Self-Directed 401k - One Brokerage Account

[austin3515]

We have a client that I am desperately trying to convince to go daily val. Presently all money is one master brokerage account and we (the TPA) are responsible for doing quarterly valuations and coordinating with the broker regarding investment trades needed (such as recurring deposits, and account rebalances). I'm sure others are familiar with this nightmare!

My question is, I seem to recall that once upon a time there was an article regarding what a fiduciary nightmare this was.

Does anyone remember seeing this article? Sounds like a stretch, but I've had fruitful results with similar obscure questions!!

[CTipper]

Why would this be a fiduciary nightmare?

It's an unmitigated pain in the administrative rear and you can never charge enough to make it attractive from a revenue point of view, but fiduciary? I'm not getting it.

You've got a finite amount of investment options. Those aren't your responsibility. Someone else is being paid to make sure that the appropriate ones are picked.

You've got quarterly valuations.

You've got more than 3 investment options and you let them change investments quarterly.

What you've got is a communication situation with your client. How often after receiving contribution amounts are you going to give the buys to the broker? How often, and when, are participants going to be allowed to rebalance their accounts? What's your promised turn around time for distributions and does the client understand that they won't be done until the prior valuation is complete?

The biggest problem we've found is with brokers who don't understand their role in the equation.

They don't buy or sell the dollar amounts you tell them to.

They add investment options and don't tell you.

They combine investment options and don't tell you.

Etc.

All things that make it a logistical nightmare, but nothing that's a fiduciary issue.

Christopher

[MSN]

You might find the following article helpful.

http://advisor.morningstar.com/articles/do...4299&pgNo=0