Declining 401(k) plan fees have increased potential conflicts of interest among advisors—conflicts that fiduciary status alone doesn’t eliminate. Many plan sponsors struggle to know whom to trust, especially since fiduciary rules can be manipulated, and administrators of smaller plans often lack formal training.
Advisors and consultants vary widely, and most carry some level of conflict, such as promoting proprietary products or receiving third-party payments that influence their recommendations. While revenue sharing is on the decline, the push to cross-sell financial services is growing, which adds new oversight challenges.
True trust is built through transparency, honesty, consistency, and real expertise—not just credentials. It’s fragile and easily lost through broken promises or hypocrisy. Wealth advisors entering the 401(k) space may earn trust through long-term client relationships, even if they lack technical expertise, which can be outsourced. Independent Retirement Plan Advisors (RPAs) may have fewer conflicts, yet some resist formal advisor searches like RFPs.
Ultimately, the best way for RPAs to demonstrate trustworthiness is by encouraging plan sponsors to use independent, credible third parties for advisor due diligence—bringing transparency and accountability to the process.
For more, read “How Advisors Can Build (and Lose) Trust with 401(k) Plan Sponsors,” on WealthManagement.com.
