There has been a flurry of articles lately on the Department of Labor decision to ask for more guidance on the brokerage window option in company 401(k) retirement plans.
This option is often referred to as the SDBA (self-directed brokerage account). Charles Schwab has the Schwab Personal Choice Retirement Account (PCRA). Fidelity has the Fidelity BrokerageLink account.
I just read a great article by Ashlea Ebeling in Forbes about this issue. I thought that she stated the problem very well.
“The nanny state position is that employees will make dumb mistakes if given free reign to invest their 401(k) money. The alternate view is that a brokerage window gives investors the ability to build a bigger, better retirement nest egg. Are new safeguards needed? That’s what the DOL wants commentators to hash out this fall in response to its request for information regarding standards for brokerage windows. The DOL says it wants to make sure that employees are not exposed to undue risks from brokerage windows and that employers properly understand the scope of their ongoing responsibilities with respect to brokerage windows.”
My clients that use the SDBA brokerage window in their company 401(k) retirement plans are big boys and girls. They take full responsibility for their investment management decisions.
The investment advice relationship that my clients have with me adds another level of safeguards.
I am surprised that the increased demand for brokerage window options in company 401(k) retirement plan accounts does not send a clear message to the Department of Labor.
Individual company 401(k) retirement plan participants are voting with their feet. They want better investment options on the company 401(k) retirement plan menu. And they want investment advisors involved in their company 401(k) investment management decisions.
Ric Lager
Lager & Company, Inc.
