Validation Institute recognizes advisers who meet ERISA fiduciary standards

• Key Insight: Discover how fee‑based fiduciary validation separates unbiased advisers from conflicted broker‑consultants.
• What's at Stake: Heightened ERISA litigation could expose employers and advisers to significant fiduciary liability.
• Supporting Data: Only 12 advisers from 10 firms currently hold the Validation Institute credential.
• Source: Bullets generated by AI with editorial review

What do Volition Group Founder Matt Bittner and Brian Uhlig, a senior partner with the Alera Group, have in common? They're among just a dozen benefit advisers from 10 consulting firms who've been formally recognized by the Validation Institute for avoiding potential conflicts of interest and actually adhering to fiduciary standards.

Several high-profile ERISA lawsuits filed against health benefit plan sponsors over alleged breaches in their fiduciary responsibility served as a catalyst to reward advisers who adopt a fee-based model for providing consulting, procurement and management services, which allows them to make more objective recommendations.

"We thought this would be a really good time to draw a very bright line between folks who are fiduciaries and those who are conflicted, and not just say that they are fiduciaries, but put a $100,000 guarantee on it that says they're not going to be named in any ERISA suit," explains Al Lewis, founder of the Validation Institute and Quizzify. 

Read more: Stop loosely using the word fiduciary

Under the criteria for receiving this recognition, advisers cannot accept commissions, bonuses or overrides from vendors associated with an employer client's health plans, though carrier commissions for the sale of ancillary products are acceptable. One hundred percent of any indirect compensation must be credited back to the employer. They also must use contracts that comply with disclosure rule 408(b)(2)(B).

Advisory firms that apply for the fiduciary adviser validation must pay to have their contracts vetted and annually renewed, as well as submit any updated templates. 

Walking the talk

"I viewed this as an opportunity to have a third-party validation of what I'm doing," Bittner says. "You can talk the talk everywhere in healthcare, but if you don't walk the talk in terms of being contractually obligated to act and behave in a certain way on behalf of your clients, then you're not doing much."  

After reading Lewis's 2012 book, "Why Nobody Believes the Numbers," Uhlig says there hasn't been a single vendor presentation that escapes the skepticism expressed in those pages. "I think a lot of this is just realizing that my clients are wholly unequipped to be able to make good decisions on their own," he explains. "They're just not trained or prepped, so I feel a responsibility to truly be a fiduciary on their behalf." 

Read more: Family feuds: Advisers navigate beneficiary designation disputes

Early adopters of the fiduciary adviser validation moniker like Bittner and Uhlig could help pave the way for their peers who are reluctant to join this movement, serving as canaries in the coal mine that spotlight the importance of always doing what's in a client's best interest on the health and welfare side of employee benefits.

"There's a lot of opportunity for people to lead with their values given how expensive healthcare has become," Bittner observes. "We are in a cost crisis, and I think the broker-consultant-advisory role is at the tip of the spear on helping employers meaningfully navigate that, and people could have a meaningful career if they take the steps to do so." 

Many brokers and consultants may be operating as part of an employment arrangement wherein they are unaware of all the compensation that exists with their clients or unable to go out on their own and have full transparency, he believes. Another issue, he says, is that they may fear reduced compensation by embracing a fixed-fee approach, especially with rising healthcare premiums spiking commissions.

Uhlig describes the fiduciary adviser validation process as eye opening for rethinking how consulting agreements are structured, and in his case, it reaffirmed that in he was heading in the right direction on the vast majority of what he was expected to do. 

Raising the possibility of many more ERISA court challenges being filed, Lewis notes that HR and benefits professionals tend to be extremely risk-averse, and so "if you can take one risk off their table, that's huge for them."