Evaluate Your Retirement Plan Advisor or Consultant
The Department of Labor and the Securities and Exchange commission have reported that many Retirement Plan Sponsors rely heavily on pension consultants or investment advisors for help with fulfilling their ERISA fiduciary responsibilities. As a result, the DOL and SEC require consultants and advisors to provide written disclosure of fees for services provided and fully disclose potential conflicts of interest that may affect the objectivity of the advice they provide. You can find the list of questions at these websites: SEC and DOL.
Questions To Ask Your Advisor or Consultant
Disclosures and Conflicts of Interest:
- Are you registered with the SEC or a state securities regulator as an investment adviser? If so, have you provided me with all the disclosures required under those laws (including Part II of Form ADV)?
- Do you have any policies or procedures to address conflicts of interest from being a factor when you provide advice to your clients?
Compensation and Fees:
- Do you or a related company receive any payments from any service providers or investment managers that you recommend? If so, what is the extent of these payments in relation to your other income (revenue)?
- Are your fees fully disclosed for the services provided pursuant to a written client service agreement?
Fiduciary Obligations and Insurance:
- Do you consider yourself a fiduciary under ERISA with respect to the recommendations you provide the plan and will you acknowledge this in writing?
- What types of professional liability insurance coverage do you carry and with what limits?
Prudent Process:
- Describe your process used to help us fulfill our fiduciary responsibilities as described in ERISA 404(a); "Prudent man standard of care."
- What type of ongoing due diligence and documentation will you provide to support this?