Is your advisor compensation 'level?'
If you use a 'broker,' compensation may vary based upon the different fees in the various share classes of your investment plan lineup that may create a conflict of interest, even if the broker appears to get paid a level rate. [The new DOL Fiduciary Rule that is currently expected to become effective June 9, 2017, addresses level compensation for your plan advisors.] Using a representative of a Registered Investment Advisor can provide level compensation.
Compliance audits are conducted by people. A spirit to intend to be compliant may go a long way should you be audited. Putting together all your fiduciary compliance documents in an organized and up to date record keeping system, for example, may demonstrate an awareness of various regulations and document how you comply with these rules.
A spirit of cooperation and your intention to comply may be recognized during the audit, which may lead to a No Action letter. Of course, there is more to it than appearing to want to comply. You really need to have your ducks in row.
Share Class Cost – Which Do You Use?
Did you know that one fund may have several share classes? Yes, there may be as many as eight or more share classes for one fund, each with a different ticker and each with a different cost to your plan participants. The reason for this difference is that people are being paid from this amount – the record keeper or the advisor or the TPA. If your record-keeper is already charging a wrap fee, the extra expense could be going to the record-keeper as well. If different share classes are offered, the fiduciary responsibility should be assessing this and assessing which share class you should be using.