DOL fiduciary crackdown on retirement advisors underway

Far too many financial advisors have sold 401(k)s as a lead generation tool. The 401(k) is a by product of their ability to sell high commissioned products to plan participants. Plan sponsors should be aware that allowing this action is another way of endorsing it. This could result in fiduciary liability. The 401(k) is far too important of an employee benefit to allow this. It is a benefit that must stand on it’s own.

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So far this year, the Department of Labor’s Employee Benefits Security Administration has significantly raised its enforcement efforts in what Andy Larson, director of the Retirement Learning Center, said should serve as a wakeup call to advisors who advise retirement plansand plan sponsors.In 2011, EBSA said it had closed 3,472 civil cases and obtained monetary results of nearly $1.39 billion. EBSA also closed 302 criminal cases that resulted in 129 individuals being indicted and 75 cases being closed with guilty pleas and/or convictions. DOL also wants to increase the number of its enforcement personnel from 913 to 1,003 this year.

Larson called those EBSA enforcement numbers “astonishing,” and warned that many advisors are surprisingly still unaware that the DOL has jurisdiction over them.

Most plan sponsors and retirement advisers are unaware of the focus by the DOL. As stated in this article most advisers are unaware that the DOL has jurisdiction over retirement plans. As the retirement crisis becomes more evident more focus will result in more audits and consequently more fines.

Please comment or call to discuss how this affect you and your company.

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