NAIRPA
National Association of Independent Retirement Plan Advisors
Background
The image of 401(k) plans, whether fairly or not, was tarnished by the recent economic crisis. In order to weather the storm, frustrated plan sponsors and participants are increasingly seeking investment advice. However, there is surprisingly little understanding in the marketplace and among policymakers in Washington regarding the role of an investment advisor and what it really means to be "independent."
The financial services industry (i.e., investment manufacturers) are heavily represented in Washington by a number of trade associations, including the Investment Company Institute (mutual funds complexes) and the American Council of Life Insurance (insurers), and they have been aggressively weighing in on these issues. Independent retirement plan advisors do participate in other organizations (e.g., the Financial Planning Association), but none of them are exclusively focused on the issues that matter to retirement plan advisors. Given these uncertain economic times and the debate about the future of 401(k) plans, it is critical that independent retirement plan advisors have a strong "independent" voice in Washington to ensure their views are clearly heard by policymakers.
Core Principles
The National Association of Independent Retirement Plan Advisors (NAIRPA) is a leader in the transformation of the national retirement system to improve transparency, effectiveness, and governance. We embrace new members who adhere to NAIRPA’s Core Principles, which include:
- The retirement industry is in transition and NAIRPA is a leader for positive change.
- Our core purpose is to enhance retirement security in America.
- Our members provide independent, unbiased advice to retirement plans and their participants.
- Our members embrace a fiduciary ethic for serving our clients.
- Our members are committed to leading the transition to a more transparent, effective, professionally governed retirement system.
- Independence requires elimination of conflicts of interest in the spirit of ERISA, and our members seek to eliminate conflicts wherever appropriate.
Membership
In addition to supporting the above Core Principles, membership in NAIRPA is open to any retirement plan advisory firm (“Advisor”), which supports the following standards of practice:
Transparency. The Advisor should abide by the following transparency rules with respect to all client engagements for retirement plan services. The Advisor should clearly disclose:
- All compensation, monetary or non-monetary and direct or indirect (includes affiliates), expected to be received in connection with such services in advance of any engagement and all such compensation actually received at least annually thereafter.
- All conflicts of interest.
- Its fiduciary status and the extent and limitations of its fiduciary responsibility.
Independence. Compensation received by the Advisor should be on a fee basis and should not be impacted by investments or vendors ultimately selected by the plan sponsor or participants. This is consistent with recent Department of Labor regulations addressing the provision of investment advice.
Organizational Structure and Relationship to ASPPA
Each NAIRPA member appoints an individual to serve on the NAIRPA Board, which is responsible, by majority vote, for setting the strategic direction and making policy decisions for the organization. The NAIRPA Board meets in-person at least once a year in Washington D.C. and by conference call at least once per month. Each year the NAIRPA Board shall elect a Chair and Vice-Chair from among its members. The Chair and Vice-Chair, in consultation with the NAIRPA Staff President, shall set the agenda for the NAIRPA Board meetings.
NAIRPA is a limited liability company subsidiary of ASPPA. An individual appointed by ASPPA serves as an ex-officio liaison member of the NAIRPA Board. The NAIRPA Staff President is the ASPPA Executive Director/CEO, and all logistical and lobbying support is provided by the ASPPA National Office. NAIRPA’s mission, strategic plan, and vision will be consistent with that of ASPPA.
Budget and Dues
To provide effective representation in Washington, NAIRPA is expected to require annual resources of $250,000. Annual dues will be set at a minimum of $3,000, although to help meet our budgetary goal voluntary dues at a level of $5,000 would be appreciated. Future dues increases will only be instituted after consultation with the NAIRPA Board.
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