I always say that sometimes, appearances mean everything. If something doesn’t look right, people are going to assume that something actually isn’t right.
It reminds me of my little hamlet, Oceanside. You have a small group of people who claim they are community leaders, but do a better job of getting jobs for their friends and family. Nepotism doesn’t mean something underhanded is going on, but it gives off the impression that it was. Hiring your brother as the advisor for your 401(k) plan even if you actually conducted a legitimate process of vetting advisors gives off the impression something isn’t right. People will snicker that the process was just a “horse show” as a smokescreen to confirm the family member as the advisor.
So much litigation over retirement plans is because something doesn’t look right. Just because things are right, impressions matter so most. Using mutual funds that all pay revenue sharing or using only proprietary funds run by the bundled provider are just some of the things that ERISA litigators look out for.
If you avoid transactions or situation that look bad, you can avoid a lot of grief in the courtroom.