Even if ERISA does not cover the Thrift Savings Plan, it’s worth noting the exercise of this discussion may be worthwhile to those actually do bear ERISA fiduciary responsibility.
Conflicts of Interest
While diligence is to be applauded, that’s not to say you can’t carry it to an extreme. If fact, some folks are so hung up on fees, they sometimes fail to see the bigger picture.
Clearly, you wouldn’t pay more for 2 apples if you could get 3 for the same price, but would you pay more to get 2 oranges instead?
Despite this, 401k plan sponsors can better protect their employees, even when it comes to personal data, because that data is only acquired within the context of the service provider’s relationship to the plan.
You can squeeze a tube of toothpaste all you want, but that doesn’t change how much toothpaste it holds. Are we experiencing the same thing with 401k fees, or are they really dropping as much as we think? And, if they are dropping, are they dropping for the right reasons?
Once a person enters retirement, the number of scenarios proliferate. Unless the plan sponsor is a financial professional, it’s going to be a challenge to quickly comprehend all these options.
Today, the understanding of conflict-of-interest fees goes well beyond plan sponsors. Individual investors also understand how they can act as a better fiduciary for their own personal investments.
Therein lies the conundrum. In the current environment, it may be far easier to overlook the failure to meet benchmarks with adequate consistency than it is to ignore the du jour ad hoc definition of woke.
It may not immediately strike small business owners that they may not have complete control or access to their own retirement assets that sit within the company plan they sponsor. After reading this, they may have second thoughts about taking any unvetted actions.
Regulators (including the DOL) seem intent on splitting the baby in half by allowing two incompatible business models – one fiduciary with no self-dealing fees, the other non-fiduciary with conflict-of-interest fees – to coexist within the same market. Does this mean “fiduciary” has lost its inherent advantage?
