By Amy Glynn
We've seen compensation issues, product limitations and a number of potential "prohibitive transactions" limit the advice advisors can offer at both the plan sponsor and participant level. Many broker/dealers simply do not protect advisors on this front. In fact, some firms claim it's cheaper for them to handle one-off lawsuits than to go through the expense of redesigning their compliance protocols and paperwork. Other firms have retreated, claiming neither they nor their advisors who provide plan sponsor services are fiduciaries.
We made a strategic management decision a year ago to elevate our ability to deliver effective, qualified retirement plan solutions. I was charged with figuring out how to enable advisors to work with both organizations and individuals in an Investment Advisory Representative and/or Registered Representative capacity.
When you consider the major issues in the 401(k) marketplace today, this task is difficult:
-
When advisors work with an individual or a business, lines cross. To be effective, advisors should be able to render a perspective from either an IAR or RR viewpoint. Yet those in a position to give advice have been handicapped by different regulatory bodies at the client's expense. Additionally, there are times when an advisor needs to act in both an IAR and an RR capacity, based on client needs and product access. Until the regulatory bodies develop more synergy, we have a crisis in the advisor-client relationship.
Because of the blurry lines that exist between rendering advice and providing education, Commonwealth sought outside counsel to help develop a program that would protect our advisors -- and their clients -- in an uncertain environment. As a result, we:
- Implemented a universal retirement plan consulting program that enables advisors to work with any plan sponsor on any needs
- Require advisors conducting fee-based qualified plan business to have either the AIF or the CRPS designation
- Created fee-based options for both plan sponsor and participant advice functions
- Implemented protocols that -- in the event a participant chooses to work with an advisor individually and a product with varying compensation may be suitable -- clearly illustrate fees and services and allow clients to explicitly acknowledge that they have proactively selected these services
With this restructuring of our firm's operations, compliance protocols and educational requirements, we are proud of the results and confident this is the appropriate posture for all constituents and precisely in line with the direction of the administration in Washington.
Amy Glynn is the director of retirement consulting services at Commonwealth Financial Network, member FINRA/SIPC, a registered investment adviser, in Waltham, Massachusetts. She can be reached at aglynn@commonwealth.com.
