Clear Road Ahead

As the Department of Labor and Congress zero in on disclosure of fees associated with qualified retirement plans, the independent broker/dealer Commonwealth Financial Network recently unveiled a new retirement platform, called Preferred Portfolio Services Retirement Solutions, which allows advisors to provide full transparency and disclosure to their corporate clients and plan sponsors.

The retirement platform, launched last October, is an offshoot of Common-wealth’s fee-based program, Preferred Portfolio Solutions. Timothy Nihill, manager of retirement products and services at Commonwealth, says the open architecture retirement platform “is more fiduciary fit,” because it discloses the fees being charged, as well as how fees are handled, and because it eliminates conflicts of interest with payments to advisors. “Top to bottom, there’s no question from the plan sponsor on who’s getting charged what and where the money is going,” he says.

In building the platform, Common-wealth joined with Benefit Street, a recordkeeper in San Ramone, California, to coordinate the handling of fees, Nihill says. When considering normal fund expenses–like trails coming from mutual funds and subtransfer agency fees (which Nihill says are now coming under scrutiny by regulators)–”we take those monies and use those to offset plan costs to the plan and the participant,” he says. This ensures Commonwealth is in line with ERISA rules that state 12b-1 fees should be used for the benefit of the plan and plan participant. “This platform does that,” Nihill says. When the retirement plan is “presented to the client and plan sponsor, the plan sponsor sees the recordkeeping fee, the custody fee, advisory fee, and the money going back to benefit the plan and plan participant.”

Complying With PPA