DOL investigations of Retirement Plan Financial Advisors

There was a great article written by Fred Reish and his staff regarding Department of Labor (DOL)investigations into broker dealers and registered investment advisors and their relationships with their retirement plan clients. I recommend everyone in the industry to read it.

As far as the investigations as to what the DOL called the Consultant/advisor project (CAP), it comes as no surprise. The DOL over the last few years has made it their goal to improve the role of retirement plan advisors whether its requiring them to disclose fees, abide to a fiduciary standard (to be decided), and to finally offer investment advice.  

Having been in the business for over 13 years, you see a lot of things that are quite good in the industry and some things that are not so good.  Whether it’s the plan provider who receives extra compensation that is not disclosed by having their client switch 401(k) platforms or those who can get an extra trail for pushing a specific share class of a mutual fund or stable value fund, there are enough abuses with the financial community to warrant these investigations.

As I have always stated, the good old days where a financial advisor could make a few bucks by not servicing a client and by making sure the client added a specific fund to their lineup or to use a specific 401(k) platform are over. A retirement plan advisory business where fund and platform selection is fee neutral and where advice can be given to participants will be a good thing.

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