-only advisor? 

Yes. Interlake is grounded in a deep commitment to fiduciary principles and practices. This is the only way we’ve ever done business and the only way we ever will.

If we work together, where will my money be held?

We custody private client assets at Altruist, a tech-forward, digital-only (as opposed to legacy brick-and-mortar) custodian built from the ground up to help independent advisory firms like Interlake serve clients like you. Interlake chose to work with Altruist after a lengthy process of due diligence and we’re delighted to be a part of the Altruist community. We think you will be too, owing in part to Altruist’s digital tools for account opening and transfers, elegant client app, and the simplicity of linking banks to move money into or out of your accounts.

Altruist’s other standout qualities include robust model portfolio management, the opportunity to buy fractional shares (which effectively means we can implement our full portfolios for even the smallest accounts), sophisticated rebalancing, and zero-commission trades for stocks and exchange-traded funds (ETFs).

For additional information and resources concerning the Altruist client experience, we encourage you to visit Altruist’s Client Hub.

If you are a retirement plan sponsor, we currently work with four recordkeepers (PCS, T. Rowe Price, Vanguard/Ascensus, and Vestwell). Each recordkeeper partners with a trust company to provide trading and custodial services for retirement plan assets.

It’s a big country and we aren’t geographically close to each other. Can we still work together?

Yes indeed. A large majority of Interlake’s retirement plan clients and about half of our private clients are remote. Thanks to 21st century technology, it’s no problem at all to get started and keep going without being geographically close to each other. 

I’m a participant in a 401(k) plan advised by Interlake. I’m preparing to leave my current plan sponsor (due to retirement or a change of employment) and want to discuss my rollover options. Is that something Interlake can help me with? 

Absolutely. We consider this an essential part of our service to plan participants, as the prudent management of retirement assets is at the center of our work. Per federal law and our own moral compass, we will always give you a clear and even-handed description of your options: Leaving your assets in the plan; rolling them to a new employer’s 401(k); taking a taxable distribution (generally not recommended, especially for anyone under the age of 59.5); or rolling them into an Individual Retirement Account (IRA) at a financial institution such as a bank, mutual fund company, broker-dealer, or independent advisory firm. 

If you choose to roll your 401(k) assets to an IRA or Roth IRA under Interlake’s management, we will require a signed acknowledgement that we’ve discussed all your options, that you understand the expected costs and benefits of each, and that you’ve freely chosen to continue working with us after your separation from your 401(k) plan. 

I’m a plan sponsor interested in Interlake’s assessment of our current 401(k) program. What do you need to see to evaluate our plan?

We’d love to help you evaluate your current plan arrangements. A big part of our fiduciary worldview is that we will call it as we see it; if we think your plan offers a state-of-the-art program for your participants, we will say so. If we see room for improvement, we’ll tell you that too. Either way, we’re happy to be part of your regular (and legally required) due diligence regarding service providers, investment options, expenses, and overall plan performance. 

To get started, we'll begin by sending a 10-minute Fiduciary Wellness Assessment using Perseptiv, Interlake's diagnositc tool that provides a framework for this initial diagnosis and ongoing monitoring. If we need more detailed information, we might ask for one or more of the following items: 

  • Your Summary Plan Description
  • Your most recent statement of assets at the plan level (ideally with ticker symbols but at least with fund names and share classes)
  • Your most recent 404(a)(5) fee disclosure to participants and any additional related information if any fees such as TPA expenses are paid from the company treasury rather than from plan assets (i.e., participant accounts)
  • Anything else you specifically want us to assess

Each of these documents should be readily available on your recordkeeping platform or in your ERISA file without directly requesting them from current service providers. If they aren’t, we’ll discuss best practices regarding documentation to help you ensure rock-solid compliance. 

I’m a plan sponsor considering a new team of service providers. How much time and effort will it take to make that transition if we choose to do so?

We know it can seem daunting to change one or more service providers for your plan, especially recordkeepers. In broad terms, you should expect the plan conversion process to take 60-80 days, though for most of that period you won’t have to do a thing.

The key variables affecting total duration of the process are the responsiveness of the outgoing recordkeeper and your own timeliness in fulfilling the requirements of your new service providers. In terms of hours spent, Interlake’s general suggestion is that plan signatories (i.e., plan administrators) should expect three to five hours of direct involvement with outgoing and incoming service providers during the conversion.

Payroll and HR managers who will be involved in working on the new platform should plan on two to three hours of direct involvement.

Rank-and-file plan participants should plan on committing one to two hours to in-person or virtual enrollment meetings, registering for account access on their new platform, and making any necessary deferral, investment, and beneficiary decisions.  

How does Interlake charge private clients for asset management and planning services? 

Because Interlake is a fee-only advisory firm that does not accept commissions of any kind, the only revenue we have ever generated, or ever will generate, flows from the contractual fees our clients pay for our services. For private clients, we calculate those fees as a percentage of the assets you place under Interlake's management. Fees are assessed quarterly and deducted from client accounts at Alruist.

We're pleased to share economies of scale with our clients by maintaining a tiered fee schedule. Those fees begin at 1.0% annually for household assets up to $1 million. An advisory fee of 0.8% applies to assets between $1 million and $2 million. From there, our fee schedule drops to 0.6% between $2 million and $4 million; 0.4% between $4 million and $6 million; and 0.2% between  $6 million and $10 million. Households with more than $10 million under Interlake's management will enjoy custom fee schedules.

Thanks to Altruist’s ability to manage portfolio allocations with fractional shares, we do not require asset minimums for new clients.

How does Interlake charge workplace retirement plans for its fiduciary and advisory services? 

As with our private client services, Interlake never earns any product- or platform-related revenue in its work with employer-sponsored retirement plans. Instead, we assess fully transparent fees for our fiduciary and advisory services as a percentage of assets under management. That fee schedule starts at 0.5% annually and declines from there as plan assets increase with our second tier of 0.4% annually kicking in at $2 million in plan assets. Additional tiers fall at $4 million, $6 million, and $10 million. Plans over $20 million will enjoy custom fee schedules.  

Plan sponsors should note that we can have our fees deducted directly from plan assets or paid out of the company treasury by quarterly invoice. By keeping expenses as low as possible for participants, we consider the latter method to be a fiduciary best practice for employers whose balance sheets allow it.

A third option is to bill sponsors by invoice for Interlake's 3(38) fidicuary services while deducting a modest quarterly fee from plan assets for our participant-facing advisory work. In this instance, total charges would be consistent with Interlake's standard fee schedule. (For example, a plan with $1,200,000 could pay 0.4% annually from the company treasury for Interlake's 3(38) services and 0.1% from plan assets for our participant advisory services.) A significant benefit here is that the 0.4% in 3(38) fiduciary fees becomes a tax-deductible business expense while we minimize fees deducted from participant accounts.

Discussions of how to most efficiently and prudently assess fees are always important parts of our plan design process with sponsors.  

The bottom line is that Interlake is committed to keeping total plan costs as low as possible consistent with industry-leading fiduciary, advisory, operational, and compliance services.

I like the idea of financial assessments using Elements, but does Interlake do more comprehensive financial planning? 

Yes, Interlake also uses Right Capital to perform holistic, long-term financial planning and projections. Tolerisk can also help with that process. We make comprehensive planning services available to private clients pursuant to our standard service agreements. 

What’s the difference between 3(21) and 3(38) fiduciaries?

We believe the 3(38) fiduciary role is the gold standard of fiduciary delegation for plan sponsors. It’s the easiest, most complete, and in many cases least expensive way to outsource a large majority (but not all) of the practical and legal responsibilities of plan sponsorship. To summarize the difference between 3(21)’s and 3(38)’s: 

  • A 3(21) investment advisor is legally obligated to offer fiduciary advice, but the responsibility for investment-related decisions remains with the plan sponsor (i.e., the individual or individuals who hired the 3(21) advisor)
  • A 3(38) investment manager assumes discretionary control over the plan’s investment program, handling the selection, monitoring, and occasional replacement of investment options made available to participants. 

Legally, decision-making authority and discretion are the key variables here. A 3(21) fiduciary’s advice might be outstanding on its merits, but it doesn’t shift any meaningful liability to the advisor. This is a crucial distinction that plan sponsors need to understand so they can make informed decisions about which arrangement would most fully serve their interests. If you’d like to dive deeper into this subject, drop us a line at my401k@InterlakeCapital.com

What are the relative merits of bundled and unbundled arrangements with recordkeepers and third-party administrators? 

There’s no single solution that makes the most sense for all plan sponsors on this dimension. Generally, smaller and simpler plans (e.g., a Safe Harbor plan with only a few participants) will tend to benefit from the economics of a bundled program, where one firm provides both recordkeeping and compliance services. On the other hand, larger, more complicated plans that require top-heavy testing, need new comparability profit-sharing calculations, or sit alongside a cash balance plan might benefit from an unbundled arrangement with an independent TPA that brings serious experience and expertise to the table. 

Interlake is always happy to provide both bundled and unbundled proposals so we can help clients compare the costs and benefits of each approach. For many plans with large numbers of participants, unbundled plans can offer both superior service and better pricing. But again, this is a decision properly made case-by-case, and we’re here to consult with plan sponsors every step of the way.