The Importance Of Fiduciaries: A Lesson Well-Learned

You may recall a few months ago I gave my two-cents on a segment from Last Week Tonight with John Oliver that discussed the importance of using a fiduciary for a financial adviser – regardless if they are advising your company’s 401(k) or your own brokerage account. My intention is not to frighten anyone into a panic by writing this piece, but for some of you, the impact will be more profound that you thought.

It’s important to highlight, that you as an employee of any company have a legal right to inquire and receive regular information regarding the money you transfer to a 401(k) or any retirement savings firm. However, very few regularly inquire, either because they just don’t care, they never think about it, they’re trying not to think about it, or they have completely put their trust into their employer to make the best decisions on their behalf – all of these are incorrect ways of thinking.

If you are not being provided information on a regular basis, something is very wrong. If you are being provided information on a regular basis, glance at it every now and then.

The point is, you have the right to know and understand: SO ASK! There is no harm in asking.

I bring this up in particular because I wanted at address a very scary situation that happened to a friend of mine who recently left the same firm that I wasted 2 years of my life. In case you need a reminder, it’s THIS ONE. I will show you two very different scenarios and both show why you should never trust your employer’s retirement plan, UNLESS they can prove to you that they operate on a fiduciary basis.

My Experience:

When I was eligible to receive benefits from this employer, I decided to designate somewhere between 1%-4% of my pre-tax income to their retirement plan. My initial document to sign had a Morgan Stanley header, gave a brief description of the plan, the funds offered, and said this particular office was located in Jacksonville, Florida.