About & Philosophy
Since 2009, my work has focused on helping employers make better retirement plan decisions by bringing the same level of scrutiny to retirement plans used when evaluating other professional service relationships.
That work begins with understanding how retirement plans actually function. Over the years, I have reviewed thousands of Form 5500 filings and documented thousands of conversations with employers to better understand the relationships among provider compensation, services, governance, incentives, and participant outcomes. Those observations have been organized into a proprietary database that provides perspective on provider compensation and how retirement plans are purchased, evaluated, and monitored in practice.
Unlike most professional services, retirement plans often lack a straightforward way to evaluate who is being paid, how much they are being paid, what services they are expected to provide, and whether those services are commensurate with the fees being charged. Asset-based compensation, participant-paid expenses, multiple service providers, and information scattered across several documents frequently make informed decision-making more difficult than it should be. Bringing clarity to those relationships helps employers ask better questions, evaluate providers more effectively, and strengthen retirement plan governance.
My goal extends beyond identifying excessive fees or conflicts of interest. It is to help employers build retirement plans that are transparent, well-governed, appropriately priced, and aligned with the long-term interests of both the business and its participants.
My Philosophy as a Forensic Consultant
In the retirement plan industry, financial advisors typically charge asset-based fees and argue that they need to charge this way because they are “managing” the account, but they don’t actually do any managing. Instead, they typically choose a cookie cutter fund line-up, rarely if ever make any changes, and wait for participants to contact them.
They attempt to justify their fee structure and management services by misleadingly touting the value of selecting the investment options, acting as a fiduciary, and providing vendor search and benchmarking services. In reality, technology has commoditized their services, resulting in advisors often being significantly overcompensated at the participants’ expense which is rarely evident to either the participants or employers.
The real value lies in advisors taking the time to meet with participants and help them figure out how to determine an optimal retirement plan contribution level, create and monitor a budget, determine an investment risk level that makes sense, effectively allocate contributions between a Roth or traditional 401(k), and implement a debt repayment plan if applicable.
With regard to fiduciary services, simply having a fiduciary on the plan doesn’t mean much. The fiduciary needs to actually add value by taking actions such as constructing an investment policy statement, documenting plan sponsor and participant phone calls and meetings, and establishing an investment committee.
Just like any other service professional, the advisory fee should be based on time and value rather than a fee based on the value of the assets, which has no bearing on the value or level of services provided. Ideally, the employer should pay this fee, which has the advantages of being tax deductible, helping the employees save more for retirement, reducing fiduciary liability, and putting employers in a better position to assess the true value of the services and effectively compare to other providers.
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