There has been much discussion on the fiduciary standard for all financial services salespeople. There has been new regulations requiring those brokers or agents selling retirement plans to become fiduciaries to the plans. This is vital to the success of the 401(k) as the sole source of retirement for most Americans.
Many retirement plans are sold today, not to improve the quality of investment vehicle offered to plan participants. But rather as a lead generation tool to sell other financial products to the participants which generate high commissions for the broker or agent. Some of the product sold is helping the participants reach their financial goals, however the plan sponsor cannot be assured that this is the case. Remember, your employees look to you for guidance and respect your decisions. These same employees will believe that you endorse everything the broker or agent proposes.
The retirement plan you provide to your employees should be treated like the important employee benefit you intended. As a plan sponsor you have the fiduciary responsibility to act in the best interest of the plan participants and their beneficiaries. With this responsibility comes liability for you the fiduciary to the plan.
The 401(k) plan has become the sole source of retirement of most Americans. Like it or not, business owners are responsible for providing the best tools available for their employees to successfully retire. It is your responsibility to protect your employee’s future self from their current self. To do this, avoid any conflicts of interest by treating your 401(k) plan as an employee benefit not a lead generation tool.
Your company’s ability to remain competitive for talented employees and retain those employees is dependent on your ability to provide excellent employee benefits, including your 401(k) plan.
- U.S. 401(k) Disclosure Is Coming-What To Do In January (401kplanadvisors.com)
- The New 401(k) Advice Rule and the Road to a New Fiduciary Standard (401kplanadvisors.com)
- Who Are Your Fiduciaries? (401kplanadvisors.com)