NU Online News Service, Jan. 11, 3:23 p.m. – The Profit Sharing/401(k) Council of America, Chicago, says its member companies are more worried about the legal risks involved with providing investment advice than they are about the cost.
The council recently surveyed 141 member companies and found that only 31 offer investment advice.
The council asked the 110 other companies to rate the importance of several different reasons for not offering advice.
On a scale of 1 to 5, cost earned an importance rating of only 2.0, the council reports.
The difficulty of picking a competent, independent advisor earned a 3.6 rating, and the difficulty of meeting federal standards for monitoring advice quality earned a 3.7 rating.
But the deterrent that earned the highest rating was the fear that an employer might prove to be liable for any advice that leads to a monetary loss, even if the advisor is competent and independent.
Council members gave fear of liability for any monetary losses a 3.9 importance rating.
The full results are available on the council Web site, at http://www.psca.org/data/advice2001.html