Morningstar 401(k) Platform Will Help Advisers Address Fiduciary Risk

Morningstar, a provider of independent investment research, plans to release MorningStar Plan Advantage early next year in the wake of the Department of Labor (DOL)’s fiduciary rule taking effect.

“Demonstrating and documenting that plan decisions are in the best interest of participants is growing in importance as the Department of Labor’s expanded fiduciary rule continues to disrupt the financial services industry,” Morningstar explains. “In particular, generalist advisers working with retirement plans may have to adhere to higher standards and might be conflicted from providing plan lineup advice beginning in April 2017.”

According to Morningstar and the wider industry consensus, the DOL rule will expand fiduciary responsibility to most professionals seeking to provide advice regarding 401(k) plan investments. This means broker/dealers with generalist advisers working off commission from the sale of certain investment products will likely need to reassess how they do business with retirement plans in order to minimize conflicts and liability.

To meet this challenge, Monringstar’s new platform “aims to help broker/dealers keep the 401(k) plans they work with.” This is accomplished by offering “competitive recordkeeping selection and fund lineup management services all through a single online platform.” Morningstar will take the lead on managing the fund lineups, reducing the need for generalist advisers to do so.

“Morningstar Plan Advantage helps to ensure that their plan sponsor clients can continue to receive retirement services and quality fund lineups,” Morningstar says. “From the plan sponsors that use the platform to the advisers and broker/dealers it supports, Morningstar Plan Advantage aims to solve several needs that the expanded fiduciary rule exposes.”

Additional information on the forthcoming platform offering is available here.