Guest Columnist Ron Rhoades

Indeed plan sponsors beware. If the brokerage industry and product vendors are not responsive to the needs of the plan sponsor who is held to a fiduciary standard of care on behalf of their employees, then could there not be a better case for RIAs to fill the leadership vacuum in support of professional standing the plan sponsor demands? 

Large scale institutionalized support for fiduciary standing is more likely going to come from very large RIAs like CapTrust or New England Pension Counsel which advise well over $100 billion in assets. This level of expert fiduciary counsel can not be replicated in a brokerage format regardless the size of the broker/dealer.

Disaffected brokers who seek professional standing may have no choice but to seek affiliation with expert counsel.

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Legal analysis: Why the Yale 401(k) letters, limits aside, should raise an alarm to plan sponsors

Ron Rhoades: Here is the rub: the plan sponsor has great difficulty holding the "retirement plan consultant" to account, given the low standard of conduct applicable to measure the potential liability of a non-fiduciary consultant.

ERISA

401(k)

Drinker Biddle & Reath

Ron Rhoades

Fred Reish

The days when RIAs were the outsiders at the 401(k) party are fast coming to a close. What's new is that the mass of 401(k) assets 
is getting critical at about $3 trillion; fiduciary advisors are getting appreciated; fat fees and questionable kickbacks are getting exposed and stepping out of line is getting dicier as the Department of Labor tightens the regulatory screws.

The old reasons why the 401(k) business is attractive are still in place: there are fresh assets pouring in every month and when employees leave jobs or retire, they produce rollovers that build up IRA accounts for financial advisors. The drawbacks of getting into the 401(k) business are still in place, too. Dealing with retirement assets is really a second line of business and it remains -- unless you overcharge with hidden fees -- a low margin business with high potential fiduciary liabilities.

Still, the outsourcers, infrastructure and accumulated knowledge for RIAs to capitalize on is growing daily and a the mega-shift of assets away from brokers is making the 401(k) business riskier and riskier -- to ignore.

401(k) Stories

Ayres may not have it all letter perfect but his basic points have a legal basis

Legal analysis: Why the Yale 401(k) letters, limits aside, should raise an alarm to plan sponsors

Stephen Winks

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