The 401(k) Minefield: Why Your Business Needs a Different Approach

What if the 401(k) plan you thought was protecting your employees—and your business—is actually a ticking time bomb of liability, compliance issues, and hidden costs?

When Everything Fell Apart

Meet Sarah, CEO of a growing manufacturing company with 150 employees. For years, she’d relied on her payroll company to handle the 401(k) plan. “One-stop shopping,” they called it. Simple. Convenient. Until the Department of Labor audit letter arrived.

The problem started small. A few late deposits here, some missing participant notices there. But as investigators dug deeper, they uncovered a web of compliance failures: investment fees that hadn’t been properly disclosed, a plan document that hadn’t been updated in five years, and fiduciary responsibilities that no one was actually fulfilling.

The final tally? $425,000 in penalties and legal fees. Three months of management time consumed by the audit process. And worst of all—the realization that her “simple” solution had been putting her business and her employees at risk for years.

Sarah’s story isn’t unique. It’s happening to business owners across America who believe their 401(k) is being properly managed, only to discover too late that convenience doesn’t equal competence.

What This Means: The Hidden Reality of 401(k) Management

As an executive or business owner, your time is valuable, and managing retirement benefits shouldn’t be a hassle. But here’s what most business owners don’t realize: a 401(k) plan is one of the most complex financial products your business will ever purchase.

Under ERISA guidelines, plan fiduciaries—which often includes CEOs, CFOs, HR directors, and other executives—carry personal liability for plan decisions. This isn’t just corporate liability that insurance can cover. This is personal liability that can follow you home.

The complexity is staggering. Investment selection and monitoring. Fee benchmarking and disclosure. Participant communications and education. Compliance testing and documentation. Vendor oversight and management. Each area has its own regulatory requirements, potential penalties, and litigation risks.

Yet most business owners handle their 401(k) plan with the same level of attention they give their office supplies.

Why This Matters: The Cost of Getting It Wrong

The statistics are sobering. According to the Department of Labor, there are over 2,000 ERISA-related lawsuits filed annually, with the average settlement exceeding $2 million. These aren’t just cases against massive corporations—small and mid-sized businesses are increasingly in the crosshairs.

The Hidden Costs Include:

• Personal fiduciary liability that can pierce corporate protection
• DOL penalties ranging from thousands to millions of dollars
• Class-action lawsuits from participants seeking damages
• Lost productivity from management teams dealing with compliance issues
• Employee retention problems when plan quality suffers
• Missed opportunities to use retirement benefits as competitive advantages

But the real cost isn’t just financial—it’s the distraction from running your business. Every hour spent dealing with 401(k) problems is an hour not spent growing your company.

The Critical Pain Points Business Owners Face

1. Fiduciary Liability Confusion

Most business owners don’t even know they’re fiduciaries, let alone understand what that means. They assume their payroll company or “retirement plan advisor” is handling everything, only to discover they’re still personally liable for decisions they didn’t know they were making.

2. Investment Oversight Chaos

Your employees are depending on the investment options you’ve selected, but when was the last time someone with real expertise reviewed performance, fees, and appropriateness? Most business owners are making million-dollar investment decisions based on marketing materials and vendor presentations.

3. Compliance Nightmares
   

ERISA compliance isn’t optional. Late deposits, missing notices, inadequate disclosures, and outdated plan documents aren’t just administrative oversights—they’re violations that can trigger audits and penalties.

4. Fee Transparency Issues

Do you know what your employees are actually paying in fees? Can you document that those fees are reasonable? Most business owners can’t answer these questions, leaving them vulnerable to fee litigation.

5. Employee Engagement Problems

Your 401(k) plan is supposed to help attract and retain talent, but if employees don’t understand it or feel it’s not competitive, it becomes a liability instead of an asset.

An Analogy That Puts It in Perspective

Think of your 401(k) plan like the electrical system in your building. You can see the outlets and switches, and everything seems to work fine day-to-day. But behind the walls is a complex network of wiring, circuits, and connections that require expert knowledge to install and maintain safely.

You wouldn’t let your office manager rewire the building just because they’re good with spreadsheets. Yet that’s essentially what happens when business owners rely on payroll companies, PEOs, or generalist brokers to manage their 401(k) plans.

The consequences of electrical problems are obvious—fires, outages, safety hazards. The consequences of 401(k) problems are often hidden until it’s too late—then they can be devastating.

How Gatewood Solves These Critical Concerns

At Gatewood Wealth Solutions, we keep your priorities the priority. We understand that you didn’t start your business to become a retirement plan expert—you started it to pursue your vision and serve your customers.

Our Evidence-Based Approach:

Unlike providers who offer one-size-fits-all solutions, we design each plan based on empirical research and your specific business needs. We combine passive index funds for core exposure with targeted active management in market segments where skilled managers historically add value—international equity, fixed income, small-cap value, and large-cap growth.

True 3(38) Fiduciary Protection:

We don’t just advise on investments—we assume legal responsibility for them. As your ERISA 3(38) Investment Manager, we reduce your fiduciary burden while ensuring your plan operates in compliance with all regulatory requirements.

Comprehensive Oversight:

Our team of specialists provides strategic guidance tailored to your goals, helping you implement efficient, compliant, and structured retirement plans. We handle investment monitoring, fee benchmarking, compliance calendars, and participant education—everything you need for a successful plan.

How Gatewood Compares to Other Providers

• Large Payroll Companies (Paychex, ADP):

Payroll companies excel at payroll processing but treat 401(k) plans as add-on products. They typically offer limited investment lineups, minimal fiduciary support, and focus on administrative convenience rather than participant outcomes. When problems arise, you’re often shuttled between departments with no one taking ownership.

• PEOs like TriNet:

PEOs provide small and medium-size businesses with HR admin support and services, including access to benefits that small businesses may not typically provide. However, they focus on standardized solutions across their entire client base. Your plan becomes part of their master plan, limiting customization and often resulting in higher costs and fewer options for your specific workforce.

• Traditional Brokers:

Most retirement plan brokers are compensated through revenue sharing from investment companies, creating inherent conflicts of interest. They may not have the specialized credentials or processes necessary for proper fiduciary management, leaving you with the appearance of professional help without the substance.

Gatewood’s Key Differentiators 

CFA®-Led Investment Oversight:

Your plan is monitored by our CFA®-credentialed investment committee—not outsourced to third-party managers with limited customization like typical providers.

Dynamic Planning vs. Static Setup:

We use real-time dynamic planning to continually review fund menus, participant outcomes, and investment lineups to keep your plan optimized. Others often set the plan once and revisit infrequently, leading to outdated fund options.

Holistic Business Owner and Executive Coordination:

We go beyond plan administration by integrating your personal financial planning with your business retirement plan. For business owners, we coordinate the plan’s design with your personal retirement and tax strategy, optimizing contributions (401(k), profit-sharing, cash balance plans) to align with your long-term goals. For executives, we provide personal financial planning sessions to integrate company benefits—equity awards, deferred compensation, and stock options—into their broader wealth strategy.

Personalized Fund Selection:

We offer institutionally vetted funds with no proprietary product pressure or revenue-sharing arrangements that create conflicts of interest.

Individualized Employee Education:

We conduct personalized education sessions—from entry-level employees to senior management—using advanced planning tools like eMoney to help participants understand how their workplace savings integrates with their overall wealth strategy. This goes far beyond the generic group meetings most providers offer.

Firm-to-Family Continuity Model:

Business owners and executives gain a dedicated Client Care Team—wealth advisor, planner, and coordinator—ensuring seamless service and alignment of corporate and personal planning. Unlike advisor-dependent providers, our team-based approach provides consistent, long-term continuity.

Specialized Expertise:

Our team includes Certified Plan Fiduciary Advisors (CPFA®) who focus exclusively on employer-sponsored retirement plans. This isn’t a side business—it’s our specialty.

Process-Driven, Not Product-Driven:

We start with your goals and design strategies accordingly, rather than trying to fit your needs into our products.

Relationship-Driven Approach:

With Gatewood, you gain a dedicated partner committed to the financial well-being of your loved ones now and for generations to come. We build long-term relationships focused on your success.

Integrated Wealth Management:

Unlike standalone retirement plan providers, we can coordinate your business retirement plan with your personal wealth management, creating synergies and efficiencies other providers can’t match.

Employee Education Excellence:

We help you empower employees through financial wellness education and one-on-one meetings, ensuring they understand how to make the most of their retirement benefits.

The Benefits of the Gatewood Approach

Reduced Fiduciary Risk: Our 3(38) fiduciary services significantly reduce your personal liability while ensuring professional investment management.

Enhanced Employee Outcomes: Evidence-based investment selections and comprehensive education programs aim to help your employees build more successful retirement savings. 

Improved Retention and Recruitment: A well-designed, properly managed 401(k) plan becomes a competitive advantage in attracting and retaining talent.

Operational Efficiency: We handle the complex compliance requirements, freeing your team to focus on business operations.

Cost Transparency: We provide clear, comprehensive fee reporting so you always know what you’re paying and can document fee reasonableness.

Ongoing Partnership: Unlike transactional providers, we work with expertise and care to support your evolving business needs over time.

Building Enduring Wealth with Purpose

At Gatewood, we understand that wealth is personal—and that includes the wealth your employees are building through their retirement plans. The true value of planning is the confidence it creates—confidence for your employees in their financial future, and confidence for you that your business is protected from unnecessary risks.

We are process-driven, not product-driven. Our systematic approach to plan design, investment management, and ongoing oversight ensures that your 401(k) plan supports your business objectives while meeting your fiduciary obligations.

Your Next Step: From Risk to Confidence

Don’t let your 401(k) plan become a liability that threatens your business and your employees’ financial security. The question isn’t whether you can afford professional 401(k) management—it’s whether you can afford not to have it. 

Ready to transform your 401(k) from a compliance burden into a competitive advantage?

Contact Gatewood Wealth Solutions today for a complimentary plan review. We’ll analyze your current plan structure, identify potential risks and opportunities, and show you how our comprehensive approach can provide the peace of mind you need and the results your employees deserve. Schedule your consultation and discover why business owners across the region trust Gatewood to guide them through the complexities of retirement plan management. Because when it comes to your employees’ futures and your business’s protection, solutions, not answers make all the difference.

Important Disclosures:

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

The Financial Blind Spot: Why 85% of Your Employees Want Help—And Most Employers Aren’t Noticing

According to a 2025 study[1]  highlighted by Inc., nearly 85% of employees believe their employer should help them navigate financial challenges. Let that sink in.

That’s not a “nice to have”—that’s a near-universal expectation.

And yet, in many workplaces, financial wellness is either ignored, underfunded, or mistaken for a once-a-year 401(k) meeting.

As someone who advises companies on retirement plans, I’ve seen this firsthand. And here’s the truth: the companies who acknowledge and respond to this growing expectation aren’t just helping their people—they’re strengthening their own business.

A Simple Metaphor: Financial Stress Is a Dashboard Warning Light

Imagine you’re driving a car and the oil light comes on. You ignore it—after all, the engine still runs. A few weeks later, you’re stalled on the highway with a major repair bill.

Employee financial stress works the same way.

It’s often invisible. But it’s real, it’s chronic, and it’s impacting performance, health, and retention. Financial pressure weighs heavily on decision-making, focus, and emotional health—especially when there’s no guidance or support.

The Science of Financial Stress at Work

Psychologists refer to this as cognitive load—when the brain is overloaded with mental “tabs,” it can’t focus. According to WebMD Health Services[3], financial stress is the #1 stressor across income levels, and 1 in 4 employees say it directly impacts their productivity.

Additional research from Morgan Stanley’s 2025 Workplace Financial Benefits Study[2] found:

• 84% of employees want help with personal financial planning
• 66% say financial stress affects their work or personal life
• 68% of employees would stay longer if their employer offered meaningful financial wellness support.

This is no longer just a benefits issue—it’s a talent strategy issue.

Why Most Employers Miss the Mark

Despite overwhelming data, many employers still believe financial guidance is too personal, too complicated, or already “covered” by the 401(k) plan.

But here’s the disconnect: most 401(k) plans offer basic education, not personalized guidance. And they often ignore broader financial issues—like budgeting, debt, or emergency savings—that dominate employee stress.

This is like handing someone a map but not teaching them how to read it.

Simple Ways Employers Can Step Into the Gap

You don’t have to overhaul your benefits package to make a difference. Here are practical, low-cost ways to respond to this need:

1. Offer “Financial Office Hours” – Offer easy to access one-on-one meetings with a financial advisor (ideally one with no product agenda) where employees can ask basic questions—judgment-free.
2. Survey Your Team – Ask: “What’s your biggest financial concern?” and “Would you like more support from the company?” It opens the door and shows empathy. You can modify future education initiatives around their answers.
3. Add Financial Touchpoints to Existing Benefits – During open enrollment or onboarding, include simple guides on budgeting, emergency funds, and debt management. You could even provide a scheduling link to the financial advisor’s office hours calendar.
4. Curate Trusted Tools – Recommend vetted budgeting apps, podcasts, or free online courses—employees often just need help knowing where to start.
5. Normalize the Conversation – Create a culture where financial wellness isn’t taboo. When leadership talks about it, others feel safer engaging.
6. Continue Onsite 401(k) Education Meetings – Keep offering in-person 401(k) sessions, but raise your expectations. Collaborate with providers to ensure the agenda and talking points address the real financial concerns of your team—not just investment basics. These sessions should help bridge the gap between retirement planning and everyday financial wellness. It should address common employee questions and give you time back in your day.

Final Thought: From Retirement Advisors to Financial Allies

As a retirement plan advisor, my role used to revolve around plan design, investment lineups, and compliance. But today, the companies we serve expect more—and rightly so.

By stepping into the financial wellness gap, we’re not just helping employees retire well. We’re helping them live better now.

And if 85% of your workforce wants this? The only real question is—what are we waiting for?

Sources:

[1] Inc. Magazine citing John Hancock’s 2025 Financial Stress Survey – 85% of employees believe their employer should support their financial well-being.

Source: Inc. (2025). The Next Frontier of Employer Support? Financial Wellness.
https://www.inc.com/2025/03/financial-wellness-workplace-employee-benefits.html

[2] Morgan Stanley Workplace Financial Benefits Study, 2025

84% want help with financial planning, 66% say stress affects work/life, 68% say they’d stay longer if supported.
Source: Morgan Stanley at Work. (2025). The State of the Modern Workplace.
https://www.morganstanley.com/articles/workplace-financial-benefits-2025

[3] WebMD Health Services (2024–2025 Report)

Financial stress is the top stressor and directly impacts productivity.
Source: WebMD Health Services. (2024). Employee Well-Being Trends Report.
https://www.webmdhealthservices.com/resources/2024-well-being-trends-report/

Important Disclosures:

This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice.  Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.  In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations

Unlocking the Power of 401(k)s: How Better Benefits Drive Employee Success