Employers Seek Consultants Without Conflicts of Interests

The Securities Exchange Commission (SEC) received support from the nation's employers in its investigation into conflicts of interest among the consultants that serve
their employee retirement plans, a newly released survey by PLANSPONSOR shows.

An overwhelming majority of 85 percent of so-called plan sponsors - employers who sponsor employee retirement plans - said it is 'extremely important' that their consultants are free of conflicts of interest. A further 15 percent said this was 'somewhat important.' Not a single respondent indicated that any semblance of a conflict of interest was acceptable.

"More than ever, plan sponsors value and rely on the unique expertise and perspective of consultants to help them fulfill their fiduciary obligations," notes Nevin Adams, Editor-in-Chief of PLANSPONSOR. "While more than half of
this year's survey respondents are relying on their consultant for compliance monitoring, plan sponsors realized that a perspective tainted by conflicts of interest not only provides no value, it presents a risk to the long-term interests of plan participants."

The survey described 'extremely important' as 'the consultant must be entirely free of conflicts.' 'Somewhat important' meant that 'some conflicts are acceptable, as long as they are disclosed.'

The results back up the action the SEC took earlier this year, when it asked a number of pension consultants for information regarding the practices, compensation arrangements and disclosures in providing services to defined benefit and defined contribution plans. Defined benefit plans are often called pension plans, while 401(k) plans are the most popular form of defined contribution plans.

Among other findings in the survey were:

-- Seventy-two percent said the relationship with an individual consultant is more important than the relationship with the firm itself.
-- Fifty-five percent said maximizing investment returns is their most pressing issue, followed by dealing with fiduciary responsibilities and educating employees about their retirement benefits, both at 49 percent.

You may like these other stories...

Here's a CPA who truly walks the walk. On March 15, Frank Ryan, CPA, departed San Diego, California, with plans to be in Ocean City, Maryland, by July 2 to teach a course at the Maryland Association of CPAs’ (MACPA...
When Theodore J. Flynn first joined the Massachusetts Society of CPAs (MSCPA) in 1970, it was a different world and a different profession.  The "Big Eight" were still headquartered in Boston. Vietnam War...
Accountant Rickey Charles Goodrich had it a little too good. Many bean counters would kill to serve as financial guru to the likes of Pearl Jam. Goodrich was hired in 2005, and the following year, he became the CFO of Curtis...

Already a member? log in here.

Upcoming CPE Webinars

Oct 30Many Excel users have a love-hate relationship with workbook links.
Nov 5Join CPA thought leader and peer reviewer Rob Cameron and learn ways to improve the outcome of your peer reviews while maximizing the value of your engagement workflow.
Nov 12This webcast presents basic principles of revenue recognition, including new ASU 2014-09 for the contract method. Also, CPAs in industries who want a refresher on revenue accounting standards will benefit.
Nov 18In this session Excel expert David Ringstrom, CPA tackles what to do when bad things happen to good spreadsheets.