Rising Conflict of Interest for Retirement Plan Advisers?

Posted on April 7th, 2016 at 1:08 PM
Rising Conflict of Interest for Retirement Plan Advisers?

From the Desk of Jim Eccleston at Eccleston Law LLC:

Retirement plan advisers are moving into dangerous territory in offering some types of Target-Date Mutual Funds (TDFs) for their employers. InvestmentNews reporter Greg Iacurci has gone so far as to suggest that plan advisers’ decisions may involve a bribery-like situation.

Iacurci has taken a close look at how plan advisers choose their TDFs and found that financial service companies were using aggressive sales tactics to encourage plan sponsors to fill their plans with proprietary products offered by the companies. At the core of some of those aggressive sales tactics is record keeping discounts. According to Iacurci’s research, some record keepers were willing to waive the record keeping fees provided that the plan sponsor use the proprietary products of the asset management company affiliated with the record keeper.

Of course, it is not illegal to offer such a discount, but, “it almost feels like you’re getting bribed to use the target date”, according to Fred Barstein, founder and chief executive of The Retirement Adviser University. While offering discounts to plan sponsors may not always be wrong, it equally is likely that accepting those discounts is not always right. Plan advisers must be wary of accepting discounts to cut costs if that means that they will be providing a less suitable product to plan participants.

In addition, plan advisers might find themselves in the crosshairs of regulators. The Labor Department’s new universal fiduciary standard has made it clear that all conflicts of interest relating to retirement savings assets must be either eliminated or disclosed. Clearly, regulators are cracking down and plan advisers enter into discount deals at their own risk. 

The attorneys of Eccleston Law LLC represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.

Related Attorneys: James J. Eccleston

Tags: Eccleston, Eccleston Law, Eccleston Law LLC, James Eccleston

Return to Archive



If you find yourself in trouble with the regulators, call Eccleston Law, you won't regret it.

Rick R.


October 26, 2021
Former Advisor Fails To Reverse Bar After Alleged $1 Million Theft From RBC

A former RBC Wealth Management advisor lost his bid to reverse an industry bar, according to an appellate decision issued by the Financial Industry Regulatory Authority (FINRA).

October 25, 2021
Firms Walk Thin Regulatory Line In Referring Self-Directed Clients To Advisors

While online trading platforms have surged in popularity during the pandemic, brokerage firms view self-directed investors as a source of new clients.

October 22, 2021
TIAA Sues Former Advisors For Allegedly Soliciting Clients

Teachers Insurance and Annuity Association of America (TIAA) filed suit against three of its former Connecticut advisors for allegedly soliciting TIAA clients to join them at their new firm.