Over two decades ago, leading retirement plan advisors revolutionized the industry by prioritizing fiduciary principles and driving cost reductions for plan sponsors through record keeper RFPs. Despite initial reluctance from plan sponsors, the outcomes included improved service quality, reduced costs, and a streamlined provider landscape. However, the transition towards conducting due diligence on retirement plan advisors (RPAs) is progressing more gradually due to various challenges, including the lack of external pressure, plan sponsor complacency, and limited resources for conducting meaningful assessments.
As plan sponsors become more aware, they recognize the necessity of independent due diligence to ensure regulatory compliance and enhance plan outcomes. While some plan advisors excel, others may fall short, especially those serving smaller plans without proper qualifications. Although advisor benchmarking offers a quick assessment, its limitations and biases underscore the importance of objective evaluations. Ultimately, the evolution towards independent due diligence will drive positive change, benefiting both plan sponsors and participants, echoing the transformative shift witnessed in the record keeper landscape over two decades ago.
Fred Barstein delves deeper in his latest article on www.wealthmanagement.com titled, “The Increasing Importance of Retirement Plan Advisor Due Diligence”
