An ABG recordkeeper discovered a 7 person law firm retirement plan that had a broker collecting 12b1 fees and churning high priced mutual funds at over 100% annual turnover. The plan’s investment performance had underperformed the S & P by over 500 basis points over the past six years. And the broker was not performing its tasks as a Fiduciary.
We brought in a 3(38) Advisor who utilized open architecture to select new funds and moved totally away from 12b1 fees and commissions. Our new Advisor signed on as the Plan Fiduciary. The ABG firm moved them to a daily recordkeeping approach. Today, this plan has over $4 million in assets and is saving 50 basis points in fees versus the prior approach, and has beaten the S & P averages the past two years. The law firm is able to focus on practicing law and building their business, while the Plan Fiduciary Advisor is able to manage the plan on behalf of all the participants.
BEST PRACTICE LEARNED
Just because you have a group of professionals, albeit lawyers, who have a retirement plan, it doesn’t mean it’s always been set up properly. ERISA and retirement plan work is very specialized, so plan sponsors are better off finding a bona fide experienced expert Advisor and bona fide experienced expert consultant and recordkeeping firm. You may think you have the best plan possible, but all plans need a checkup periodically to make sure you’re keeping up with industry standards.