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Posts Tagged ‘Independent Investment Advice

Why don’t more people go to financial planners?

Jim Lorenzen, CFP®, AIF®

Jim Lorenzen, CFP®, AIF®

Bob Clark, in a recent AdvisorOne article, says the answer is “fear.” Many people are afraid of:

• Being embarrassed by their current financial condition

• learning their financial situation is much worse than they realized

• of getting beat up for not saving more

• of being told to do things they don’t want to do, such as going on a budget, saving more, or buying more insurance.

He’s probably right.  The old adage WIIFM (What’s in it for me) maybe best answers what people really want:  How to get their financial house in order and keep it that way forever; how to achieve their goals with peace of mind; how to minimize risk; how to feel good about what their future!

Jim

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The Independent Financial GroupJim Lorenzen is a Certified Financial Planner® and An Accredited Investment Fiduciary® in his 21st year of private practice as Founding Principal of The Independent Financial Group, a fee-only registered investment advisor with clients located in New York, Florida, and California.   IFG provides investment and fiduciary consulting to retirement plan sponsors, and retirement and wealth management services for individual investors. IFG does not sell products, earn commissions, or accept any third-party compensation or incentives of any description.  IFG also does not provide tax or legal advice.  The reader should seek competent counsel to address those issues.  Content contained herein represents the author’s opinion and should not be regarded as investment advice which is provided only to IFG clients upon completion of a written plan.  The Independent Financial You can reach Jim at 805.265.5416 or through the IFG website, www.indfin.com, the IFG Investment Blog and by subscribing to IFG Insights lettersfor individual investors.  Keep up to date with IFG on Twitter: @JimLorenzen

How To Calculate Retirement Needs

Jim Lorenzen, CFP®, AIF®

Jim Lorenzen, CFP®, AIF®

A Sample Case Study

While there is an abundance of software available to help planners and advisors in projecting financial needs for clients, the fact is few do an adequate job in this area.   It pays to know what’s “under the hood” of your software – or maybe better – to be able to do some meaningful calculations yourself, if only to demonstrate you actually do have a prudent process.  Anyone with a financial calculator (HP12-C or HP10B-II, for example) can perform these calculations.  Remember, however, even with these, there’s still some ambiguity.

 A Simplified Hypothetical Case Study Problem

Carl is 50 years old and has $500,000 in his 401(k).  He wants to retire in 13 years with $50,000 a year, in addition to Social Security, and wants his money to last 30 years (he isn’t worried about leaving money to his children).   He believes inflation over that period will average 3.5%.   He feels a long-term target of 6% is a realistic annual target return.   With that target in mind, is his $500,000 enough or how much more will he have to put away?    Note:  Let’s assume Carl is in the 40% (combined state and federal) marginal tax bracket.

Answer:

There are three steps:

  1. Calculate the first-year need ($50,000) in inflated future dollars to protect purchasing power.
  2. Calculate the present value of the total needed for 30 years in retirement, beginning in the fist year, at the assumed investment rate adjusted for inflation and taxes, if additional is to be saved outside a tax-deferred vehicle.
  3. Calculate the annual amount to be saved by the end of each year and convert to a monthly amount.

Step #1.  The First Year Need.

                  $50,000    = PV

                  3.5%  = I

                  13   =  n

                  (solve) FV=  $78,197 This is the amount needed for the 1st year.

Step #2.  Calculate the Present Value of total need at beginning of retirement for 30-year period with earnings discounted for inflation: 

                  Compute after-tax yield:             6% * (1-.40) =    3.6%

                  Compute PV of total need for retirement discounted with inflation-adjusted returns. 

                  (BEGIN mode)

                  [((1.036/1.035)-1) x 100]    =        0.0966 =  i  (Inflation-adjusted tax-deferred rate would be 2.41%)

                  $78,197     =      PMT

                  30   =    n

                  (solve) PV =  $2,313,376  Present value of required amount at retirement.

Step #3.  Calculate the amount to be saved by the end of each year to reach the goal:

                  (END mode)

                  $2,313,376  =    FV

                  – $500,000  =   PV  (HP12-C and HP10-B-II conventions require (-) sign

                  3.6   =  i  (note:  if post-retirement tax-bracket is different, adjust this figure)

                  13  =   n

                  (solve) PMT =  $93,838  (divide by 12 for monthly amount to be saved)

Can Carl really save over $90,000 a year?  Even if the annual amount inside tax-deferred vehicles dropped the annual requirement to $66,036, it would appear some adjustments might have to be made.  This is when prioritization and goal-based planning can be important.

Individual Investors Gravitating To RIAs

Jim Lorenzen, CFP®, AIF®

Jim Lorenzen, CFP®, AIF®

Just as many brokers (registered representatives of broker-dealers) have been moving from their brokerage houses to become independent registered investment advisors over recent years, it appears many individual investors seeking advice are learning who these people are and are following them.

According to TD Ameritrade’s latest RIA survey, trust and customer service are the most important reasons why clients opt to work with registered investment advisors (RIAs) instead of commissioned brokers.

TD Ameritrade’s quarterly query of 502 RIAs, appearing in this month’s issue of Financial Planning,  found that 29% of clients using RIAs said that the RIA’s  fiduciary responsibility to work in the best interest of clients was the No. 1 reason they got their business.    Placing second at 21% was more personalized service and a competitive fee structure, just ahead of dissatisfaction with their current or former full commission broker (19%).

Tom Bradley, president of TD Ameritrade Institutional, said in the report, “The survey results support what we believe is a long term trend of investors gravitating to the fiduciary model… Investors may increasingly seek the confidence that can come from working with independent RIAs who sit on the same side of the table and are required by law to put their clients’ interests first.”

According to the survey, 55% of new business coming to RIAs are coming from traditional full-commission firms.  Not much of a surprise, since that’s where most RIAs came from themselves, including yours truly.

It appears the trend is due to the fact that responsible practitioners want the same thing their seem to desire:  A high level of professionalism characterized by a `client-first’ fiduciary standard coupled with a non-conflicted environment.  

Frankly, it was the reason I began my journey to independence back in 1992; and, it’s gratifying to see that individual investors are finally catching on.

How To Use a CERTIFIED FINANCIAL PLANNER Professional

Jim Lorenzen, CFP®, AIF®

Jim Lorenzen, CFP®, AIF®

You’ve heard about certified financial planners – you’ve probably seen articles by them and some interviewed on television and radio!  Are these people the guru’s of all things financial?  Is a CFP® professional the only resource you’ll ever need?

Hardly.

First, a little background:  A CFP is required to meet certain experience, educational, and ethical requirements.  To fulfill the educational requirement, candidates must have a bachelor’s degree or higher from an accredited U.S. college or university and also master a list of nearly 100 topics on integrated financial planning through a CFP Board-Registered program.  The topics cover major planning areas such as:

  • General principles of finance and financial planning
  • Insurance planning
  • Employee benefits planning
  • Investment securities planning
  • State and Federal income tax planning
  • Estate, gift, and transfer tax planning
  • Asset protection planning
  • Retirement planning

The course of study can take up to three years to complete, depending on scheduling.  Today there are more than 300 colleges and universities across America offering CFP Board-Registered programs in their MBA programs.  Upon completion of the course of study, the candidate must pass a ten-hour exam, conducted over two days.  Board exams are conducted two times each year at selected locations across the U.S. on specified dates.

You’ll notice I indicated there are nearly 100 topics covering integrated financial planning.  There’s your ‘tip-off’.  CFP practitioners should be viewed as general practitioners.  Just as your family physician – probably a general practitioner – will refer you to specialists for various issues, the same should be true of your CFP.

A recent law school graduate, for example, must sit for his/her state’s Bar Exam to practice law.  During law school, subjects included contracts, torts (personal injury) crimes, real estate, taxation, evidence, constitutional law, estae law, procedure, and many other areas; but, you probably wouldn’t even want an attorney who ‘specialized’ in everything!  An estate lawyer may not be the one you want handling your personal injury case, just as you probably wouldn’t want a podiatrist performing a liver transplant.

Likewise, while CFP practitioners typically do provide comprehensive financial planning services, you should expect a good CFP to act as a ‘facilitator’ bringing together a group of legal, tax, insurance, and others who are experts in their respective fields in order to coordinate an integrated solution. 

If you find any advisor in any field telling you they can handle everything themselves, I would personally advise you run the other way.  My guess is they’re more interested in helping themselves than they are in helping you.

Jim

 

Jim Lorenzen is a Certified Financial Planner® professional and an Accredited Investment Fiduciary® in his 20th year of private practice as Founding Principal of The Independent Financial Group, a fee-only registered investment advisor with clients located in New York, Florida, and California.   IFG provides investment and fiduciary consulting to retirement plan sponsors and selected individual investors. Plan sponsors can sign-up for Retirement Plan Insights here.  IFG does not sell products, earn commissions, or accept any third-party compensation or incentives of any description.  Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader.  The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.

Member - Retirement Plan Advisory Group

The Retirement Plan `Shell Game’

Jim Lorenzen, CFP®, AIF®

Jim Lorenzen, CFP®, AIF®

I thought you might like hearing about an actual case history related to me by another advisor.  The names are unimportant because the practice is so widespread, you could probably substitute any number of the usual suspects.

A rep from a well-known, big-name insurance company called on an employer and talked him into transferring his plan and allowing the company to bundle everything for him.   `Bundling’ means the three main plan functions could all be packaged together by the insurance company:  Recordkeeping, administration, and investments.   In an unbundled plan, the three functions are performed by independent providers, usually under the watchful eye of an independent plan consultant, which provides the employer – our plan sponsor – with a system of ‘checks and balances’.

The reason for the change?  Well-known investment options and it would be cheaper!  In fact, for the employer, it was practically free!

The tooth fairy lives.

How did they do it?  The funds in the investment line-up were all ‘load’ funds and carried 12b-1 fees.   This is where the lack of oversight reveals itself.  The insurance company rep is the investment salesman as well as a salesman for the record keeper and administrator.  There’s an incentive to choose funds that charge 12b-1s because they traditionally pay revenue-sharing out of those 12b-1 fees back to the administrator, reducing the amount that the administrator has to charge the company or the plan!   

But, there’s more.  Quite often, as was the case here, the insurance company also charged a wrap fee, which is not part of the 12b-1 and almost always hidden.  Even though not all the 12b-1 fees went to revenue sharing, most of it did, as well as the wrap-fee!   What’s worse, the amount of the 12b-1s that didn’t go to revenue sharing was not being returned to the participants in the plan!

All of this was accomplished so that:

  • The representative could make greater commissions without having to charge the employer or the plan,
  • The employer could move to a `cheaper’ plan – it actually turned out to be more expensive, and
  • The insurance company could make more money since the revenue-sharing hid the true cost of providing needed services, at the expense of participant’s retirement returns

Okay, what’s wrong with this picture?   Back in my management consulting days, if I chose a client solution based on the amount of hidden compensation a third party paid me, that would be called a ‘kick-back’.   Even disk jockeys know what payola is… and choosing investments based on the kick-back to service providers isn’t much different.

How about our employer!  He made an investment line-up decision affecting the participants’ retirement returns simply in order to reduce his own costs.   I’m no lawyer, but that smells like self-dealing to me and could be regarded as a prohibited transaction!

Our employer, by virtue of his decision to choose the insurance company and their funds, was acting as a fiduciary; and, under ERISA is required to act solely in the best interest of the plan participants and for the exclusive purpose of providing retirement plan benefits.  The key words are ‘solely’ and ‘exclusive purpose’.  That means just what it sounds like. 

Do you suppose that employer’s documentation will stand-up under fire?  

Does what our employer did sound like he fulfilled his fiduciary duty to you?

You know he’s trusting his vendor to `take care of everything’.  Wait ‘til he finds out the insurance company’s ERISA attorney works for the insurance company and not him.

No wonder brokers and agents don’t want fiduciary status; and, despite all the marketing material, are actively fighting the DOL and in congress to remain free of it.

Wait ‘til the employer finds out:  He’s a fiduciary.  His vendor isn’t.  And, he’s the one who will have to produce his own documented process for choosing the provider.

Wait ‘til he finds out he actually had the low cost solution before the change!  All the appropriate expenses were being paid by plan participants and the plan, anyway – and without the added drain of all the ‘kick-backs’.

How do you think your plan would ‘score’ on the fiduciary scale? 

When was the last time you had your plan benchmarked for all three main plan concerns:  (1)  fees and expenses, (2) services, and (3) investment line-up?

Smart plan sponsors are looking into this now – before the disclosure rules take effect and employees begin banging on the door.

Jim

 

Do you make decisions regarding your company’s retirement plan?   Stay ‘in the loop’ with Jim’s Retirement Plan Insights!  You can subscribe here!

 

Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER™ and an Accredited Investment Fiduciary®  in his 20th year of private practice as Founding Principal of The Independent Financial Group, a fee-only registered investment advisor with clients located in New York, Florida, and California.   IFG provides investment and fiduciary consulting to retirement plan sponsors and selected individual investors.  IFG does not sell products, earn commissions, or accept any third-party compensation or incentives of any description.  Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader.  The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.

Investors Vote on Washington

Jim Lorenzen, CFP®, AIF®

Jim Lorenzen, CFP®, AIF®

It was interesting to watch the markets last week as our elected politicians enjoyed spending much of the entire last two weeks of July grand-standing in front of the cameras on a daily basis – and somehow magically managing to stay on camera right up to the time they left town for the August recess.

As they kept talking about the impending ‘crisis’ and the potential downgrading of the government’s debt (Treasuries), the pros on Wall Street were selling stocks and buying the very debt that no one would presumably want – the same debt that would presumably lose value after the downgrade.   If that doesn’t reveal a lack of confidence in their handling of the economy, I don’t know what does.  The pros were willing to buy `safe’ Treasuries, even if downgraded resulting in higher rates and lower prices in the future, than stay in stocks!  It really doesn’t sound like a professional strategy, does it?

What does this mean to the individual investor?   It’s unclear, at least to me at this point, how much of the selling was done as part of an asset management strategy and how much was done simply to raise cash in order to meet redemption requests by individual investors. 

Short-term volatility has always been a part of stock market investing.  Many of us can remember the early ‘90s when a 50-point swing in a single day was so unheard-of (at the time) that trading curbs were installed once a 50-point move occurred!  Today, 50-points seems like a day off!   If the institutional selling was done in order to meet redemption requests, I fear many of those individual investors – once again reacting to headlines – will once again get ‘whipsawed’ by the markets.

If past experience is a guide, most of the individual selling was likely instigated by individual investors acting on their own; and very little, if any, was done by investors working with advisors who have them allocated with a long-term plan in mind.  Give it six months – say, March – It wouldn’t surprise me to see the markets recovered and the same people buying back in at higher prices.

Jim

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Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER™ and an Accredited Investment Fiduciary®  in his 20th year of private practice as Founding Principal of The Independent Financial Group, a fee-only registered investment advisor with clients located in New York, Florida, and California.   IFG does not sell products, earn commissions, or accept any third-party compensation or incentives of any description.  Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader.  The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.  The Independent Financial Group does not sell financial products or securities and nothing contained herein is an offer or recommendation to purchase any security or the services of any person or organization.

 

Written by Jim Lorenzen, CFP®, AIF®

August 9, 2011 at 8:10 am

The 401(k) Landscape in Simple, Plain English

Jim Lorenzen, CFP®, AIF®

Jim Lorenzen, CFP®, AIF®

You’d be surprised how many business owners think their 401(k) plan is free.  It’s a ridiculous assumption, but many believe it.   It’s not their fault, though.  The landscape were designed to be confusing, they couldn’t have done a better job of it.

Retirement plans are regulated under the Employment Retirement Income Security Act (ERISA) with the purpose of protecting plan participants.  Once you realize that the plan participant, not the plan sponsor, is ERISA’s priority, you’re on your way to understanding fiduciary liability.

Now, I’m not an ERISA attorney, nor did I stay in a Holiday Inn Express last night – and plain English explanations require a little over-simplification, so I’ll take a shot at it.  But, be sure to discuss this with your attorney.   Okay, here’s the oversimplified, plain English inside look:

Who’s a Fiduciary?

If you sponsor a plan, you’re a fiduciary under ERISA.  If you make decisions concerning the plan, you’re a fiduciary, regardless of your title – you can be the company janitor and still be a plan fiduciary.  If you give plan advice, you can be considered a fiduciary – even if you’re a receptionist.  The fiduciary’s primary responsibility is to the plan, i.e., plan participants.

Why it’s important:  Fiduciaries can be held personally liable for their decisions.  Yes, personally.  No corporate veil protections.  ERISA won’t allow plan fiduciaries to hide behind the company when participant money is involved.   Problems generally arise when a fiduciary is held to have breached their fiduciary obligations with regard to the plan.  Most often, this happens due because of a failure to follow and document a prudent process in carrying out their duties or when a `prohibited transaction’ occurs – something that’s a little too complicated to go into here; but, it is a issue worth discussing with your ERISA attorney.  Note:  You need an ERISA attorney.  The one you use for your estate plan isn’t the one you need.

The Players

  • Plan Sponsors:  Individuals or companies that sponsor 401(k) plan(s) for their employees.
  • Plan Fiduciaries:  Those who make decisions regarding the plan.
  • Plan Participants:  The employees who each have their own retirement accounts inside the plan.
  • The Record Keeper:  Generally the plan provider.  The record keeper makes sure plan assets are recorded to participant accounts and provides reporting services.  These are not fiduciary functions; they’re administrative.  Plan providers are vendors.
  • The Administrator:  A TPA (third party administrator) Handles administrative duties, i.e., discrimination testing, IRS filings, fee payments, plan amendments, etc.  None of these are fiduciary functions; they’re administrative.
  • The Plan Financial Advisor:  Traditionally, this has been the plan salesperson who sells the `bundled’ solution to the employer for a commission.  This role is changing drastically as more plans are using fee-only Registered Investment Advisors to provide plan consulting services instead of commission-based brokers, for reasons you’ll soon see.
  • The Plan Investment Manager:  The investment fiduciary – the one who makes the investment decisions.  The one who has the final say on the investment line-up (which funds and options you include) is the investment manager; and this IS a fiduciary function.  You may think you’re not the manager; but you’d better consult your vendor agreement – chances are YOU are the investment fiduciary.

The `Shell Game’

Since plan sponsors are becoming more aware of their potential liabilities, plan providers have come up with a marketing gimmick.  They call themselves `co-fiduciaries’ in their marketing material, but expressly avoid any such liability by limiting their `advice’ to line-up `recommendations’  and participant education, i.e., they do not provide actual investment advice to participants.   The marketing leads sponsors to believe the provider is `taking care of everything’, but they’re sadly mistaken.   Remember, the provider is still only a vendor.  The choice of provider is a fiduciary act.  The fiduciary must act in the best interest of the plan, i.e., the participants.

Most vendors like selling a ‘bundled’ solution.  The reason is simple:  It’s easier to sell and they can make the plan look `free’ to an unsuspecting plan sponsor.

Note:  Our government is designed with three branches:  Executive, judicial, and legislative.  The purpose of the design is to provide a `checks and balances’ so that no one branch can control government.  Indeed, this hasn’t always worked, particularly when one party controlled all three branches.

A good plan has three components:  Recordkeeping, administration, and investment management.  When these three functions are handled under a ‘one-stop shop’, it’s often a recipe for abuse, with the plan sponsor left on the hook as the fiduciary holding the bag.

Example:  ABC Wigits wants a `free’ plan.  The company president is told by a vendor they can handle everything!  They are a third-party administrator who can handle design, record keeping, and everything else, top to bottom.  What’s more, it’ll be dirt cheap!

It’s all done with revenue-sharing – something I liken to `kickbacks’ – TPAs hate it when I use that term.  But, you tell me what it is when money is steered to specific mutual funds who, in turn, pay revenue sharing to the TPA?   And, some mutual funds companies pay higher revenue sharing than others – so, guess which ones get chosen for the fund line-up?

Would YOU call that a fiduciary best practice on behalf of your participants?   Choosing revenue sharing funds is a common practice, with the `kickbacks’ used to defray the fees TPA’s charge to the account balances of plan participants.

Do you doubt the plan’s commissioned sales person is selecting funds that pay the most revenue sharing?  After all, if s/he’s commissioned on the revenue generated for the TPA firm, that could represent a conflict of interest.  No wonder, they don’t really want fiduciary status for investment selection.

There’s nothing illegal about any of this.  Indeed, responsible TPAs are now getting out front by disclosing all revenue sharing used to offset fees and are not trying to line their pockets.  But, that doesn’t get plan sponsors ‘off the hook’.  After all, they are the ones charged with having a documented process for the selection of all service providers, including the investment line-up.  And, eliminating conflicts of interest is an obvious place to begin.

Staying Out of Trouble

Here are five simple tips – again, in oversimplified plain English. 

  1. Avoid questionable revenue sharing arrangements that could influence fund selection.  Do not use your TPAs in-house investment advisory firm.  Keep a Chinese Wall between all players.  TPA-administered plans with no financial advisors are even worse because these payroll providers will offer mutual fund lineups while clearly stating they are not offering advice or acting in any fiduciary capacity.
  2. Use an independent plan advisor to develop an investment policy statement (IPS) with plan trustees, conduct vendor searches, provide education at both the plan level (fiduciary) as well as the participant level, where the need is for real help, i.e., advice beyond education.  While a ERISA 3(21) fiduciary advisor can advise on fund selection, asset allocation, and investment line-up, they can help plan sponsors who want to truly minimize their liability by helping the sponsor conduct an independent search for an ERISA 3(38) investment manager – which truly transfers the responsibility, and liability, for investment selection to the manager.  While liability is greatly reduced, it’s important to remember, the selection of a 3(38) advisor is still a fiduciary act, and you need a prudent process for selection, as well as the in-house education and participant advice component.  Your independent 3(21) plan advisor will also be providing monitoring and oversight of your 3(38) managers and, of course, the independent advisor works for the client, not the TPA or record keeper.  Your advisor is your guide to an independent, documented, prudent process for the fiduciary issues ERISA addresses.Remember, an investment advisor who is not independent and works for the TPA will always have a dual loyalty.  A loyalty to the client, sure; but, also a loyalty to provide a mutual fund line-up that will produce the most kickbacks – sorry, revenue sharing fees – to the TPA firm.  An independent advisor is paid from the plan on a fully-disclosed basis and has no incentive to provide revenue sharing for the TPA – indeed, the advisor works solely for the plan and in the best interest of plan participants – and that’s what ERISA is all about.
  3. Use an independent ERISA attorney.  The TPA’s attorney, like the sales rep, works for the TPA, not the plan sponsor.  Only an independent ERISA attorney will always act as an advocate for the client.  Remember, the in-house attorney doesn’t have an attorney-client relationship with you.  If a problem arises, guess which side the attorney will take!
  4. Avoid using a ‘one-stop shop’.  Checks and balances are one and the plan sponsor is virtually ALWAYS left as the true lone fiduciary at the mercy of the other players.  Besides, suppose you’d like to terminate one service provider, i.e., after terminating the TPAs legal department and/or investment services, how do you maintain a working relationship with their administration arm when bringing in others to handle those services independently?
  5. Don’t use your payroll company to run your 401(k) plan.  The two largest payroll providers in the country see 401(k)s as a natural ‘add-on’ profit center; but payroll services are an automated, computerized function, and too often they seem to run their 401(k) plans the same way.  While they talk about ‘seamless’ integration, I’m not so sure it’s all that seamless.  Plan administration has little to do with payroll.  The tasks of plan administration, record keeping, investment management, and plan advisory services are simply too many balls to keep in the air.  More importantly, the `checks and balances’ plan sponsors need is missing.  Further, they seldom if ever offer any real investment advice – nor do they offer a co-fiduciary role.  My favorite story is about the TPA/payroll provider `advisor’ who suggested a client add a small cap fund to the lineup and then insisted it wasn’t financial advice, just a suggestion.

This is rather short and admittedly over simplified.  Talk to an independent ERISA attorney and an independent plan consultant.  They’ll help you through the process of helping you put together your own independent financial group of service providers, each working for you, with loyalty only to your plan. 

Beginning next year, this issue will likely show up on the evening news!  The reason? New laws kick-in requiring plan providers to fully disclose all fees on participant statements, which means participants will likely start knocking on the doors of plan sponsors asking some questions.  Plan sponsors, and participants, who thought their plans were `free’ will likely be in for a shock – and without a documented process, answering questions may prove difficult, especially when the questions come from disgruntled former employees.

Remember, the buck stops with the one who makes the final decision.  And, delegation of authority IS a decision.

Jim

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Jim Lorenzen is a Certified Financial Planner™ and An Accredited Investment Fiduciary® in his 20th year of private practice as Founding Principal of The Independent Financial Group, a fee-only registered investment advisor with clients located in New York, Florida, and California.   IFG does not sell products, earn commissions, or accept any third-party compensation or incentives of any description.  Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader.  The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.  The Independent Financial Group does not sell financial products or securities and nothing contained herein is an offer or recommendation to purchase any security or the services of any person or organization.