Guard Against Investment Education Pitfalls 

DECEMBER 3, 2024

If you want to offer investment advice to your retirement plan participants, it’s crucial to avoid investment advisors who might expose fiduciaries to increased risk from conflicts of interest. The solution? Partner with a knowledgeable and experienced retirement plan recordkeeper — one who provides financial wellness education to employees, investment advice to employers and works alongside a co-fiduciary investment advisor to help plan fiduciaries make informed decisions about investment options. The right recordkeeper can make personal investment guidance a standout feature of your retirement plan.

Employees Need More Than Advice

To ensure the financial assistance provided to employees is appropriate, employers have a fiduciary responsibility to monitor the investment advisors they hire. Employers should review these key aspects:

• Whether the investment advisor is looking to sell other products or services to the employee.
• Consistency in the advice provided.
• Incorrect, discriminatory or otherwise harmful recommendations made during one-on-one meetings, potentially exposing the employer to potential legal issues.
• If the investment advisor is experienced (less experienced advisors may not have the depth of knowledge needed to offer effective advice to employees).

Many employees seeking help need financial wellness education, not just recommendations for their 401(k) account investments. In fact, a recent study indicates American workers are struggling and want assistance with personal finances:¹

Each employee should have the opportunity to work with their recordkeeper to update investment elections and/or request transfers from their retirement account online. If an investment advisor is unfamiliar with the recordkeeper’s website, or the employee experiences difficulties accessing their account during the one-on-one session, the employee may not follow through with the investment advisor’s suggested changes.

It’s vital to select an investment advisor who understands recordkeeper capabilities and therefore can provide more than investment insight. This ensures employees receive the education and guidance they need to plan for a financially secure retirement.

Impartial and Consistent Guidance

USI Consulting Group (USICG) believes a retirement plan recordkeeper is best positioned to provide retirement plan education to employees because:

• A significant portion of education is spent showing employees how to access and use available tools on the recordkeeper’s website.
• Employees receive largely impartial feedback and results from modules that can be accessed on the website.
• Members of the recordkeeper’s team provide consistent messaging to employees across in-person, over the phone, or online communications.
• The recordkeeper’s website easily allows employees the ability to consider many investment options such as target date funds and managed accounts.
• Recordkeepers provide robust online services geared around financial wellness education.

Holistic Approach

At USI Consulting Group (USICG), we are solely dedicated to employer-sponsored retirement plan (ESRP) consulting, ensuring that organizations are not exposed to potential conflicts of interest. Unlike some advisors who may offer advisory services to both employers and their employees for individual wealth management, we focus exclusively on ESRP consulting. This specialization allows us to work holistically with all employees, providing comprehensive and unbiased guidance tailored to their unique needs.