Is the person who assisted your company in installing your retirement plan an adviser or salesman? How do you know that they put your interest first and not their own bottom line? How can find out the answer to this questions? I have provided some retirement plan red flags below that may indicate that you are working with an investment salesman as opposed to a adviser.

1. +1% mutual fund fees: If the majority of mutual funds offered within 401 (k) plan have fees in excess of 1%. There are over 25,000 mutual funds in the U.S. with fees ranging from 0.02% a year to 3% or more. There are many mutual funds that offer the exact same underlying investments with a higher fee. A well designed plan will have funds with fees ranging from 0.10% all the way to up to 1.4%. Anything more than that and the fees are going to significantly eat into your returns.
2. Majority of mutual funds from the same fund company. Advisers should be working with you to develop a fund line up with the lowest fees possible. A platform that has an” open architecture ” allowing advisers to seek out the lowest fee and best performing mutual fund from multiple fund family’s is essential aspect of developing a quality retirement plan.
3. No named fiduciary. If you have an adviser who is a fiduciary, they will often be “named” in at least one plan document. Normally a fiduciary will go out of their way to let you know that they are held to fiduciary standards.
4. You don’t know how your r plan adviser is being paid. If you don’t know how the adviser or broker is being paid they are likely getting a “cut” of mutual fund expenses and or sales charges. This means that you are likely not in the lowest fee share class.
5. No investor policy statement. An adviser well versed in fiduciary standards and ERISA law knows that having a solid investor policy statement in place is essential to ensuring that all parties involved understand the goals and objectives of the plan.