RPA | Self-Directed Brokerage Accounts Expand Fiduciary Liability

Sheldon M. Geller, JD, CPA

Participant-directed 401(k) plan investment has expanded from an investment menu to include a self-directed brokerage account option. Service providers market these accounts to provide participants access to a large universe of mutual funds, stable value portfolios, and individual securities. Nevertheless, these self-directed accounts customarily include higher share class expense funds available to retail investors than those that have been negotiated by the plan sponsor or advisor for the plan's investment fund menu. 401(k) plans, however, generally include larger pools of assets than that held in the average retail investor's account. Stewards of larger pools of assets are required to secure lower expenses and monitor fund performance on behalf of their beneficiaries and participants.