Sometimes, change is anyone’s guess

An advisor asked me a very interesting question that had me thinking: since a good chunk of what an advisor does is helping a plan sponsor minimize their fiduciary duty, is it a proper plan expense to use assets to pay for something that protects the plan sponsor?


I thought it was a great question and I told the advisor that while it’s still a proper expense to compensate an advisor as a proper plan expense, the use of plan assets to pay an advisor for services in connection with something that would benefit a plan sponsor might be an improper expense in the future.


I will always contend that revenue sharing in 401(k) plans s only legal because the Department of Labor (DOL) and Congress hasn’t said it’s illegal when we know that record company payola is illegal. It’s possible that the DOL could one say that an advisor can only be paid from plan assets from services that are in connection to working with participants.


From where I sit, I don’t think there will be change because I think it would be too confusing to try to figure out the percentage of services that benefits participants or the plan sponsor. The DOL would probably not try to delineate the services just like the Internal Revenue Service has punted the ball on taxing accrued frequent flyer miles that business travelers get from travel that they didn’t pay for.


I don’t think I have the answer to the question, but I loved it because it’s a great topic to try to figure out. I’m

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