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Role of a Plan Advisor on Outside Assets


At a Plan Sponsor University (TPSU) program held at Marylhurst University in the Portland area conducted by Nathan Fisher, Managing Director of 401(k) Solutions at Fisher Investments, the HR manager for a not-for-profit (NFP) organization with 160 employees. The HR manager describes services her plan advisor provides to help plan participants that are helpful, but because they charge for advising on issues outside the parameters of the plan, it can cause some issues. The approach of a plan advisor on outside assets can be a major factor in participant outcomes.

The advisor for the NFP is very valuable providing one on one planning sessions with employees but they draw a line when questions arise outside the plan investments. Their services include reviewing plan investments and creating portfolios but when questions arise about financial issues outside the plan, the advisor charges an additional fee. The 403b plan sponsor engages other parties for financial wellness programs to help with other financial planning services but it becomes awkward when employees meeting with the plan advisor go beyond questions about the plan investments.

Many plan advisors offer financial planning services that go beyond the scope of a 401k or 403b plan and rightly charge for them while some will not to avoid conflicts and perhaps difficult discussions. Advisors may not, for example, suggest that participants move money from the plan into a self-directed account for which the advisor might charge a higher fee. Beyond that, many employees need and want holistic financial advice and their plan advisor may be the only financial professional they interact with. Sometimes, charging for this additional advice can cause problems for the plan sponsor who may need to use third parties to help participants.

The new DOL fiduciary rule focuses largely on advisors helping employees with IRA rollovers defining when they must act as a fiduciary but little is mentioned about whether they can work with participants in the plan on outside assets. Understanding what financial planning services employees need and whether the advisor offers them as part of the fee paid by the employer or the plan is critical as well as whether that advisor is capable. Selecting third parties, especially those that interact with employees, is a fiduciary act for which plan sponsors must act prudently documenting the process as well as monitoring their activity especially with the new DOL rule making more advisors act as a fiduciary.

Fred Barstein

Fred Barstein

Founder & Editor-in-Chief at 401kTV | TRAU | TPSU
Fred Barstein is the Founder & Editor-in-Chief of 401kTV. Fred is also the Founder and CEO of The Retirement Advisor University (TRAU), a collaboration with UCLA Anderson School of Management Executive Education and The Plan Sponsor University (TPSU).Mr. Barstein was also Founder and Editor-in-Chief of NAPA Net.
Fred Barstein

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