Confero Summer 2013: Issue 3 - Page 11

Have you had a situation where you were advising a committee about an issue or taking a certain course of actions and they completely ignored your advice? W/O mentioning names can you walk the reader through it? I would say for our retainer clients, the answer would be no. I mean there is reason why they’ve hired us—they get their responsibilities, they understand the liability and the breadth of what’s expected of them. But for some of our project clients, we have seen where we’ve made a recommendation and they either have kind of pushed that recommendation aside or have not been timely in responding to that recommendation. So an example would be a recent benchmarking that we did for a client. There was an identified area of liability that came up in our review. It had to do with compensation received by an advisor out of the plan and the advice he was providing to employees. Our first area of concern was that his compensation seemed unreasonable. It was above what others were receiving for similar services. Secondly, his agreement with the client disclosed that he was not a fiduciary, yet he was providing specific advice to employees. This very well could lead to liabiilty for the fiduciaries of the plan. We were very clear to the client that they needed to address this issue sooner rather than later. At this time, they have yet to examine this further. How did it turn out? Are they still clients? We are hoping to assist them in an ongoing relationship; I think it’s a committee that’s fractured in their appreciation for the risk that they have, as fiduciaries, to their defined contribution plan. I think a certain segment of that committee recognizes the need to get ongoing assistance and then other parts of that committee feel they don’t need the assistance—that the plan just kind of runs itself. So, stay tuned. Are you conscious of “absent” behavior when talking with prospects or new clients and your exposure? I think it’s very difficult again to do what we’ll phrase as “turning the light switch on” for committees if they don’t want to hear it. Again, for most of them, this is not their full time job. They have a lot on their plate and it’s almost like this is a nuisance for them to have to carry out this responsibility. So the goal of the Westminster consultant is to be a consultant to “turn the light on for them,” kind of lead them to what best practices are, and hope they recognize the benefit of behaving as the appropriate fiduciary should. So what’s better: an empty head or a good heart? I think a good heart is certainly better, but at the end of the day the courts have been very clear—a good