Obama the 401(k) Game Changer?
So what gives?
President Obama has thrown his hat into the ring by suggesting brokers and independent advisors adhere to a higher "Fiduciary Standard." This would impact major wall street firms like Merrill Lynch, UBS, Fidelity, Wells Fargo, Schwab, insurance companies, and independent advisors. President Obama not only mentioned fees, but poor performing funds.
Granite has been pounding the table for years about fee disclosure, risk and performance; essentially, making sure the employer meets their fiduciary obligation in helping their employees make informed decisions.
Brokers and Independent Advisors do not manage money, they are product sellers. They traditionally do not disclose all fees, and get paid directly by the investments. Additionally, brokers who service the plan have access to move separated employees into individual IRAs at a substantial fee increase.
Employers have a legal obligation to make sure fees, investments, and the custodians are safe. Most employers do not realize their commitment.
Here is the criteria for employers to look for:
- Fees - How does the broker or independent advisor get paid? If they get paid by the investments, the employer and the employee will be compromised.
- If they cannot show all fees, including theirs, broken out in detail from TPA, recordkeeping, and custodial - run away.
- Investments - If they sell their own product or represent a platform or do not have access to all mutual funds, the employer and employee are compromised.
- If the broker/adviser can not demonstrate a sound, proven investment criteria, that works over a long period of time for all funds (10 years), the employee will be compromised at retirement.
If you are looking for an independent consultant to represent your best interest and who can provide a safer, more transparent, cost effective plan with professional investment education: Please call 203-210-7814 to implement a better plan for your employees.