Here’s the basic idea. If you’re a fiduciary, there’s one simple rule. Follow this rule and you’ll never go wrong. Stray from this rule into gray areas, and things can get a bit complex. If you outright shun this rule, then regulators will soon come pounding on your door and having a good attorney in your rolodex may be called for. Here’s the rule: Always act solely in the best interests of the plan beneficiaries.
Now, here’s the tricky part. The world of the fiduciary should not be confused with the world of business. In the business world, companies often succeed by adopting the motto “The customer is always right.” Here’s where the confusion comes in. Some good-hearted folks tend to like the 401(k) beneficiary (usually the “plan participant” or “employee”) to “customers.” This leads to confusion as to what their fiduciary duty entails. Unfortunately, they can find “acting solely in the best interests of the plan beneficiaries” does not mean the same thing as “the customer is always right.”