Still Right After All These Years: Why True 401(k) Fiduciary Advice Can’t Be Mass-Produced
Back in 2017, W. Scott Simon wrote a remarkable piece titled, “What’s Wrong With Third-Party 3(38) Investment Managers?” on Morningstar’s site. His insight was sharp then, and it’s even more relevant today.
Simon warned that many so-called “independent” §3(38) fiduciary services were anything but independent. Too often, large fund companies, insurance platforms, and recordkeepers offered 3(38) services that were quietly tied to their own investment lineups, revenue arrangements, or platform restrictions. The result? Fiduciaries in name only—bound by corporate interests rather than the duty to act solely for plan participants.
At Ok401k, we’ve built our advisory approach to be the complete opposite of that model. As a true fiduciary advisor, we select and monitor every fund offered to our plans independently. We are never pressured or incentivized to include any recordkeeper’s proprietary funds. Our only obligation—and our only motivation—is to serve the best interests of our plan sponsors and their participants. We operate either 3(38) or 3(21). Would we sell more plans and would it be easier for us if we just offloaded the RIA service to some other top-quality national RIA like Morningstar, Lipper or Wilshire and just collect our fee? Of course we would.
“We believe a personalized fiduciary advice approach will increase participation, increase deferrals, and improve quality of investing by the saver.”
Terry Morgan
But we believe a personalized fiduciary advice approach will increase participation, increase deferrals, and improve quality of investing by the saver.
Unfortunately, many national advisory organizations have gone in the opposite direction. These “fast food” 401(k) firms are built for scale and efficiency, not independence or fiduciary depth. There’s a world of difference between the steak you grab at a drive-through and the one you savor at The Palm Steak House, Ruth’s Chris or Capital Grille—and the same holds true for fiduciary advice. These large firms mass-produce retirement plans, rolling in with slick presentations and outsourcing the actual §3(38) or §3(21) work to a third-party RIA. What’s left behind is usually a non-fiduciary customer service rep tasked with “managing” the plan. The sales team collects its 25 or 50 basis points while someone behind the curtain pretends to serve as the fiduciary.
Would you let your insurance agent tack an extra 50 basis points onto your mortgage just because he’s “doing a great job” selling you a policy? Ridiculous—yet it happens every day when big P&C firms sell retirement plans. The same laws of economics that exist in a mortgage exist in a 401(k) or IRA. Their agents can “educate” participants under ERISA, but they can’t deliver the kind of real, fiduciary-level advice that changes outcomes. Most employees are handed off to a toll-free number with a faceless representative they will never meet or an AI-driven website, while only executives get the personal attention that should belong to everyone.
This mass-production model may be efficient, but it misses the heart of true fiduciary duty—serving real people, not just a process. That’s why I wrote “I Have Seen the Enemy and It Is Us” for 401(k) Specialist: to remind advisors that our job isn’t to scale; it’s to serve. Real fiduciaries get back to basics—meeting participants where they are, helping them save more, and keeping their best interests at the center of every plan decision. Eight years after Simon’s warning, this concern has only grown. The same structural conflicts he identified now extend to the broader §3(21) marketplace, where national firms bundle services, outsource responsibility, and blur the lines of who truly serves as the fiduciary. Simon saw this coming. His message deserves renewed attention in 2025: true fiduciary responsibility cannot be mass-produced or outsourced to a conflicted institution. Independence, transparency, and loyalty to participants’ best interests remain the cornerstones of sound plan governance—and at Ok401k, they always will.
If we as serious 401(k) advisors truly want to be “real” advisors to our plans and participants, we need to get back to basics and take personal responsibility to the plan and the participants. After all, it’s their money and we may just see higher participation and savings. Isn’t that what we are here for? Advisors that are true fiduciaries and meet with the participants, I believe get better results long term. We may not sell as many 401(k) plans as the big fast-food organizations, but our results will be awesome.
SEE ALSO:
• I Have Seen the Enemy and It Is Us
Terrence Morgan, President and CEO of Ok401k, Inc., has been in the retirement plan business for over 23 years. Mr. Morgan is a securities and advisory licensed professional and holds an AIF and CPFA designation.
Terry’s experience began with the Principal in 1997, a leader in 401(k) plans in America. He strongly believes the market needs fiduciary advisors whose duty and loyalty is to the employer that sponsors the retirement plan, the employees and their beneficiaries. In 2018 Terry's company Ok401k became a Registered Investment Advisor (RIA). No commissions and no conflicts of interest.