Plan Sponsors Have Fiduciary Duties to Follow During Adviser M&As

Employee Benefits Partner Robert Friedman spoke with PlanSponsor about what plan sponsors should do if their advisory firm is acquired, or if the firm they partner with keeps acquiring others. Plan sponsors should first find out whether and how the services their financial adviser provides will be impacted, then they will want to understand whether the acquisition will bring on any conflicts of interest that were not a concern before. Mr. Friedman recommends employers review the contracts they have with the advisory firm if it’s going through an acquisition. However, he notes that if the acquisition involves an equity-type transaction where the advisory firm is owned by another company or person, then it’s likely little has changed within the firm and its services.

“The plan sponsor may not need to do anything initially, but they will need to pay attention consistently to make sure that the advisory firm is still capable and competent,” Mr. Friedman said. If there is a change in the structure of the advisory firm, then plan sponsors will likely be asked to consent to a new contract. In this case, Mr. Friedman strongly encourages plan sponsors to ensure they understand the potential alterations that would occur as a result of the acquisition. “Those changes could be anything. It could be a change in the team that is servicing the plan sponsor, a change in fees or a change in the approach that the advisory firm takes when providing services,” he says.

READ: Plan Sponsors Have Fiduciary Duties to Follow During Adviser M&As