Steps Every Boomer Should Take Before Leaving the Workforce

The best advice I can give to boomers is to seek and pay for the advice of an objective professional adviser. A fee only financial advisor will most likely follow the fiduciary standard. In other words an adviser who puts the interest of the client first.

FORTUNE Brainstorm
FORTUNE Brainstorm (Photo credit: jurvetson)

5. Know the difference between a brokerage firm and an advisory firm.A lot of baby boomers don’t understand the difference between a broker and an advisor. A broker is someone who sells something for a commission,  and sells products like  mutual funds, variable annuities, etc. An advisor provides investment recommendations.

Brokers and brokerage firms don’t have a fiduciary standard to the client, they only have a suitability standard to the client. That means whatever they recommend must be suitable for you, but it doesn’t have to be in your best interest.

On the other side, an advisor has a fiduciary standard to the client. What an advisor recommends to the client has to be in their best interest.

When anyone is preparing to retire they should seek the advice of an adviser following the fiduciary standard. Most people do not understand the difference. By working with a brokerage firm you will have to wonder if there is a conflict of interest.

Please comment or call to discuss.

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Majority of Retirement Plan Sponsors Do Not Feel Prepared for New Fee Disclosure Rules

Employment Exhibition
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Many plan sposnors suffer from ‘they don’t know they don’t know’. This new fee disclosure regulation will force them to understand and monitor the fees in their company sponsored retirement plan.

“Business leaders are challenged by rising healthcare and benefits costs, heightened government oversight, and new regulation. At the same time, the importance of fee transparency, fiduciary responsibility, and participant education cannot be overlooked,” said Greg Tschider, CEO of Verisight, Inc. “Our survey highlights the challenges employersface in balancing new priorities. Devising a strategic approach is always important, but is especially critical now as the industry prepares for more changes.”Regulatory Wake-up Call

Effective April 1, 2012, a new retirement plan fee disclosure rule mandated by the Employee Retirement Income Security Act (ERISA) will require all 401k retirement plan service providers to begin providing increased fee disclosure to sponsors and plan fiduciaries. Additionally, on May 31, 2012, new participant fee disclosures rules from the Department of Labor will go into effect. However, the survey indicates that as many as 61 percent of companies do not feel prepared to respond to these new fee disclosure regulations. Furthermore, executives believe that only 3 percent of employees fully understand the cost of their retirement plan.

Further confusion exists around fiduciary standards. While a whopping 87 percent of employers use an external or third-party investment advisor, a third (34%) are unsure what their advisor’s fiduciary responsibility means and 27 percent work with advisors that are not fiduciaries.

Additional findings from the Verisight and McGladrey Survey include:

When evaluating compensation decisions, employers take the following into account:

  • Challenge of retaining key employees (52%)
  • Desire to incent employee performance (48%)
  • Challenge of attracting talent (43%)

When deciding what is most important in evaluating a retirement offering:

  • Fifty-nine percent consider the costs of investments and also quality and level of service
  • Only 32 percent care about the reputation of the provider
  • Only 24 percent care about the availability of specific investment options

Now is the time for plan sponsors to prepare for the new regulations. Many top employees will begin to ask questions on the fees paid in their plan.

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

  • The Future after Fee Disclosure and the Crystal Ball (
  • Fiduciary Responsibility for Plan Investments. (
  • A Closer Look at Fiduciary Status Under ERISA (
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