When negotiating or refreshing a service agreement with your retirement plan advisor or consultant, there’s one main question all organizations should ask: “Are you dealing with a fiduciary?” Ensuring your provider is fully and always acting as a fiduciary is step one. It’s certainly not the only question, but it should be the first.
If your service agreement expressly and specifically outlines that all services will be provided by an advisor acting as a fiduciary, you’re off to a good start.
Beware of caveats, disclaimers, or conditions stating that the provider may not be acting in such a capacity under certain conditions. If any such language exists, unfortunately you cannot rely on the advice you are receiving to be fully objective. In these cases where an advisor is “dually registered” as an advisor and a securities registered representative, every time you seek a piece of advice from your provider you’ll be forced to ask them if they’re acting as a fiduciary in each and every moment.
Knowing your provider’s stance as a fiduciary will open the door for other important questions that need to be asked before signing a contract. When North Pier conducts a search for a client, we utilize a proprietary 17 page RFP document filled with due diligence questions to vet an organization’s qualifications, uncover potential conflicts of interest, and clarify service commitments. If the provider in question is solely a fiduciary, then it’s a little easier to move many questions about divided interests off the table. If a plan sponsor is not experienced enough to write a comprehensive RFP, and more importantly read between the lines of a candidate’s responses to their questions, they should seek outside counsel.