As we move toward the end of another year, plan sponsors should make time to review their 401(k) plan providers. Most employer plan sponsors use an investment adviser to help them with their 401(k) plans. This is a smart decision since most advisers are able to save plan sponsors at least as much as they charge. How can you tell if you are working with a good investment adviser? Top advisers:

  • Sign-on to your plan as a fiduciary. You should not hire or continue to work with an adviser who will not sign-on to your plan as a fiduciary. In addition, you should expect to receive the services outlined here.
  • Have a clean background.  Investment advisers who have been sued in the past are likely to be sued in the future. You don't have to work with problem advisers. Check the background of your investment adviser, or an adviser you are thinking of hiring, using BrokerCheck. BrokerCheck is a free service provided by the Financial Industry Regulatory Authority (FINRA), a financial industry regulatory agency under the direction of the Securities Exchange Commission (SEC). Any violation you find on the BrokerCheck website for your existing adviser should cause you to begin searching for another. Similarly, any violation you see should cause you to drop an adviser from the list of advisers you are thinking of hiring.
  • Do not accept soft dollar payments. Soft dollar payments are received by some advisers from mutual fund families. Consider only those advisers who practice fee transparency. These advisers will produce a bill for you each quarter for the services they provide. Their only source of revenue is the fees they receive from their clients.
  • Are objective. Don't hire an investment adviser that is also an asset manager or recordkeeper. For example, many employers use mutual fund companies as their investment adviser as well as asset manager and/or recordkeeper. No surprise, these investment advisers tend to overuse the investment funds their mutual fund family offers. This is a conflict of interest which compromises the investment advisers objectivity and may also be a breach of your fiduciary duty.
  • Work for investment advisery firms. This may seem logical, however, there are a lot of plan sponsors that hire accounting firms or banks to provide investment advisery services to their retirement plans. Hire a professional who works for a firm whose core business is providing investment advice. There is a major difference in the quality of advice you will receive.
  • Are able to work with everyone. Many employers use investment advisers who are required to recommend proprietary products or who aren't able to work with the entire universe of investment options or providers. Investment advisers who work for brokerage firms or mutual fund companies fall into these categories. Hire an adviser who has no conflicts of interest and will make the best recommendations for your plan and participants.

Finally, the SEC has put together a nice list of questions that you may wish to consider asking a prospective or existing investment adviser.


Robert C. Lawton, AIF, CRPS is President of Lawton Retirement Plan Consultants, LLC, an RIA firm helping retirement plan sponsors with their investment, fiduciary, employee education and compliance responsibilities. He may be contacted at or 414.828.4015.

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