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Conflicts of Interest among Affiliated Financial Advisors in 401(k) Plans: Implications for Plan Participants
Liao, Junchao Cici, Gjergji Bazley, William
Liao, Junchao
Cici, Gjergji
Bazley, William
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Abstract
Institutional features of 401(k) plans can give rise to conflicts of interest between plan participants and financial advisors that advise them. We study one such conflict that arises when advisors are affiliated with the plan’s recordkeeper. Using a large dataset of 401(k) plans, we find that affiliated advisors reduce investment performance by steering participant flows to proprietary funds. We observe no similar effects for unaffiliated advisors. Additionally, affiliated advisors provide no significant benefits in terms of participation rates, administrative fees, or diversification. Given the increasing prevalence of advisors within 401(k) plans, our findings have relevant implications for households, plan sponsors, and policymakers.
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These are the slides from a presentation given at the 65th Annual Southern Finance Association Meeting held in Orlando, FL on 11/20/2025.
Date
2025-11-20
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University of Kansas
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LiaoJ_2025.pdf
Adobe PDF, 1.73 MB
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Keywords
Financial advisors, 401(k) plans, Conflict of Interest, Mutual funds