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Advisor Insights

More on the Troubling Framework of the Retirement Plan Industry

Contributor Scott Simon takes a deep dive into the ways plan sponsors may unwittingly expose plan participants to conflicts of interest.

In last month’s column, I shared a story that shone a light on the troubling framework of the retirement plan industry. The article received such a good reception--at least based on the feedback that I received in my email inbox--that I thought it worthwhile to expand further on the theme.

To review, I related how my registered investment advisory firm took over a 401(k) plan as the investment manager as defined in section 3(38) of the Employee Retirement Income Security Act of 1974. The plan’s new record-keeper--a well-known insurance company--was surprised to find out that it wouldn't have the power to select, monitor, and replace the plan’s investment options, such as including its lucrative proprietary stable-value fund, or SVF.