It's getting harder to find a good pension consultant: The Securities and Exchange Commission (SEC) is warning employers that some consultants fail to disclose their conflicts of interest, and that can cloud the objectivity of advice they give you and your employees.
To determine whether pension consultants are working for you (or pushing outsiders projects), ask them some or all of these questions:
1. Are you registered with the SEC or a state securities regulator as an investment adviser? Have you provided me with all of the disclosures required under those laws?
2. Do you (or your company) have relationships with the money managers you recommend?
3. Do you receive any payments from the money managers you recommend?
4. How do you prevent those relationships or payments from being a factor when you advise your clients?
5. If you allow plans to pay your consulting fees using the plan's brokerage commissions, do you monitor the amount paid and alert the plans when your fees are paid in full?
6. Likewise, under that system for paying your fees, what steps do you take to ensure that the plan receives the best execution for its securities trades?
7. Do you have any arrangements with broker-dealers that will benefit you if money managers place trades with them for their clients?
8. If you are hired, will you acknowledge in writing that you have a fiduciary responsibility as an investment adviser to the plan?
9. Do you consider yourself a fiduciary under ERISA with respect to the recommendations you provide the plan?
10. What percentage of your plan clients use money managers, investment funds, brokerage services or other service providers from whom you receive fees?