Investment guidance for a 401(k) plan

June 6, 2008

We'd like to hire an investment adviser to provide guidance to participants in our group practice's 401(k) plan. Is this allowed, and if so, must we monitor the advice given?

We'd like to hire an investment adviser to provide guidance to participants in our group practice's 401(k) plan. Is this allowed, and if so, must we monitor the advice given?

Yes to the first question, No to the second. A change in the pension law allows employers who offer plans with participant-directed accounts to hire investment advisers to provide participants with individualized investment advice. You needn't supervise the adviser's specific recommendations, but you must choose someone appropriate and monitor his or her actions in general. The rules impose a number of requirements for choosing an adviser and dictate how he or she must provide advice, so you may want to ask your pension adviser for further guidance to make sure you're selecting someone who'll pass muster.