Challenge

When you serve as a plan fiduciary, as all sponsors do, you are subject to the most potent form of risk management. There is no room for agendas or preoccupied consultants. And nothing less than complete objectivity and total advocacy should be acceptable.

Objective Advice

There are as many points of view in our business as 401(k) plans. If you work with a broker, he or she has allegiance under the broker-dealer, and may be compensated through through 12b-1 fees or provider's wrap fees; these costs can be substantial.

What's more, a broker may represent his own firm's product, another retail provider, or even a third party administrator, casting doubt on objectivity. From an investment perspective, brokers can be incentivized to manipulate share classes in a plan to increase compensation.

If you work with an insurance agent on your 401(k) plan, he will typically represent a specific insurance plan. A plan provider always represents its product alone. While all entities may do a fine job, recognize that each has an agenda.

In reality, the potential for conflict of interest means that many brokerage firms, brokers, and insurance agents are not permitted to sign a contract accepting fiduciary status with your plan.

Consider also that a provider may require its own funds be featured in your plan's investment mix. After all, proprietary funds are typically more profitable to them. But more expensive to you. Worse yet, they may be poorer performers than other alternatives.

Who, then, represents the interest of your benefits committee?

An Accredited Investment Fiduciary, dedicated solely to qualified retirement plans, and motivated to improve plan value for both sponsors and participants.