PLANADVISER - September/October 2019 - 16

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A Fiduciary Duty for RIAs
Participants need to know about making rollover decisions in their own best interest
ADVISERS need to educate retirement ment account (IRA) into a 401(k) plan.
" Registered investment advisers
plan participants about their various
rollover options. As a recent survey
from Financial Engines found, 42% of
401(k) plan participants, ages 35 to 65,
who had recently departed a job were
unaware they could have left their
account balance in the plan.
Twenty-eight percent were unaware
that some retirement plan distribution
choices trigger tax liabilities and penalties;
51% did not know it is possible to
move money from an individual retireTALKING
POINTS
Small Businesses See Many
Possibilities in Offering 'Open' MEPs
According to a recent survey, 66% of 304 small businesses
currently not offering a retirement plan said they would do
so through an open multiple employer plan (MEP).
Asked why they would consider offering an open MEP:
* It's the right thing to do .................................................................................................................................................................................
* To attract the most talented employees ....................................................................................................................
* To retain employees ..........................................................................................................................................................................................
* To offer a benefit that most small businesses do not offer........................................................
* To be able to hire in a tight job market .........................................................................................................................
Asked what they view as the positive components
of an open MEP:
* Lower costs for their organization ..............................................................................................................................................
* Lower costs for their workers .................................................................................................................................................................
* A variety of fund options ............................................................................................................................................................................
* The help of financial professionals .........................................................................................................................................
* Lower liability risk for their organization ............................................................................................................................
* Administrative support for their benefits staff.......................................................................................................
* Fiduciary support .....................................................................................................................................................................................................
* Protections under ERISA for all employees ..............................................................................................................
Source: Empower Institute, " Open MEPs: A promising way to narrow the coverage gap "
63%
59%
59%
48%
37%
[RIAs] have a fiduciary obligation to
make sure their clients make rollover
decisions that are in their best interest.
And all financial advisers, regardless
of whether they're required to serve
in their clients' best interest, have an
ethical obligation to share with their
clients all of the options available to
them, " says Ric Edelman, co-founder
of Edelman Financial Engines and
chairman of financial education and
client experience at the firm.
Many of Ascensus' financial advisers
discuss rollover options with participants
during enrollment meetings, says
Ric Irace, the company's chief operating
officer (COO). In addition, " many financial
wellness programs now include
online videos and tools to help answer
participants' questions about rollovers
and withdrawals, " Irace says.
To make
rollovers
or
transfers
more efficient, eMoney Advisor LLC
offers this service to its participants
via an automated, online system,
says company Senior Financial Planning
Analyst, and Certified Financial
Planner®
, Brett Tharp.
Financial Architects Inc. offers the
same type of service, with its system
requiring participants to proactively
acknowledge that they have read
about their various options, says Larry
Steinberg, the firm's chief investment
officer (CIO). " With paper forms, they
are unlikely to read them and have no
clue as to what they are signing. "
For this reason, Unified Trust Co.
implemented a digital
rollover solution
on its platform, says Diana Jordan,
senior retirement plan consultant at the
company. The choices it offers participants
include working with an adviser
or a digital adviser, she says.
Besides failing to invest the money
55%
54%
49%
49%
47%
39%
43%
30%
they have cashed out, within the
60-day window-participants' most
common mistake, the experts say-
they also frequently forget the tax bill.
The plan's investment firm is required
to withhold 20% of their balance in
order to cover taxes, Steinberg notes.
" That 20% is just an estimate, " he
says. Participants may not realize that
they could need to pay even more. "
Finally, it would probably be helpful
for advisers to know that once a
participant accumulates $100,000 in
assets, or is approaching retirement,
he is more apt to want to work with
an adviser, regarding rollover options,
Steinberg says. -Lee Barney
16 | planadviser.com September-October 2019

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PLANADVISER - September/October 2019

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