We are switching from Principal to Vanguard for our small business 401k. We will pay the modest plan fees from the business account and each participant will only have expense ratios to pay out of their invested money. I think it's a fantastic plan. We are tentatively planning to work with Vanguard directly since I see no reason to have a 3rd party advisor involved (we do have our own TPA and he is good and charges a reasonable fee). However, one of my partners met with a 3rd party advisor from UBS and this advisor has scared him into thinking we have to have a 3rd party advisor. The advisor would charge 30 basis points on all AUM.
The advisor says one of his main functions would be to provide "documentation" of how and why we chose the funds on the 401k menu available to plan participants so that in the event of a law suit we could show the documented rationale for our decisions and why we have fulfilled our role as plan fiduciary.
Our 401k plan will be beautiful and simple with limited, well diversified fund options with target date defaults. Vanguard will provide assistance and advice in choosing the funds and will help each participant to get their investments set up.
Am I crazy, or is there really a good reason to pay a 3rd party advisor to do documentation (whatever that really means) and sit around and do nothing for the next 30 years while collecting money for "advising" our plan participants?
The advisor says one of his main functions would be to provide "documentation" of how and why we chose the funds on the 401k menu available to plan participants so that in the event of a law suit we could show the documented rationale for our decisions and why we have fulfilled our role as plan fiduciary.
Our 401k plan will be beautiful and simple with limited, well diversified fund options with target date defaults. Vanguard will provide assistance and advice in choosing the funds and will help each participant to get their investments set up.
Am I crazy, or is there really a good reason to pay a 3rd party advisor to do documentation (whatever that really means) and sit around and do nothing for the next 30 years while collecting money for "advising" our plan participants?
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