10/10/12 4:47 PM – 401(k) Consulting

I have updated my 401(k) page on the website to give a glimpse into the consulting I do to help companies improve their 401(k) plans.

Part of this is letting corporate executives and business owners know that they have a fiduciary responsibility and attendant liability for running the plan solely in the best interest of plan participants.

This is news to most of them and that is a shame.

What I am finding on nearly all the 401(k) plans I look at are a lack of proper policies and procedures and documentation to protect fiduciaries and to aid in managing the plan correctly. This is especially true for the investment portion of the plan.

Few plans I talk to have given their investment advisor an investment policy statement or any kind of guidelines on plan investments. The other bad thing is the very few advisors and brokers know they need to ask for such guidance. The vast majority of brokers have no clue about levels of fiduciary responsibility or the complexities of 401(k) investing and management. They are simply friends or brokers for someone in senior management.

This is not just disappointing, it can be dangerous, for participants and especially for business owners. Good luck in a partipant-generated lawsuit, guys. You can get sued by former participants who may have a grudge against the company. Or, you can be audited by the Dept. of Labor and try to explain why there are no directing policies or procedures in place, no regular reviews and no documentation.

If you have any control over a company 401(k) you really should talk to me about these issues and related issues I have not mentioned here. If you are a participant and can put me in touch with a senior executive, I can often improve your plan if I talk to decision-makers rather than your Human Resources Dept.

I do not charge to review a 401(k) and if I am hired to help fix it my fees are very reasonable, especially when compared to the potential liability facing plan fiduciaries.