How will fiduciaries be affected by use of a large, brand-name provider?
Brand-name should never be the deciding factor. Most brand-name providers will not assume responsibility as fiduciary of a plan; if the sponsor remains as the plan fiduciary, exposure to legal liability is unaffected by hiring a brand-name provider. Regardless of the provider’s market presence, periodic reviews are required to ensure the lowest cost and best service, since a current provider has little incentive to cut its profit margin. (return to top) (12) What are the ramifications of having a 401k that is part of a financial services agreement with a financial services institution? For example, my bank receives commissions for selling insurance products sold by its 401k provider, or my company’s attractive credit rate with a bank is tied to keeping its 401k with the bank. ERISA requires that a plan be operated exclusively for the benefit of the participants and beneficiaries. These arrangements are classic conflicts of interest and are termed prohibited transactions. ERISA may requ
