Employee accounts can, generally, be rolled over upon the occurrence of a distributable event.
This makes them a potential target for financial advisors looking to increase their revenue.
Source: The Effects of Conflicted Investment Advice on Retirement Savings, 2015, Council of Economic Advisors
A “distributable event” is the point in time when an employee participating in a group sponsored retirement plan is legally permitted to transfer or rollover money from their plan.
While other options exist, inclusive of leaving the plan assets in the group plan, it’s the rollover and/or transfer option that garners the attention of financial institutions, brokers and advisors, planners and salesman.
Quite frankly, the event is the most meaningful event in the lifecycle of an employer sponsored retirement plan. To the employee, it can be intimidating. To the financial advisor, salesman, broker, or planner it can be an opportunity. While there are rules in place to help prevent conflicted sales practices, there are conflicts that are not addressed by these rules. Furthermore, the interpretation of these rules may vary from firm to firm and the enforcement of these rules is relegated to litigation.
Make no mistake, these well intentioned rules can make a difference. It ls our goal to focus on the conflicted practices that persist and rid the group marketplace of these structures and help American workers make informed decisions at The Distributable Event.