Self Directed Accounts in 401k Plan

[DP]

I have a 401k plan where several of the participants have their balances in self-directed brokerage accounts using various brokers. One of the HCE's was told recently by his broker, that all 401k plan assets now have to be under the same financial advisor.

Was that part of the new Fiduciary ruling?

[My 2 cents]

I have a 401k plan where several of the participants have their balances in self-directed brokerage accounts using various brokers. One of the HCE's was told recently by his broker, that all 401k plan assets now have to be under the same financial advisor.

Was that part of the new Fiduciary ruling?

I don't work with 401(k)s, but it sounds a bit fishy to me.

[rcline46]

Not so, but assuming the new rules stick, multiple advisors will be 'sticky' for the plan sponsor.

[DP]

I now have had two different Plan Sponsors tell me today that their financial advisor said all plan assets have to be under one financial advisor. Both of these Plan Sponsors use Edward Jones' brokers as their investment advisor.

[My 2 cents]

Not so, but assuming the new rules stick, multiple advisors will be 'sticky' for the plan sponsor

As noted before, I do not work with 401(k) plans, but would the plan sponsor be choosing the investment advisor for a self-directed account or would the participant do the choosing?

[DP]

The plan allows the participant to choose. Even though this option is available to all participants, only a few of the HCE's (usually the Plan Trustees) take advantage of using a self-directed account.

[A Shot in the Dark]

My firm works with and receives referrals from a few Edward Jones Advisors.

The information you are being told by the Edward Jones advisors is not a legal issue, but an internal decision made by the Edward Jones as an institution.

Our office has been informed that Edward Jones has made a number of internal decisions regarding 401(k) Plans and Edward Jones Advisors.

We have been told that Edward Jones advisors can no longer work with clients that have self directed brokerage accounts and that all 401(k) plans must now use an institutional platform. It seems that Edward Jones has decided that the American Funds Recordkeeper Direct and John Hancock are their preferred platforms.

For the last few months we have converted a few self directed brokerage account plans to both platforms. And of course Edward Jones advisors have lost a few plan whereby the client decided they liked self directed accounts and found another advisory firm to work with.

[DP]

Thank you! Very good information to pass on to the Plan Sponsors.

[QDROphile]

The plan sponsor has nothing to do with investment fiduciaries. The plan administrator has that responsibility. Generally, the plan sponsor should not be the plan administrator.

[jpod]

QDRO, you've been blowing that horn beautifully for years, and I agree with you, but while you may save a few souls here and there the reality is that the PS will be the PA 99.9% of the time.

[rcline46]

You get what you pay for. Of course you can, but are you willing to pay what said person would want?

[QDROphile]

Appointer vs appointee is not the issue. In a small business, they are likely to be the same. One important feature is that appointment has the effect of excluding unintended persons from potential fiduciary liability. Naming the employer as a plan fiduciary gives the DOL a broader net for indiscriminate fishing.