Los Angeles partner Bruce Ashton was quoted in a PlanAdviser article titled “The Roll of the Adviser.” The article discusses how the vacated fiduciary rule may have a lasting impact on how plan sponsors scrutinize rollover advice from advisers.
Bruce noted that he often hears employers say that when a former employee remains in the company plan, the company consequently takes on additional fiduciary responsibility and risk for someone who no longer even works there. “If you assume that former employees are more likely to become disgruntled, to become ‘squeaky wheels,’ there is that risk,” Bruce said. “But as long as the plan is operated appropriately and the sponsor carries out its fiduciary responsibilities properly, it is not giving its former employees much to squeak about.”
Weighing the pros and cons of departed employees staying in company plans, Bruce said that “[t]he pro of lower costs generally outweighs the cons of squeaky wheels and having to ensure that former employees get all the required notices.”