Does your business need an Investment Advisor? Absolutely!

We have seen a large recent uptick in the percentage of small and mid-sized businesses that have made the move to engage an investment advisor to serve as a fiduciary to their respective company sponsored 401(k) plans, and this is a good thing.  According to the IRS, “a fiduciary is person who owes a duty of care and trust to another and must act primarily for the benefit of the other in a particular activity.  For retirement plans, the law defines the actions that result in fiduciary duties and the extent of those duties.”  Mismanaged plans that have either intentionally or through negligence allowed inappropriately high fees in their plans are being faced with law suits more frequently than ever. These suits generally claim that the employer breached the company’s fiduciary duties by allowing participants to be overcharged for particular services. We have noted that as this debate pushes to the forefront of the national retirement plan conversation, the law suits are attacking smaller and smaller companies and plans.  Combine this trend with the Department of Labor’s new fiduciary rule (April 2016) which has significantly raised the standard for investment advice in retirement plans, and small and mid-sized businesses that are trying to take on full fiduciary responsibility alone are at more risk than ever.  Responsible companies are engaging investment advisors to share the fiduciary responsibility and finding that through this relationship they are often able to adjust the 401(k) plan to reduce certain costs while maintaining a strong fund lineup with appropriate service to the participant.  Engaging an investment advisor helps a plan sponsor better manage the risks inherent in having a company sponsored 401(k).