Dalbar Expands 401(k) Certification

By Trevor Thomas

November 21, 2003 at 07:00 PM

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NU Online News Service, Nov. 21, 2003, 11:50 a.m. – Dalbar Inc., Boston, says it will expand its certification of financial advisors who advise members of participant-directed retirement plans.

The certification, which Dalbar had offered to selected plan providers, will be available beginning Jan.1 to all 401(k) providers and sponsors that exercise their fiduciary duty in selecting and periodically reviewing advice, Dalbar says.

Dalbar says the certification will relieve providers and sponsors from the cost and trouble of performing their own due diligence, as required by the Employee Retirement Income Security Act of 1979.

The certification consists of three parts, says Dalbar: a background check to clear the advisor of any SEC sanctions or other incidents and checking appropriate licensing, a test of service quality based on a survey of clients and a test of specific retirement plan knowledge. Advisors must be recertified annually.

Dalbar says the certification process will take about 90 days. Under a no-action letter to Dalbar from the SEC, advisors who receive a certificate will have the right to advertise their Dalbar ratings, showing their knowledge of 401(k) plans, according to a Dalbar spokeswoman.

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