Created in 2002, QP Consulting sought to fill the void of retirement plan specialists in the small and mid plan market. QP operates on a fee-only basis and accepts no compensation from third party vendors, thereby assuring its independence from them. Its fully disclosed revenue comes only from its clients, which helps to avoid conflicts of interest.
QP Consulting is an SEC registered investment advisory firm that focuses on the needs of corporate retirement plan’s trustees and their employees. We believe that the goal of a retirement plan is to provide participants with the necessary resources and information to determine their retirement needs and then guide them down the path to success.
There are a number of factors that make QP Consulting truly different from our competitors. The following are the items that we feel are most important:
The investment advisor to a retirement plan should be free from any real (or perceived) conflicts of interest. QP Consulting’s founder worked in prior jobs on behalf of the vendors. In these roles, he was able to see the many conflicts that come into play in the brokerage world and the vendor world. There are obvious conflicts like recommending an affiliates investment manager or trust company that most plan sponsors can easily see. What is more difficult to vet are the undisclosed shelf space arrangements, exclusive sales agreements, and soft dollar revenue sharing or bonus compensation programs that brokerage firms and vendor firms participate in. QP Consulting can help plan sponsors and investors navigate this maze to provide a solution that works for you and your employees.
With Fiduciary being the industry buzz word of the day, it is very difficult for Plan Sponsors to analyze the many shades of gray that are being marketed. Some provide little protection while a limited few actually help to reduce Plan Fiduciaries liability. QP Consulting can be engaged as either an ERISA 3(21) fiduciary or ERISA 3(38) investment manager. While the appropriate arrangement depends on the client and their needs, many prospective clients we meet with are not served in either capacity today. If you do not have a contract with your advisor, you are not being properly served. If you have a contract with exclusionary language that simply provides fiduciary guidance, you are also likely not being served. We can go beyond guidance and provide tangible advice that can help you significantly reduce your fiduciary liability.
Plan Sponsors should seek out prudent investments that can be backed by a legally sound, academically oriented, and cost effective methodology. At QP Consulting, we can provide sound advice that gets us away from picking the four or five star fund of the year, and focus on long term investments that will provide our participants with accurate asset class exposure at a reasonable cost.
The advisor to a retirement plan should have consulted with many businesses and organizations over the course of many years in the area of qualified retirement plans. Too often, investment advisors are distracted by the allure of selling additional products and services to plan participants. These activities are a nuisance at best and, at worst, may create conflicts of interest for the plan sponsor and investment advisor. At QP Consulting, we have broad industry experience that allows us to constantly provide updated and innovative solutions to you and your plan participants.
What every sponsor of a retirement plan should know is that ERISA holds them to the highest standards of being a prudent investment expert – even though they are almost never investment experts. There is a solution to this conundrum.
The Employee Retirement Income Security Act (ERISA), the body of law that governs qualified retirement plans such as 401(k) plans, has a mechanism by which a plan sponsor can get rid of its responsibilities and liabilities for the selection, monitoring and replacement of plan investment options.
The sponsor can do this by retaining an investment advisor that accepts transfer of these responsibilities and liabilities from the sponsor. This is done through a written contract between the sponsor and advisor in which the advisor is legally bound as an ERISA section 3(38) investment manager. By signing this contract, the advisor becomes an ERISA section 405(d)(1) independent fiduciary to the plan which makes it solely responsible and liable for its investment decisions concerning the selection, monitoring and replacement of plan investment options. A plan sponsor, however, always retains the duty to select, monitor and replace the investment manager.
Few Advisors Are Willing to be Fiduciaries
Few advisors to retirement plans will accept transfer of such significant fiduciary responsibilities and liabilities. The great majority of advisors offer plan sponsors only “help” or “assistance” in carrying out the sponsors’ investment-related fiduciary duties. This help is comprised of monitoring services, facilitations of manager searches, checklists and other kinds of busywork. None of these services do anything to help plan sponsors rid themselves of the significant responsibilities and liabilities they bear under ERISA.
The “Co-Fiduciary” Advisor – Buyer Beware
Some sponsors of ERISA-governed retirement plans have become aware that the advisors to their plans should wear the “fiduciary” label. The retirement plan industry has responded to this by creating a marketing gimmick, otherwise known as a co-fiduciary. The term “co-fiduciary” has been hijacked by many in the industry so that they can turn non-fiduciary broker-advisors to retirement plans into fiduciaries. This invented co-fiduciary marketing term has nothing to do with the legal meaning of a co-fiduciary under ERISA law.
An advisor wearing the “co-fiduciary” label accepts no transfer of responsibilities, so there is no mitigation of liabilities for the plan sponsor. Such advisors simply refuse to accept from plan sponsors the transfer of significant responsibilities and liabilities for the selection, monitoring and replacement of plan investment options. This failure leaves plan sponsors holding the bag all alone and bearing all fiduciary responsibilities and liabilities with no offer of real help from Wall Street non-fiduciary broker-advisors that wear the “co-fiduciary” label.
There is a Clear Choice
Sponsors of retirement plans have a clear choice. Retain an investment advisor that’s an ERISA section 3(38) investment manager and transfer significant fiduciary responsibilities and liabilities to that qualified advisor. Sponsors that do this are then no longer liable for selecting, monitoring and replacing plan investment options. The other choices are to retain a plan investment advisor that’s an ERISA section 3(21) “co-fiduciary”. While this does not transfer the same level of liability, we have found that it can be a useful stepping stone for Plan Sponsors that have only had non-fiduciary investment guidance in the past.
This choice is an obvious and easy one when plan sponsors are informed fully about it.