In this video titled “The Single Biggest 401(k) Advisor Mistake: Tibble Tort Lawyer Speaks Out” features an interview with Jerry Schlichter, a 401(k) tort lawyer, discussing common fiduciary mistakes made by advisors. Here’s a summary of the key points:
- Biggest Mistake: Advisors often fail to thoroughly examine the details of a plan. They must adhere to the standard of a prudent financial expert and should be familiar with benchmarks, performance, and fees for aspects like record-keeping and investment management.
- Small Plans Issue: Some advisors might overlook small plans, assuming they won’t be scrutinized. However, this is problematic as the Department of Labor (DOL) is increasingly focusing on fees, and private lawyers are more interested in smaller plans due to potential fee reimbursements.
- Reputational Risk: A serious reputational risk arises if an advisor is involved with a plan that has egregious facts exposed in the media or court. This can damage their entire business, even if it’s just one case.
- Revenue Sharing Concerns: Revenue sharing isn’t illegal, but problems arise when it leads to excessive fees. Advisors should recommend that clients obtain rebates for excessive fees and ensure future amounts are rebated to protect themselves and maintain integrity.
You can view the video here.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
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