On August 1st, the US Citizenship and Immigration Services released an updated Form I-9, which can be found here. 

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The most recent prior version of  I-9 (Revision 10/21/19) will still be accepted until October 31, 2023, at which point the current update (known as Revision 08/01/223) will be the only valid and acceptable version of the form. Employers do not need to fill out a new version of the form for current employees that already have properly filled-out and submitted forms processed in the system unless reverification is necessary at some point after October 31, 2023.

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There are a number of substantial changes in the latest update. From a structural standpoint, Section 1, which covers preparer/translator certification, and Section 3, which covers reverification and rehiring, have been removed from the primary I-9 form and now serve as standalone documents labeled Supplements A & B. Further, the instructions section has been reduced by almost half - down from 15 pages to 8.

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Updates have also been made in terms of content, with the phrase “alien authorized to work” now replaced by the term “noncitizen authorized to work” and an additional checkbox was included in the new version that employers can tick in the event that the alternative verification procedure was used to examine employee documentation.

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The new version of the I-9 form can also be accessed, filled-out, and submitted electronically via tablets and mobile devices now, as well.

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Further, the US Citizenship and Immigration Services have unveiled an alternative procedure for remote verification which enables qualified employers to verify the documentation of employees hired on or after August 1, 2023 via duplicate copies and to verify the employee identity via live video meeting. 

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In order to meet the requisite qualifications to utilize this alternative procedure, employers must be in good standing in the federal E-Verify system. It’s also important to note that employers are not permitted to choose whether or not to use this alternative procedure with employees on a case-by-case basis linked to some attribute of the employee such as immigration status, for example, but instead employers offering this option must offer the alternative procedures to all employees at a given hiring site and/or who share a common remote-worker status.  

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This alternative procedure can be used to meet the physical verification requirement for all I-9 forms and accompanying documentation that were initially verified under the less stringent COVID-19-inspired verification procedures, as well. In order to qualify to use the alternative procedure for these cases, employers must have been registered in the E-Verify system when they opened the new case (except in instances of reverification). Further, qualifying cases would have had to have been opened sometime in the window between March 20, 2020 and July 31 2023.

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To avoid any potential compliance-related issues, employers would be well-served by reviewing the new Form I-9 and alternative procedure for remote verification prior to updating their own internal processes and procedures accordingly.

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You can read more about this topic here.

The Certified Financial Planner (CFP) designation is one of the most widely recognized in the finance industry, and indicates a high level of competence, education, and knowledge within numerous aspects of money and investment management. But what is Certified Financial Planner?

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This article will provide comprehensive insights into Certified Financial Planners, their roles, fiduciary duty, the potential costs of hiring one, fee structures, finding a CFP, the certification process, and the CFP exam. If you feel that a Certified Financial Planner is right for your financial needs, we will also outline how to find the right one for you.  

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What is a Certified Financial Planner (CFP)? 

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A Certified Financial Planner (CFP) is a financial professional who has obtained the CFP certification, a widely recognized and highly regarded standard in the financial planning industry. CFPs have undergone rigorous training, education, and examinations to demonstrate their competence in various areas of financial planning. 

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What Does a CFP Do? 

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A CFP provides comprehensive financial planning services to individuals, families, and businesses. They analyze clients' financial situations, can help to create budgets and set financial goals, and devise strategies to achieve them.

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CFPs offer expertise in areas such as investment management, retirement planning, tax planning, estate planning, insurance analysis, and risk management. They provide personalized advice that is tailored to clients' unique circumstances and goals. 

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Certified Financial Planners and Fiduciary Duty 

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CFPs are held to a fiduciary duty, meaning they are legally obligated to act in the best interest of their clients. This fiduciary standard means that CFPs have to prioritize clients' interests over their own and provide advice that is free from conflicts of interest. While this may seem like something that all financial advisors would be bound by, non-fiduciaries are not always obligated to follow this standard.

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Working with a CFP who follows the fiduciary standard can provide peace of mind, as it ensures that their recommendations are solely based on the client's best interests rather than outside financial considerations. 

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How Much Does It Cost to Hire a CFP? 

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The cost of hiring a CFP can vary depending on several factors, such as the complexity of the client's financial situation, the scope of services required, and the CFP's level of experience.

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CFPs may charge fees based on a percentage of Assets Under Management (AUM), an hourly rate, a flat fee, or a combination of these approaches. It is essential to have a clear understanding of the fee structure and any potential additional costs before engaging in the services of a CFP. Some advisors may also be willing to negotiate their fee structure, especially for a long-term working relationship.  

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Fee-Only vs. Fee-Based Advisors 

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There is an important difference between fee-only and fee-based advisors that should be understood when considering hiring a CFP: 

• Fee-Only: Fee-only advisors are compensated solely by the fees they charge for their services. They do not earn commissions or receive compensation from product sales, minimizing potential conflicts of interest. This fee structure aligns their interests with the client's, as they are not incentivized to recommend specific products. 
• Fee-Based: Fee-based advisors charge fees for their services, but they may also receive commissions or other forms of compensation from putting clients into certain financial products. While fee-based advisors can still provide valuable advice, their compensation structure may introduce conflicts of interest. It is important to clarify how these potential conflicts are managed to ensure the client's best interests are prioritized. 

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What is the Best Way to Find a CFP? 

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Finding a CFP involves careful consideration and research to find the right one for your unique needs. Some effective ways to find the right CFP for you include: 

• Recommendations: Seek recommendations from trusted friends, family members, or colleagues who have worked with CFPs. Their personal experiences can provide valuable insights. 
• Professional Associations: Consult professional organizations such as the Financial Planning Association (FPA) or the National Association of Personal Financial Advisors (NAPFA). These organizations provide directories of certified professionals and offer resources to help find a suitable CFP. 
• Online Databases: Utilize online platforms that list CFPs, allowing you to search for professionals based on location, specialties, or credentials. 

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How Can I Become a Certified Financial Planner? 

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To become a Certified Financial Planner, individuals must fulfill several requirements: 

• Education: Complete specific coursework in financial planning from a CFP Board-Registered Program or an equivalent program. This coursework covers various areas of financial planning, including investment planning, retirement planning, tax planning, estate planning, and risk management. 
• Experience: Accumulate relevant work experience in the financial planning industry. The CFP Board requires a minimum of three years of full-time or equivalent part-time experience. 
• Ethics: Adhere to the CFP Board's Code of Ethics and Professional Responsibility, which includes acting as a fiduciary and putting the client's best interests first. 

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The CFP Exam 

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The final step in becoming a Certified Financial Planner is passing the CFP exam. This comprehensive exam evaluates a candidate's knowledge and understanding of financial planning concepts, principles, and practices. The exam covers various topics, including financial planning, tax planning, retirement planning, estate planning, investment management, and ethics.

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Candidates must demonstrate proficiency in all areas to earn the CFP certification. If you are considering attaining a CFP designation, be aware that it is known as one of the more comprehensive and difficult examinations within the financial industry.  

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The Bottom Line 

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Certified Financial Planners (CFPs) are professionals who possess specialized knowledge and expertise in financial planning. They provide comprehensive advice and guidance to clients, helping them achieve their financial goals. Those clients may be individuals, families, or businesses, as the CFP designation denotes a comprehensive understanding of many different aspects of finance, financial planning, taxes, investments, and money management.

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Working with a CFP who adheres to the fiduciary standard ensures that their recommendations are made solely in the client's best interest. When hiring a CFP, it's important to understand the associated costs and fee structures, and that there is a difference between one who is fee-based versus fee-only.

If you are an employer who offers a 401(k) retirement plan for your employees, working with the right advisor is crucial to the plan’s success. There may come a time when it becomes necessary to change the advisor who manages your plan, for any number of reasons. Once an employer has identified the need for a change of advisors, how do they go about doing so?

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This article will provide readers with guidance on how an employer can change their 401(k) advisor, by outlining the following:

• Identifying the reasons a change may be needed
• The importance of exploring different options
• Benchmarking your existing advisor and plan
• Analyzing fees and performance
• Assessing service levels
• Considerations when making the switch. 

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We hope that you never encounter the need to change your 401(k) plan’s advisor, but this article will help you understand the process should that need arise.

Why Should You Change Your Financial Advisor? 

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There are several reasons why an employer might consider changing their 401(k) advisor: 

• Poor Performance: If your current advisor consistently underperforms compared to market benchmarks or fails to deliver satisfactory investment results, it may be time for a change. 
• High Fees: Excessive or undisclosed fees can eat into participants' retirement investments. If your advisor's fees are significantly higher than industry standards or lack transparency, it may be beneficial to seek more cost-effective options. 
• Inadequate Service: If your advisor is unresponsive, fails to provide timely and accurate information, or lacks the necessary expertise to address your plan's specific needs, it may be time to explore other options. 
• Lack of Fiduciary Responsibility: Fiduciary responsibility is crucial in managing a retirement plan. If your current advisor fails to meet their fiduciary obligations or has a conflict of interest that compromises the best interests of plan participants, it may be necessary to change advisors. 

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The Importance of Knowing Your Options When Comparing 401(k) Advisors 

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When considering changing your 401(k) advisor, you should begin by exploring your options and assessing the market. By knowing what other advisors offer, you can make an informed decision and potentially find a better fit for your plan and participants' needs.

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When comparing advisors, consider factors such as:

• Investment options
• Fee structures
• Service levels
• Technology platforms
• Fiduciary responsibilities

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Knowing the other options that are available may give you the room to negotiate with your current advisor if fees are the main point of contention. If there are other issues at play, doing your due diligence will help you make an informed decision based on the needs unique to your company and plan.  

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Benchmark Your Existing 401(k) Advisor and Plan 

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Before making any changes, it's important to benchmark your existing 401(k) advisor and plan against industry standards. You should evaluate the key metrics of your plan such as investment performance, fees, participation rates, and employee satisfaction. This benchmarking process will help you identify areas where improvements can be made and provide a baseline for comparing potential new advisors. 

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Analyze Fees and Cost-Efficiency 

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If the cost-efficiency of your plan is the issue, compare the fees charged by your current advisor with industry averages for similarly-sized plans to see if they are reasonable. Assess the transparency of fees and consider whether alternative fee structures, such as flat fees or fee-for-service models, would better suit your plan's participants and needs. 

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Examine its Performance 

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Evaluate the performance of your current 401(k) plan's investment options. Compare their returns to relevant market benchmarks and industry standards. Look for consistent performance over the long term and consider whether your current advisor has the expertise and resources to provide superior investment options. 

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If the overall market is in a down cycle in which investments are performing poorly across the spectrum, changing your plan advisor may not result in positive outcomes. If the funds offered by your plan are performing more poorly than the rest of the market, however, a change may be what is needed.

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Assess the Level of Service 

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The quality of service provided by your 401(k) advisor is crucial for plan success. Evaluate the accessibility and responsiveness of your current advisor, their ability to address participant inquiries, and the level of educational resources that they provide for your plan participants.

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Consider whether your plan requires additional services, such as financial wellness programs or personalized participant guidance, and assess whether potential new advisors can fulfill those needs. Advisors will often put a lot of effort into gaining new clients, so this may be an area where you can make providing the needed resources a determinant of their winning your business.  

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Change Your 401(k) Advisor 

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Once you have thoroughly evaluated your current advisor and explored outside options, you may come to the decision that it is time to change your 401(k) advisor. Follow these steps to facilitate a smooth transition: 

• Notify your current advisor: Review your contract or agreement to determine any notice requirements or termination procedures. Working in accordance with those, inform the current advisor of your decision to make a change.  
• Identify potential new advisors: Research and interview potential new advisors based on your plan's needs and requirements. Request proposals that outline their services, fees, investment options, and support capabilities. 
• Conduct due diligence: Thoroughly evaluate the proposed new advisors by reviewing their credentials, checking references, and assessing their fiduciary capabilities. Consider their experience, expertise, fees, and overall reputation in the industry. 
• Notify participants: Communicate the upcoming change to plan participants in advance, ensuring they understand the reasons for the switch and any potential impact that it will have on their accounts. Provide clear instructions on how to transfer their investments to the new advisor. 

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Things to Consider When Making the Switch 

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When changing your 401(k) advisor, it's important to consider the following aspects: 

• Fiduciary Responsibilities: Ensure the new advisor is willing to serve as a fiduciary, acting in the best interests of plan participants. Request documentation or agreements that outline their fiduciary obligations and role. 
• Investments: Evaluate the investment options offered by the new advisor, ensuring they align with the needs and preferences of plan participants. Consider performance versus the market, diversification, risk management, and the availability of appropriate asset classes. 
• Service: Assess the level of service provided by the new advisor, including participant support, educational resources, and technology platforms. Confirm that the new advisor can meet your plan's specific requirements. 
• Participant Access: Determine the ease of participant access to account information, online tools, and educational resources provided by the new advisor. Ensure that participants will have the necessary tools to make informed decisions and track their retirement savings progress. 
• Cybersecurity: Inquire about the new advisor's cybersecurity protocols and measures to safeguard participant data and sensitive information. Ensure they have robust security measures in place to protect against potential cyber threats. 
• Fees: Understand the fee structure of the new advisor and ensure that the costs are reasonable and transparent. Compare the fees to industry standards and consider the value provided in relation to the services offered. 

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The Bottom Line 

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Changing your 401(k) advisor is a major decision that should be driven by the best interests of your plan participants. Before making the determination to change your advisor, you should take the time to assess your current plan’s performance, fees, and the level of service provided by your current advisor. Compare them to industry benchmarks to verify that better options may be available for your employees.

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You should take the time to explore alternative options, conduct due diligence on potential new advisors, and consider factors such as fiduciary responsibilities, investments, service levels, participant access, cybersecurity, and fees. Don’t rush the process and switch to the first advisor that you find, as you want to find the best available option for the benefit of your plan participants.

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By thoroughly evaluating your options and following a well-planned transition process, you can make a smooth switch to a new 401(k) advisor that better aligns with your plan's goals and enhances participant outcomes. A 401(k) plan is a benefit to your employees, so put in the effort to make it the most beneficial to their retirement outcomes possible by finding the right advisor to manage it.

Not all financial advisors are the same, and there are numerous designations that can help FAs to stand apart from the crowd. Certain certifications are meant to show a high level of specific training and knowledge for the advisor, while others are required to work within specific areas of finance.

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Financial certifications may be used by an advisor to enhance their expertise and credibility. In other situations, they may allow advisors to provide specialized knowledge and demonstrate a commitment to professional development.

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This article will discuss the different types of financial certifications commonly found in the 401(k) space by outlining:

• The different types of financial certifications
• Their benefits
• The income potential that they may provide to an advisor
• The best ways to attain these certifications

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What is a Financial Certification? 

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A financial certification is a professional designation (and often a license) that signifies expertise and proficiency in specific areas of finance. These certifications are typically earned by completing rigorous educational requirements, passing exams, and will often require ongoing professional development to maintain the certification. Financial certifications help professionals gain credibility and demonstrate their commitment to the highest standards in their respective fields. 

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A financial certification can be relatively broad and show a wide array of experience in many fields, such as the Certified Financial Planner (CFP). Others can be quite specific, showing expertise in the designated area of finance, such as the Certified Fund Specialist (CFS).

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Different Types of Financial Certifications 

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There are numerous financial certifications available, each focusing on different aspects of finance. Some of the most recognized and commonly sought-after certifications in the 401(k) space include: 

• Certified Financial Planner (CFP): The CFP certification is one of the most widely recognized certifications in financial planning. CFPs have comprehensive knowledge in areas such as investment planning, retirement planning, tax planning, estate planning, and risk management. They assist clients in setting and achieving their financial goals through personalized advice and strategies. 
• Certified Public Accountant (CPA): While CPAs are primarily known for their expertise in accounting and taxation, many CPAs also specialize in financial planning and provide valuable insights into complex financial matters. CPAs can help individuals and businesses with tax planning, financial analysis, and overall financial management. 
• Certified Fund Specialist (CFS): The CFS certification focuses on mutual funds and investment analysis. CFS professionals possess an in-depth understanding of mutual funds, their structure, performance analysis, and portfolio construction. They provide expertise in selecting appropriate mutual funds for clients' investment portfolios. 
• Chartered Financial Analyst (CFA): The CFA designation is highly regarded in the investment industry. CFAs specialize in investment analysis, portfolio management, and financial analysis. They have advanced knowledge in areas such as equity investments, fixed income, derivatives, and alternative investments. 
• Certified Financial Fiduciary (CFF): The CFF certification emphasizes the fiduciary duty and ethical obligations of financial professionals. CFFs are trained to act in the best interest of their clients and prioritize client goals and objectives. They provide comprehensive advice and recommendations while minimizing conflicts of interest. 
• Chartered Financial Consultant (ChFC): ChFCs specialize in comprehensive financial planning and hold expertise in areas such as retirement planning, estate planning, insurance planning, and investment planning. They provide holistic financial advice and develop strategies to help clients achieve their long-term financial goals. 
• Certified Private Wealth Advisor (CPWA): CPWAs focus on providing specialized advice to high-net-worth individuals and families. They possess expertise in wealth management, investment planning, estate planning, and tax planning tailored to the unique needs and complexities of affluent clients. 
• Chartered Life Underwriter (CLU): CLUs specialize in insurance and risk management. They have a deep understanding of life insurance products, estate planning, and risk mitigation strategies. CLUs help individuals and businesses assess their insurance needs and develop appropriate coverage solutions. 
• Certified Management Accountant (CMA): CMAs are professionals with expertise in financial management and strategic planning. They specialize in analyzing financial data, providing management insights, and supporting decision-making processes within organizations. 

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Which Financial Certification Generates More Income? 

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The income potential associated with financial certifications varies based on several factors, including the individual's experience, area of specialization, and the demand for specific skills.

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Certifications such as the CFP, CPA, and CFA are widely recognized and tend to command higher incomes due to the level of expertise and credibility they bring to the table. However, income potential is also influenced by market conditions, geographic location, and the individual's ability to leverage their certification effectively. Tenure can often play a large role in the income potential of any type of financial advisor, as their income generally comes via their client portfolio.

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A financial advisor who has just started their own firm will have to build their client list no matter what certifications they have, which can take some time. An advisor who works for a large firm and has been there for many years, on the other hand, may receive the benefit of other advisors within that firm sending their clients to them for specialized advice or services.

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What are the Benefits of Getting a Financial Certification? 

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Obtaining a financial certification offers several benefits to professionals: 

• Enhanced Credibility: Financial certifications demonstrate a commitment to professional development and adherence to high ethical standards. They give clients and employers confidence in the individual's knowledge and expertise. 
• Expanded Career Opportunities: Financial certifications can open doors to new career opportunities and advancement. Employers often value certified professionals for their specialized skills and expertise, which can lead to higher-level roles and increased responsibilities. 
• Specialized Knowledge: Certifications provide in-depth knowledge and understanding of specific areas within finance. This expertise allows professionals to provide better advice, make informed decisions, and deliver superior value to their clients or employers. 
• Professional Network: Joining a professional association or obtaining a financial certification often provides access to a network of like-minded professionals. These networks offer opportunities for collaboration, sharing best practices, and staying updated on industry trends and developments. 
• Access to Licensure-Required Products: The finance industry is highly regulated, and some financial products require specific licensure for advisors to manage or access them. This puts specific licenses in high demand if there is a need for them within a company or client base, which can be beneficial to an advisor who holds those licenses.

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What are the Best Ways to Get a Financial Certification? 

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To obtain a financial certification, professionals generally need to fulfill specific educational requirements, pass exams, and meet experience or work-related criteria. Some of the certifications can only be gained by professionals that are working for a firm or an individual that also has specific certifications or licenses and can oversee them. The best ways to get a financial certification include the following: 

• Research: Research different certifications to determine which aligns with your career goals and interests. Understand the requirements, educational programs, and prerequisites for each certification. 
• Education and Exam Preparation: Enroll in educational programs or courses that provide the necessary knowledge and skills to pass the certification exams. Many certifications offer preparatory materials, study guides, and practice exams to help candidates succeed. 
• Exam Registration and Preparation: Register for the certification exam and thoroughly prepare by reviewing study materials, attending review courses or workshops, and dedicating sufficient time to studying. Practice exams can help familiarize yourself with the format and content of the exam. 
• Professional Development and Networking: Engage in continuous professional development by attending conferences, workshops, and seminars related to your chosen certification. Join professional associations to expand your network and gain access to valuable resources and mentorship opportunities. 

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The Bottom Line 

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As a highly regulated industry, financial certifications and licenses play a vital role in the 401(k) space and finance in general. Some of them are required to access or even discuss certain financial products with clients, while others offer evidence of expertise in specific areas of finance such as financial planning, investment analysis, risk management, or tax planning.

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Obtaining a financial certification can offer numerous benefits to an advisor, including enhanced credibility, expanded career opportunities, specialized knowledge, and access to professional networks. An advisor who has a high-demand certification within a large firm may receive a large number of clients because they put forth the effort to earn it.

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To obtain a financial certification, professionals should thoroughly research the requirements, pursue the necessary education and exam preparation, and engage in continuous professional development. Earning the right financial certifications can be incredibly beneficial to the career of a financial advisor, but they may require an immense amount of rigorous study and dedication to earn and maintain.

An employer-sponsored 401(k) is one of the most popular retirement savings vehicles in America, but just having one doesn’t guarantee a fruitful retirement. While many individuals rely on 401(k) plans to secure their future, making the right decisions with your investments can mean the difference between a comfortable retirement versus having to work longer than one would like.

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Having a knowledgeable and trustworthy advisor who can guide you in making the right decisions can be the key to that difference. There are times when it becomes evident that an advisor is not serving you well as a client and a change in 401(k) advisors is necessary. In this article, we will discuss several key indicators that can help you identify when it may be time to begin the search to change your 401(k) advisor. 

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Your Advisor is Not Sharing the Fiduciary Liability 

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A fiduciary advisor is obligated to act in your best interest, putting your financial well-being ahead of their own. If your advisor does not explicitly acknowledge or fulfill this fiduciary duty, it may be a sign that they are not prioritizing your interests. Transparency and clear communication are essential when it comes to understanding the fiduciary relationship, so if you feel your advisor is not sharing this liability with you, it might be time to explore other options. 

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Your Advisor is Not Providing Guidance on Plan Design and Oversight 

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An experienced 401(k) advisor should go beyond simply recommending investments. They should also offer guidance on plan design and oversight, ensuring your retirement plan aligns with your goals and needs. If your advisor neglects these crucial aspects and fails to provide valuable input on optimizing your plan's structure and monitoring its performance, it may be an indication that they are not delivering the comprehensive support you require. 

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Your Financial Situation is Changing, but the Advice Isn't 

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As you progress through life, your financial situation is bound to change. Whether it's getting married, starting a family, or nearing retirement, these milestones necessitate adjustments to your retirement strategy. If your advisor fails to recognize and adapt to these changes, continuing to provide the same generic advice without considering your evolving circumstances, it may be a sign that they are not adequately attentive or responsive to your needs. 

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At a minimum, your investment strategy should be changing as you draw nearer to retirement. In your early years, your portfolio can withstand a slightly higher level of risk (equities), as the market tends to perform in a cyclical nature. As you draw closer to retirement, your portfolio should be moving away from risk and towards safer investments that offer a level of protection against market downturns when you need your savings the most.

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If your advisor is not rebalancing your portfolio as you get older, that is a sure sign that you may need to find another advisor who better understands risk mitigation in relation to your retirement horizon.

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Financial Wellness Program is Lacking 

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A robust financial wellness program is an essential component of a comprehensive retirement plan. It encompasses various aspects such as budgeting, debt management, and education on financial literacy. If your current advisor does not offer or actively promote a financial wellness program, it could indicate a lack of commitment to your overall financial health. Consider seeking an advisor who places importance on your holistic financial well-being and education. 

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Your Plan Has a Confusing Fee Structure and Your Advisor isn't Helping 

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A transparent fee structure is crucial for understanding the costs associated with your retirement plan. If your current plan has a convoluted fee structure that is difficult to comprehend and your advisor is not willing to explain it to you clearly, it raises concerns about their transparency and whether they have your best interests at heart. A trustworthy advisor should be forthcoming about all fees and actively address any queries or concerns you may have. 

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If you discover hidden fees that change the overall costs of your investments as your plan progresses, that may present a red flag that should be addressed. An advisor’s fees may be negotiable, but hidden fees that weren’t previously disclosed may be reason enough to shop for a new advisor.

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Your Advisor Only Calls to Buy or Sell 

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Investment decisions should be based on careful analysis and alignment with your long-term goals, not on impulsive buy or sell recommendations. If your advisor only contacts you to push certain investments or suggest frequent trades without providing comprehensive explanations or reasoning, it could be a sign that they prioritize their own commission over your financial well-being. A reliable advisor should focus on your overall investment strategy rather than short-term gains. 

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If this happens often, you could be in a situation in which your advisor is committing a practice called “churning.” This may fall under SEC Rule 15c 1-7, which governs any deceptive or manipulative conduct enacted by a broker. If you feel that your advisor is committing “churning” by overtrading your account to grow commissions, you may file a report with the SEC or FINRA.

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Your Financial Advisor Doesn’t Listen to You 

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Effective communication is crucial for a successful client-advisor relationship. If you find that your advisor consistently fails to listen to your concerns, goals, and preferences, it indicates a lack of attentiveness and understanding. Your advisor should actively engage in conversations, address your questions and doubts, and tailor their recommendations to your unique circumstances. 

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You Feel Scared to Reach out to Your Financial Advisor 

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Trust is the foundation of any professional relationship. If you feel hesitant or fearful to reach out to your financial advisor, it is a significant red flag. Open communication is vital for effective financial planning, and if you are uncomfortable discussing your concerns or seeking clarification, it may be a sign that you should consider finding an advisor with whom you can establish a more trusting and transparent connection. 

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Some advisors prefer to use complicated financial lingo or explain things in overcomplicated ways to either keep their clients in the dark, beholden to the advisor's decisions, or in some cases purely to stoke their own ego. If your advisor makes you feel apprehensive about speaking with them because of the way they communicate, it isn’t likely to lead to a positive working relationship.  

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The Bottom Line 

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In order to achieve the best possible outcomes from your retirement planning efforts, you and your 401(k) advisor need to be able to work together as a team. If you observe any of the following warning signs, it may be time to reevaluate your relationship with your current advisor and explore other options that align better with your needs and goals:

• A lack of fiduciary liability sharing
• Insufficient guidance
• Stagnant advice
• Inadequate financial wellness programs
• Confusing fee structures
• Pushy investment decisions
• Inattentiveness
• Fear of reaching out

Making the right choice for your financial future is essential, and finding the right advisor is a crucial step toward achieving your retirement aspirations. If you find that any of the warning signs outlined above are present within your current 401(k) advisor, it may be time to find a new one.

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Planning for your retirement is one aspect of life in which time is extremely important, as you have a finite amount of it in which to save enough money to last through your Golden Years. If you feel for any reason that your 401(k) advisor does not have you on the right path toward your retirement, it’s time to find one who will guide you in the right direction.

The Employee Retirement Income Security Act (ERISA) is a federal law that was enacted in 1974 to protect the rights and interests of employees who participate in most employer-sponsored retirement plans, including 401(k) plans. ERISA sets forth regulations and standards that govern the operation, administration, and fiduciary responsibilities of these plans.

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It is imperative that any employer who offers a retirement plan to their employees ensures that they have a team in place that complies with ERISA regulations and filing requirements. This law was put into place to protect retirement plan participants, and significant penalties may be levied if a plan falls out of compliance.

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In the article below, we will explore how ERISA impacts 401(k) plans and the key aspects that employers, plan administrators, and participants should be aware of. 

What is ERISA? 

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ERISA stands for the Employee Retirement Income Security Act, a federal law that establishes minimum standards for private-sector retirement plans. Its primary goal is to safeguard the retirement savings of employees by ensuring plan transparency, fiduciary responsibilities, and accountability. ERISA covers various types of retirement plans, including pension plans, profit-sharing plans, and 401(k) plans. 

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How Does ERISA Work? 

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ERISA sets forth comprehensive rules and regulations to protect participants in employer-sponsored retirement plans. It establishes guidelines for plan reporting, disclosure, and fiduciary responsibilities. ERISA also establishes the Pension Benefit Guaranty Corporation (PBGC), a government agency that provides insurance protection for certain defined benefit pension plans. 

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Under ERISA, employers are required to provide participants with important information about their retirement plans, such as plan features, funding status, investment options, and fee disclosures. Employers must also meet specific fiduciary obligations, which involve acting in the best interests of plan participants and beneficiaries. 

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The Relationship Between ERISA and 401(k) Plans 

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ERISA applies to most 401(k) plans offered by private employers. The plans that do fall under its guidelines are subject to ERISA's provisions, including reporting and disclosure requirements, fiduciary responsibilities, and plan administration guidelines. ERISA helps ensure that employers and plan fiduciaries act prudently and in the best interests of the plan participants. These guidelines may seem like a headache to some, but they are in place purely to protect the employees who take part in employer-sponsored plans.  

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401(k) Plan Fiduciary Duties Under ERISA Law 

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ERISA imposes fiduciary duties on those who manage and control the operation of 401(k) plans. Fiduciaries are required to act solely in the interest of the plan participants and beneficiaries, following the highest standards of care, loyalty, and prudence. They must diversify plan investments to minimize the risk of large losses, ensure that plan expenses are reasonable, and provide participants with accurate and complete information about the plan. 

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Fiduciaries are also responsible for selecting and monitoring investment options offered in the plan. They should act with diligence and expertise when choosing investment options, considering factors such as risk and return, diversification, and the needs and preferences of plan participants. 401(k) plans are not “one size fits all,” so the fiduciary must ensure that a plan is built in accordance with its participants’ needs.  

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What Types of 401(k) Plans Are Not Covered by ERISA? 

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While most 401(k) plans are subject to ERISA, there are certain types of plans that are exempt. Plans sponsored by governmental entities, such as state and local governments, are generally not covered by ERISA. Similarly, plans established and maintained by churches or religious organizations are also exempt from ERISA regulations. 

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How to Know Whether Your 401(k) Plan is Covered by ERISA 

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To determine whether your 401(k) plan is covered by ERISA, you can start by reviewing the plan documents provided by your employer. ERISA-covered plans are typically required to provide participants with a summary plan description (SPD), which outlines key features of the plan and includes information on ERISA coverage.

Additionally, if your plan includes employer contributions or is administered by a third-party administrator, it is more likely to be subject to ERISA regulations. It's important to note that ERISA provides certain rights and protections to plan participants, so understanding whether your plan is covered can help you assess your legal rights and access important information about your retirement benefits. 

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The Bottom Line 

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ERISA plays a vital role in regulating and protecting participants in most employer-sponsored 401(k) plans. It establishes guidelines for plan administration, fiduciary duties, reporting and disclosure requirements, and provides a framework for ensuring the financial security of employees' retirement savings.

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By understanding the impact of ERISA on 401(k) plans, both employers and participants can make informed decisions and take advantage of the protections and benefits afforded by this important legislation. A retirement plan is meant to provide a benefit to employees and help secure their financial future. When ERISA guidelines are viewed through the lens of helping to protect the employees and their benefits, their need becomes much easier to understand.