Five Questions With: Sean McGarry

Sean McGarry is vice president and retirement plan service manager at Rockland Trust. / COURTESY ROCKLAND TRUST
Sean McGarry is vice president and retirement plan service manager at Rockland Trust. / COURTESY ROCKLAND TRUST

Sean McGarry is vice president and retirement plan service manager at Rockland Trust. He talks with Providence Business News about the recent U.S. Department of Labor ruling on the “conflict of interest” regulation, which is designed to protect investors from hidden fees in retirement-investment advice. McGarry breaks down the regulation and how it could affect clients and financial advisers.
PBN: Can you briefly explain the DOL’s recent ruling on the “conflict of interest” regulation?
McGARRY:
Simply put, the Department of Labor wants to ensure that those saving for retirement are receiving advice that is delivered conflict-free and in their best interest. The new regulation will require that any advice that is “individualized or specifically directed” to a retirement plan sponsor, plan participant or IRA owner will be considered fiduciary in nature.
PBN: Why is it important and what do your clients need to know about the new rule?
McGARRY:
It’s important that investors are aware of the two service models that different financial advisers can work under: The Fiduciary Standard (conflict free and in the client’s best interest) and The Suitability Standard. Most commissionable brokers and insurance agents operate under the suitability standard. The adviser in this scenario has no responsibility to recommend what is in the best interest of their client, so long as the advice is “suitable” based upon the information the investor provided to them. Clients who oversee a business retirement plan, invest within a retirement plan at work or have rolled money out of a retirement plan and into an IRA will want to familiarize themselves with the new rule and ask their adviser if they will be ready for it.
PBN: How does this change things for brokers and financial advisers?
McGARRY:
The regulation will be a major disruptor for brokers who wish to advise retirement plans and IRA rollovers. This is a huge market that could be off-limits for them in the future, unless they’re willing and able to act as a fiduciary to these accounts. Financial advisers who are acting fiduciaries will still need to pay attention to the new rules, although the changes for them should be more operational in nature (revised service agreements and disclosures).
PBN: Who decides what’s a “reasonable” fee?
McGARRY:
There is no concrete definition for a “reasonable” fee. This is something that a client can evaluate for themselves either with or without the help of an adviser. I encourage my clients to have their fees evaluated for reasonableness every three years. First, I benchmark the plan using software that compares their fees to industry averages for similarly sized plans. Although benchmarking is helpful, it’s not perfect and can ignore some important factors that can influence value (in the same way that viewing your home on Zillow.com will provide a ballpark estimate, but won’t be exact). Next, I call two or three alternative providers to get a competitive fee quote. This allows us to evaluate cost and services of the various providers and compare them to their current arrangement. It’s important to know that there is no requirement to select the least expensive partner, since cost is only one component of determining value.
PBN: Why should people consider working with Rockland Trust when it comes to retirement plan services?
McGARRY:
The service model at Rockland Trust sets our client up for success because each client is serviced locally by an expert within their respective field. Although many other advisers and wealth managers advise upon retirement plans, it is quite rare for an investment management firm to employ a team of advisers dedicated entirely to servicing retirement plan customers. Rockland Trust has also been operating as a fiduciary for over 100 years, so whereas some advisers are expected to propose higher fees or exit the business, the impact to our clients should be minimal.

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