Retirement plan fiduciaries are responsible for more than overseeing plan procedures and safeguarding the assets of plan participants. In most cases retirement plan fiduciaries are also responsible for benefits, compensation and the employee handbook. Some plan fiduciaries are responsible for the production line, quality assurance and the ordering of raw materials. Other fiduciaries may serve as CEO, CFO or hold the title of Risk Manager for their firm. While each fiduciary normally has another full-time job, fiduciaries can ill afford to become complacent with the company 401k Plan.
Regulatory Revision
Like it or not, plan sponsors of qualified retirement plans with assets of $50 Million Dollars or less will have a new relationship with their retirement plan advisors on April 10, 2017. That is the date established by the Department of Labor when advisors must acknowledge that they are serving in a fiduciary capacity – regardless of whether the advisor comprehends what being a fiduciary actually means.
The new Fiduciary Rule has been 6 years in the making. Now there are two dates on the horizon. The previously mentioned April 10, 2017 date and January 1, 2018. On January 1, 2018 service providers and retirement advisors will need to be in compliance with the rule’s Best Interest Contract Exemption.
Robo Advisor Reality
Many retirement plan committees have been approached by sales reps promoting robo advisor technology – with promises of lower-fees and algorithms that are better. The overwhelming majority of retirement plan committee members have not taken-the-bait. Robo advisors have experienced average account sizes shrinkage, fee compression and a slowing growth-rate.
The Robo advisor concept has become blurred recently with the introduction of the Schwab Intelligent Advisor which has been described as a “hybrid robo model” – now showcasing a human advisor as support. This is not described as a human taking over for a Robo advisor, but it is termed a hybrid. This could be best described as the more things change, the more they remain the same.
