The Bugielski v. AT&T Services, Inc. case, currently under consideration by the Ninth Circuit Court of Appeals, poses significant implications for retirement plan sponsors, record keepers, and advisors. At the core of the case is the question of whether plan sponsors have a duty to consider not just the compensation received directly from plan assets but also indirect compensation, such as fees from brokerage accounts and managed account providers, received by their record keepers. The court ruled that, according to ERISA, fiduciaries should consider all compensation received by the party “from all sources in connection with the services it provides.”
This has raised concerns about how to determine reasonable compensation, particularly regarding indirect fees. The case highlights a potential shift in the responsibilities of plan fiduciaries and could impact the revenue strategies of record keepers and advisors. The outcome of Bugielski may set a precedent for the consideration of all fees paid to advisors, requiring comprehensive evaluation for their reasonableness. The evolving legal landscape underscores the need for vigilance among retirement plan advisors to align with fiduciary duties and protect the interests of plan participants.
Read more in Fred Barstein’s Wealth Management column this week, “Court Case Threatens Compensation Model for RPAs, Providers.”
