A past Wall Street Journal article entitled, “The 19 Questions to Ask Your Financial Adviser,” originally grabbed our attention. We were drawn to read Jason Zweig’s Intelligent Investor column as investors and 401k plan sponsors, but it ended up resonating with us even more as benefits consultants.
The piece made us think of our firm’s health and welfare benefits consulting work — and how it’s often difficult for plan sponsors to differentiate between broker and consulting business models. Of Zweig’s questions, we believe these five are particularly relevant to our field of work and worthy of consideration by all plan sponsors:
Does anybody else ever pay you to advise me and, if so, do you earn more to recommend certain products or services?
Do you participate in any sales contests or award programs creating incentives to favor particular vendors?
Will you itemize all your fees and expenses in writing?
Can you tell me about your conflicts of interest, orally and in writing?
Do you earn fees as adviser to a service provider or program that you may recommend to clients?
We encourage you to read the entire article and consider its implications with respect to all benefit programs. In other words, to what degree is your adviser also a paid “producer” for certain vendors, products or programs?