Dimensional Fund Advisors has a track record of supporting best practices in investment management and grounding its solutions on academic research. DFA is embraced by many of the smartest advisors I know. So when DFA’s website is plastered with content about the opportunity for advisors in the 401(k) business, you want to pay attention.
This Website Is For Financial Professionals Only
Apollo Lupescu, who heads DFA’s advisor 401(k) business, said in a recent article that advisors who want to get into the 401(k) advice business have two options: build their own solution or outsource. DFA has a way to enable advisors to outsource most of the operational, investment research, and administrative hassle of the 401(k) business while staying at the center of the relationship with a plan sponsor, and while limiting the fiduciary risk associated with advising plans.
This story actually begins when Andrew Fox, CFP, of Fox Financial, who sent me a template email announcing that “recent regulatory changes and technological advancements have now made the time perfect for Fox Financial to start offering 401(k) plans to businesses of all sizes.” Fox’s email prompted me to ask him what he was doing. He introduced me Lupescu.
Lupescu, who holds a Ph.D. in economics, says a confluence of events have opened a window of opportunity for private wealth advisors to enter the 401(k) business. Basically, changes in rules at the Department of Labor on 401(k) advisors and the role of fiduciaries along with bloated fees charge by many large plan providers and new disclosure requirements make this a good time for advisors to look at the 401(k) business.
An article by Lupescu and another one featuring Robert Merton explain ideas driving DFA's 401(k) strategy. Merton is the School of Management Distinguished Professor of Finance at the Massachusetts Institute of Technology and University Professor Emeritus at Harvard University.
Incidentally, we’re making a change in our policy for distributing the slides at A4A webinars. You’ll need to be signed up as an A4A member to get the slides at these sessions. If you are not a member, please sign up at www.advisors4advisors.com.