Back to the Future: Learning from the Past and Looking into the Future of 401(k) Advisor Fees

So, my past two Mondays have been bookended by being quoted in a pair of excellent articles concerning the operation of 401(k) plans, one in Pensions & Investments and the other in Fiduciary News. The interesting thing about them is that one is about looking backwards, and the other about looking forwards. In the Pensions & Investments article (you can find the link here, but subscription is required; sometime copyright litigator that I am, I don’t do work arounds on these things), author Robert Steyer asks – and looks to answer – whether, and what, plans and their lawyers learn from settlements of major disputes involving other company’s benefit plans. The answer he finds, with help from me and a number of other lawyers who often look closely at settlements entered into by other lawyers’ clients, is that lawyers who represent plans see such settlements as a free look at what went wrong and how to plan future actions to avoid ending up sued for the same things.

In the second article, Chris Carosa of Fiduciary News looks into the future of plan advising, and at the type of compensation schemes that might work best in the brave new world of advising 401(k) plans. Chris points out that changes in the industry present an opportunity to adjust the compensation model for advisors to plans but I, wet blanket that I can sometimes be, point out in the article that such changes may raise questions of both liability and responsibility for a plan’s investments under ERISA.

Comparing and contrasting the two articles is worth doing, particularly if it provokes you to think a little bit about the inevitable process of dragging plan operations and advisor compensation into the future. As Don Draper once said, “Change is neither good or bad, it simply is.”