There has long been an understanding that conflicts of interest for plan advisors can compromise the effectiveness of a retirement plan. Here are some of the ways retirement plan sponsors can identify and steer clear of conflicted advisors. The retirement plan industry operates differently than it did 30, 20 or even 10 years ago. As technology improves, so does the efficiency and scalability of both plan advisors and plan recordkeepers. This has resulted in a consolidation of the number of companies that offer these types of services, which is where the potential for conflicts of interest increases. One clear example of this is the growth of advisors that are affiliated as a branch of a larger investment or insurance firm. When the vendors pay an advisory firm a commission for one business line and these advisors are selecting the same vendors for their retirement plan sponsors, that is a conflict of interest. Consider an insurance company that offers property and casualty insurance as well as retirement plan services. If an advisor sells property and casualty insurance to some clients and earns a commission for that work, while in another area of their business they help clients find vendors for their retirement plans, the insurance companies that pay them are most likely at the top of their "recommended" list.
展开▼
