#fiduciary

By:  Braden Priest, CFA®, Retirement Plan Consultant

Congratulations! Your company offers a retirement plan for employees to save for their future. Did you know you might now be a fiduciary as well? If you meet one of the criteria below, you may now have fiduciary responsibility and liability:

1. “Named Fiduciary” – The named fiduciary is most often the plan sponsor, who is typically either the owner of the company or the Board of Directors.
2. “Functional Fiduciary” – Even when you are not a named fiduciary, you may be a fiduciary if you either:
   1. Exercise any discretionary authority or control over the management of the plan or its assets.
   1. Have any discretionary authority or responsibility over the administration of the plan.

Who are Common Fiduciaries?

1. Employers and Plan Sponsors are often named fiduciaries or become functional fiduciaries through their actions.
2. Corporate Officers or Board of Directors are not automatically fiduciaries, but if they are responsible for the selection of other plan fiduciaries, such as an investment advisor or ERISA counsel, then they are acting as a functional fiduciary.
3. Retirement Committee Member are fiduciaries to the retirement plan if they are serving on your company’s retirement plan committee and they have discretionary authority or control over the plan and its assets.

Reach out to one of our Retirement Plan Advisors today to see if you might be a fiduciary to your plan, and more importantly, see how to mitigate the liability that comes along with such a responsibility.

Disclosure: BFSG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to BFSG’s website or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy (including those undertaken or recommended by Company), will be profitable or equal any historical performance level(s). Please see important disclosure information here.

Don’t be fooled if you’re told the labels “Advisor” and “Broker” are roughly synonymous. The differences between these two terms are broad and very important. Here’s why:

1. Fiduciary Status – Brokers must act in the best interest (“best interest” standard) of the client at the time the recommendation is made (this is more of a transactional relationship), and the broker needs to take into consideration only the brokerage accounts available (not the overall relationship). Advisors are held to the higher “fiduciary” standard, meaning they must always act in their client’s best interest.
2. Conflicts of Interest – Brokers are mainly compensated by commissions paid out on investment products they recommend to their clients. They can offer proprietary products and the broker-dealer can place material limitations on the menu of products the broker can offer. If that seems like an inherent conflict of interest, that’s because it is! A fee-only advisor is agnostic to the investment products used when managing assets.
3. Compensation Structures – Since broker compensation is often tied directly to a product recommendation or sale, there can be a natural incentive to recommend products with higher commissions as long as there are other factors about the product that reasonably allow the broker to believe it is in the best interest of the client. Advisors are compensated mainly by an agreed upon fixed fee that is not tied to any investment product. A fee-only advisor does not sell products.
4. Services Provided – A broker’s scope of services is generally much narrower and limited to recommending specific investments to clients, with some offering educational services. Advisors offer holistic services extending beyond investment recommendations, including social security analysis, pension election analysis, insurance reviews, tax planning, and financial planning.
5. Disclosure vs. Transparency – Broker disclosures are often long, lengthy, hard-to-read legal documents that even a financial professional would have difficulty understanding. Brokers must identify and at a minimum disclose conflicts of interest (note this does not apply to associated persons of the broker-dealer). Advisors adhere to higher standards of transparency and are legally required to provide their clients with their Form ADV, which is a disclosure brochure explaining the structure of their firm, what services they offer, and what they charge. Advisors must eliminate and disclose conflicts of interest and fairly manage unavoidable conflicts in the client’s favor.

CFP® professionals are committed to acting in your best interest. That’s why It’s Gotta Be A CFP®. Reach out to one of our Certified Financial Planner™ professionals if you would like to discuss how BFSG can help.

Disclosure: BFSG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to BFSG’s website or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy (including those undertaken or recommended by Company), will be profitable or equal any historical performance level(s). Please see important disclosure information here.

BFSG’s CERTIFIED FINANCIAL PLANNER™ professionals, Michael Allbee, CFP® and Paul Horn, CFP®, CPWA®, were invited to be guest speakers for the “It’s Your Money!” workshop series. For the “Investment World” session, Mike and Paul focused on how the investment world gets compensated. Learn the differences between brokers versus advisors, what does the word “fiduciary” mean, how to find an advisor, and most importantly how certain products are sold, and the way brokers/dealers are paid. Watch the replay by clicking here.

The “It’s Your Money!” workshop series is hosted by Peter Kote for his not-for-profit Financial & Estate Literacy. These workshops educate seniors to take control of their #financial, #estate, and #charitablegiving decisions.

Disclosure: BFSG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to BFSG’s website or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy (including those undertaken or recommended by Company), will be profitable or equal any historical performance level(s). Please see important disclosure information here.

BFSG’s CERTIFIED FINANCIAL PLANNER™ professionals, Michael Allbee, CFP® and Paul Horn, CFP®, CPWA®, were invited to be guest speakers for the “It’s Your Money!” workshop series. For the “Investment World” session, Mike and Paul focused on how the investment world gets compensated. Learn the differences between brokers versus advisors, what does the word “fiduciary” mean, how to find an advisor, and most importantly how certain products are sold, and the way brokers/dealers are paid. Watch the replay by clicking here.

The “It’s Your Money!” workshop series is hosted by Peter Kote for his not-for-profit Financial & Estate Literacy. These workshops educate seniors to take control of their #financial, #estate, and #charitablegiving decisions. You can check out the entire spring series here.

Disclosure: BFSG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to BFSG’s website or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy (including those undertaken or recommended by Company), will be profitable or equal any historical performance level(s). Please see important disclosure information here.

Benefit Financial Services Group (BFSG), a multi-faceted registered investment advisory firm serving both institutional and individual clients, is pleased to announce it has been ranked in Barron’s “Top 100 Institutional Consulting Teams” for 2021. The Barron’s listing can be seen here.

“BFSG serves as a fiduciary with every client and provides written acknowledgement of our fiduciary status. Our team-based approach ensures each of our clients has access to the knowledge and expertise
of our experienced retirement and investment professionals. We are proud that our team is raising the standards in the industry and our deep appreciation goes to our loyal clients and our dedicated professionals,” said Darren Stewart, a Principal, and Senior Retirement Plan Consultant at BFSG.

This annual ranking is performed by Barron’s. Registered Investment Advisors, Institutional Consultants, and Wealth Management Firms complete a questionnaire about their practice. Barron’s verifies the data
with the advisors’ firms and with regulatory databases and then they apply their rankings formula to the data to generate a ranking. The formula features three major categories of calculations: (1) Assets (2) Revenue (3) Quality of practice. In each of those categories they do multiple subcalculations. Barron’s measures the growth of advisors’ practices and their client retention. They also consider a wide range of qualitative factors, including the advisors’ experience, their advanced degrees and industry designations, the size, shape, and diversity of their teams, their charitable and philanthropic work and, of course, their compliance records.

Disclaimer: Awards and recognitions by unaffiliated rating services, companies, and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if the Firm is engaged, or continues to be engaged, to provide investment advisory services; nor should they be construed as a current or past endorsement of the Firm or its representatives by any of its clients. Rankings published by magazines and others are generally based exclusively on information prepared and/or submitted by the recognized adviser. The Firm did not pay a fee for inclusion on this list.