For some reason, when it comes to some charges within 401(k) plans, I always remember Don Fanucci from The Godfather Part II, who was killed by Vito Corleone because Vito no longer wanted Fanucci to wet his beak from Corleone’s criminal activity with Clemenza and Tessio.
I remember an advisor who told me of an ERISA attorney that we all knew who gave a referral to this advisor and then wanted something for that successful referral and it wasn’t just a thank you. I can tell you from the time that I started my practice that I have been approached on a number of times by both brokers and advisors who would give me something for the effort. While I won’t achieve total consciousness on my deathbed, I also won’t wet my beak because there is something to be said about independence and the belief that the only person entitled to an advisory fee is a financial advisor.
In addition, when it comes to a single employer plan or a multiple employer plan, some providers have so many charges that you think you’re paying off the entire Town of Brookhaven or some other branh of government. I know one multiple employer plan where it seems everyone is on the take because they have created so many levels of bureaucracy that the costs of joining this plan outweigh going it alone for many plan sponsors.
As we inch closer to disclosure, it should be interesting how people start labeling the fees that were so hidden for so long.