Many plan sponsors do not realize te importance of this benefit to their employees as well as themselves. Many do not realize the fiduciary responsibilities and risks that are involved in offering a qualified plan to their employees. Many times plan sponsors rely on insurance salespeople for this valuable service. They do not realize that their broker or agent cannot provide fiduciary services.
Not Hiring a Financial Adviser Plan sponsors should always enlist the help of an adviser, Ary Rosenbaum, managing partner of The Rosenbaum Law Firm P.C., told PLANSPONSOR. Aside from purchasing fiduciary liability protection and hiring a competent third-party administrator (TPA), Rosenbaum said, there is no better protection for liability than hiring a knowledgeable adviser.
“As long as you have an employee … you need to hire a financial adviser,” he said. “It’s impossible for the plan sponsor to do that all on their own.”
Plan sponsors must keep in mind that the role of a plan adviser is not just choosing investments, he added.
Not Caring What Participants Are Paying
Rosenbaum likened this to choosing the most expensive item on the menu because someone else is footing the dinner bill. It is still the plan sponsor’s responsibility to find an affordable plan.
“Plan sponsors have to find out whether the fees being paid are reasonable or not,” Rosenbaum said.
Litigation can arise if the participants think they are paying unreasonable fees, and plan sponsors should especially be aware of this in the wake of August 30participant fee disclosure regulations, effective August 30 (see “Plan Sponsors Should Not Delay Preparing for 404(a)(5)”).
Everyone needs help with fiduciary decisions. These decisions should not be made emotionally nor because of a sense of loyalty to your bank or personal adviser.
Please comment or call to discuss how an independent fiduciary can protect you and help your employees successfully retire.