Why you Shouldn’t Hire your Friends or Family as your Retirement Plan’s Financial Advisor

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They often say that it doesn’t matter what you know, it’s who you know. At one time or another, we have all derived a form of financial benefit because of someone we know. Maybe it’s a job and maybe it’s free Yankees tickets. It could be through someone we had previously worked with or through nepotism. Most of the time, “juicing people in” is harmless, but plan fiduciaries such as retirement plan sponsors could breach their fiduciary duty and/or commit a prohibited transaction by selecting plan providers just based on a previous relationship whether it’s familial or centered on friendship. This article is about why it’s wrong for plan sponsors to hire plan providers just based on the fact they know you, rather than what they know.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ary Rosenbaum, The Rosenbaum Law Firm P.C. | Attorney Advertising

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