| Myth | Reality | |
#1 |
We will be protected by having our plan with a large insurance company or brokerage firm. |
These large financial institutions have decided to drastically limit their fiduciary exposure. Their documents and processes will protect them by shifting more exposure to plan executives. |
#2 |
Choosing a large financial institution’s program where they provide all plan services will provide an above average program. |
Plans over $1 million can receive a retirement plan better than what most fortune 500 companies offer by aligning themselves with an Independent Registered Investment Advisor using “Best Practice Standards”. |
#3 |
We have had our plan for a long-time and are happy with service, so I assume I am being treated fairly. |
The longer your loyalty, the more you are probably paying in comparison with new plans being offered by the same company today. |
#4 |
I just changed plans so I assume I have an up-to-date program. |
DOL cites that unless your current program is through a financial advisor willing to acknowledge his shared fiduciary responsibility in writing, your new plan is probably still out of compliance. |
#5 |
The larger my plan assets, the smaller my plan costs should be. |
Unless you open your plan to competitive bid every 2-3 yrs, you are probably paying noticeably more than you should. |
#6 |
How the advisor gets paid doesn’t affect plan servicing. |
Commission-based advisors are typically paid a higher 1st year commission, which provides the incentive to look for new clients at the expense of servicing existing ones. |
#7 |
I do not have the time to conduct a new 401k analysis, especially since it doesn’t seem to be causing a problem. |
If you are one of 1000 companies in the tri-state area to be audited this year by the DOL, you will have to create the time, and deal with a huge disruption to defend and correct plan deficiencies. |
#8 |
A close friend or family member is our advisor and I am confident he is doing the right job. |
If you have the wrong program where the advisor has not agreed in writing to share your fiduciary responsibilities and institute a high standard process, you probably have substantial plan deficiencies. |
#9 |
My employees seem happy with our current plan |
Good employee attitude about your plan does not mean your plan does not have major deficiencies. |
#10 |
If I offer a wide variety of low-cost, no-load funds and annual employee education, I will have fulfilled my fiduciary obligations. |
You must have acceptable plan processes in place and document your adherence including assessing the effectiveness of employee education. |
