Skip navigation
ERISA Penalty Box

Q and A with top producer Stephanie Gallegos' and her "chill perspective" on 408(b)(2) and 404(a)

AMY: On a scale of 1-10 (most knowledgeable) how aware and concerned are your clients about 408b2 and 404(a)?

STEPHANIE: Aware  8; concerned  3-4. The concern is not necessarily about the potential for participant inquiries but around the administrative burden it places on the plan sponsor

AMY: Why aren't your plan sponsors worried about participant inquiries especially based on the fact the 70% think their plans are being managed for free and the remaining 2/3's think their employer is picking up the freight?

STEPHANIE:   I deal primarily in the small to mid market and unfortunately even after the market downturn and spotlight on the financial industry, retirement plans are still not a priority for a lot of these companies and in the plans we manage the fees are reasonable for the services received.  They trust us and they also know that we will help bear the burden of any participant inquiries

AMY: How are you helping them prepare?

STEPHANIE: We have been educating our clients about these upcoming regulations at each committee meeting we have had for well over 1 ½ years. We are willing to have education meetings around 404(a)(5) and we have been providing the vendor fee disclosure documents at least annually for the last several years.

AMY: Have you had to adapt your practice to adjust to the new requirements? –

STEPHANIE: No, almost all of our new business is fee based and has been for the last several years. Even with our commissioned clients we have always been very transparent about our fees.

AMY: What advisor issues and concerns do you see?

STEPHANIE: I think the advisor concerns are similar to the plan sponsor, in terms of the administrative burden and working with your broker/dealer to understand their roles and policies. There are some advisors that will have a lot of explaining to do in terms of fees but for the experienced advisors this is a nonevent.

AMY: Have these regulatory changes impacted your choice of providers you work with? If so - how?

Yes, we prefer to work in a fee based environment and with firms that have open architecture.  We also want to work with firms that are ahead of the curve with these changes, not dragging their feet to comply.   

AMY: What opportunities do you see?

STEPHANIE: There is a big opportunity to grow your business from a prospecting vantage but also to grow your existing business by having these conversations with clients and realigning your revenue with the new services you provide to assist with compliance. I have never had a client look at our fees and say that is too much, it is the opposite, that’s all you make.

AMY: Who should be freaking out?

STEPHANIE: The blind squirrels, “two-plan tony’s” and anyone who is overcharging their plan sponsors and participants. I also think some of the wire houses that have revenue sharing agreements above and beyond the average and that also have a high percentage of participants in models and haven’t been 100% transparent on all the fees being charged. 


Stephanie Gallegos is a investment advisor representative with NFP Thorbahn in Boston, MA.  She has been in the qualified plan business for 10 years and works on a team that has over 50 qualified retirement plans and over $500M in assets under advisement.     



Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.