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ADVICE AND MANAGED ACCOUNTS

Fiduciary support

Fiduciary support for plan sponsors

Advice is an important way to enhance your participants’ financial well-being. We understand that offering 401(k) advice brings fiduciary responsibilities, and we’re here to support you so that you can oversee advice in your plan with greater clarity and confidence.

Our recent webinar, moderated by Randall Brown, Vanguard client success leader, and featuring Fiona Greig, global head of Investor Research and Policy, and Wendy Tyson, senior ERISA manager and former ERISA attorney, gives a comprehensive look at advice oversight. Below, we offer some key takeaways along with some resources that can help you navigate your fiduciary responsibilities.

Check out the full webinar here: A Fiduciary’s Guide to Offering In-Plan Advice  

 

Retirement plan sponsors are responsible for a prudent oversight process, including selecting and monitoring your advice provider.

Plan sponsor oversight responsibilities

When you follow a prudent selection and oversight process, you’re not liable for advice given to individual participants.

Read our commentary: Introducing Investment Advice While Avoiding Fiduciary Risk

The Department of Labor encourages plan sponsors to follow a thoughtful and well-documented process for selecting and monitoring your advice provider. 

How to use the READ framework

Our READ framework (Research, Evaluate, Ask, and Determine) is designed to provide you with a step-by-step road map for making confident fiduciary decisions.

See our guide: Advice Fiduciary Checklist

What do I need to know about advice litigation?

Advice legal cases have not questioned the value of employee advice itself but rather whether plan sponsors are following the proper oversight process.

Advice legal cases

Recent cases have focused on how 401(k) advice programs are structured and administered, including whether participant advice fees are reasonable.

Read the Advice Guy blog: Is My Managed Account Going to Get Me Sued?

Plan sponsors should evaluate the total all-in costs of both recordkeeping and advice services, ensuring that advised participants aren’t subsidizing other plan expenses.

How to determine if advice fees are reasonable

Consider the value being offered by the advice fees and benchmark those fees against comparable products.  

How to determine if advice fees subsidize other costs

It’s important for plan sponsors to understand the full fee structure of advice and recordkeeping to determine if advised participants are subsidizing other services.
Advice and target-date funds (TDFs) are complementary, not competing, solutions. Offering both can help you address the diverse needs of your participants at different points in their financial journey.

TDFs and advice

Learn why TDFs and advice each have a role to play in supporting your participants’ financial well-being.

Discover expert insights:
TDFs or Financial Advice? How About Both?
Addressing Diverse Participant Needs Through Personalization and Behavioral Coaching

Want to learn more about Vanguard advice and why it could be right for your participants?

Contact your representative.

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