Whether Empower is a fiduciary depends on which Empower entity you’re dealing with and what service you signed up for. Empower Advisory Group, LLC is a registered investment adviser and owes you a fiduciary duty when it manages your money or gives you paid investment advice. Empower Financial Services, Inc. is a broker-dealer and is not a fiduciary, though it must meet a “best interest” standard on specific recommendations. In an employer-sponsored 401(k) or 403(b), Empower’s fiduciary status is whatever the plan’s service contract says it is, and nothing more.
When Empower Is a Fiduciary
Empower Advisory Group, LLC is registered with the SEC as an investment adviser (CRD #112058).1Investment Adviser Public Disclosure. Empower Advisory Group, LLC – Investment Adviser Firm Summary That registration triggers the Investment Advisers Act of 1940, which imposes a fiduciary duty on advisers under Sections 206(1) and 206(2).2SEC.gov. Interpretation of Section 206(3) of the Investment Advisers Act of 1940 When the advisory arm gives you investment advice or manages a portfolio for a fee, it has to put your financial interests ahead of its own.
The duty has two pieces. A duty of care requires the adviser to do reasonable diligence and make sure any recommendation actually fits your situation, goals, and risk tolerance. A duty of loyalty requires the adviser to eliminate conflicts of interest or, if it can’t, disclose them to you in writing so you can decide with your eyes open. Steering you into a higher-fee fund because it pays the firm more, without telling you, would breach both.
Before you sign an advisory agreement, Empower Advisory Group has to give you a written disclosure brochure called Form ADV Part 2A.3SEC.gov. Form ADV Part 2 – Uniform Requirements for the Investment Adviser Brochure and Brochure Supplements That document is where the fee schedule, the types of investments the firm recommends, and its conflicts of interest are spelled out in binding form. If anything you were told verbally doesn’t match the ADV, the ADV controls.
When Empower Is Not a Fiduciary
Empower Financial Services, Inc. is registered with FINRA as a broker-dealer.4FINRA. Empower Financial Services, Inc. – Detailed Report Broker-dealers are not fiduciaries. Since June 2020 they’ve been required to comply with SEC Regulation Best Interest, which says they must act in a retail customer’s best interest at the time of a specific recommendation.5SEC.gov. Regulation Best Interest That is narrower than a fiduciary duty in ways that matter.
Reg BI has four component obligations: disclosure, care, conflicts of interest, and compliance.5SEC.gov. Regulation Best Interest The SEC has said Reg BI draws on fiduciary principles but is a “tailored approach” that does not carry all the same obligations, and notably does not require ongoing monitoring of your account.6SEC.gov. Regulation Best Interest and the Investment Adviser Fiduciary Duty
The practical effect shows up most in self-directed brokerage accounts. When you place your own trades on Empower’s platform, the company is a custodian and trade executor. It processes orders. It has no obligation to warn you that your portfolio has concentrated in one stock or that a cheaper share class of the same fund exists. Fees are typically per-trade rather than a percentage of assets. If what you want is ongoing guidance and a legal duty of loyalty, a plain brokerage account is not that.
Fiduciary Status in Your 401(k) or 403(b)
Workplace plans are governed by ERISA, not the Advisers Act, and ERISA defines fiduciary status by function rather than by title. Recordkeeping alone is not a fiduciary function. The question is whether Empower has agreed, in the contract with your employer, to advise on or manage the plan’s investments — and if so, under which ERISA designation.
The 3(21) Investment Adviser Role
Under ERISA Section 3(21), a person becomes a fiduciary by providing investment advice to a plan for compensation. As a 3(21) fiduciary, Empower recommends what should be in the fund lineup, but your employer’s plan committee keeps final authority and can accept, reject, or change any recommendation. Liability splits: Empower answers for the quality of its advice, and the sponsor answers for the decisions actually made.
The 3(38) Investment Manager Role
An employer can hand off more by appointing Empower as a 3(38) investment manager. In that role Empower has full discretion to select, monitor, and replace funds without needing sponsor approval. A 3(38) fiduciary has to be a registered investment adviser, a bank, or an insurance company, and is held to ERISA’s “prudent expert” standard, which is a higher bar than the ordinary prudent-person standard. The sponsor is generally not liable for the investment decisions the 3(38) manager makes.
Neither role attaches by default. It has to be written into the service agreement. Your plan’s summary plan description and its 408(b)(2) service provider disclosure will name who has taken on fiduciary duties and under which section. If Empower has accepted a 3(21) or 3(38) role and then breaches it, ERISA Section 409 makes the fiduciary personally liable to restore any losses the plan suffered.
Rollover Recommendations
Rollovers sit in a gray area. If someone at Empower suggests moving your old 401(k) into an Empower IRA, whether that advice carries a fiduciary duty depends on whether it’s a one-time pitch or part of an ongoing relationship. A single, isolated recommendation generally does not create a fiduciary relationship. Advice given as part of a regular advisory relationship — including one the adviser expects to continue after the rollover — is treated as fiduciary advice.7U.S. Department of Labor. PTE 2020-02 Improving Investment Advice for Workers and Retirees
What remains in effect for firms handling rollovers is Prohibited Transaction Exemption 2020-02. Under PTE 2020-02, a professional recommending a rollover has to follow “Impartial Conduct Standards”: advice in your best interest, reasonable compensation only, no misleading statements about the rollover or the investments. Financial institutions also have to document in writing the specific reasons the rollover is in your best interest.7U.S. Department of Labor. PTE 2020-02 Improving Investment Advice for Workers and Retirees If an Empower representative recommends rolling into an Empower-managed IRA, ask directly whether they are acting as a fiduciary for that recommendation, and get the answer in writing.
Revenue Sharing and Disclosed Conflicts
Fiduciary status doesn’t eliminate conflicts of interest. It requires that they be managed or disclosed. In 401(k) plans, one common conflict is revenue sharing: mutual funds in the lineup may include 12b-1 or shareholder services fees that the fund passes to the plan’s recordkeeper. Empower receives these payments on some plans. That’s standard industry practice and helps cover recordkeeping costs, but it creates an incentive to favor funds that pay more over equivalent funds that would cost participants less.
When Empower has 3(38) discretion, its fiduciary duty requires selecting investments based on participants’ interests, not on what the funds pay Empower. Under a 3(21) arrangement, the sponsor still has to weigh whether cheaper alternatives exist. Every investment option’s expense ratio and any shareholder-type fees show up on the 404(a)-5 participant disclosure notice that plan administrators send you.8eCFR. 29 CFR 2550.404a-5 – Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plans
How to Check Which Standard Applies to Your Account
You don’t have to guess. The documents are legally required and are relatively readable.
- Form CRS (Relationship Summary). Both broker-dealers and investment advisers have to give retail investors this short summary. It states whether the firm is acting as a broker, an adviser, or both, and answers “What legal obligations do you have to me?” — the fiduciary language, or its absence, is right there.9Investor.gov. Form CRS
- Form ADV Part 2A. For advisory accounts, this brochure lays out services, fees, and conflicts. You can pull Empower Advisory Group’s ADV from the SEC’s Investment Adviser Public Disclosure site by searching CRD #112058 and opening “Part 2 Brochures.”1Investment Adviser Public Disclosure. Empower Advisory Group, LLC – Investment Adviser Firm Summary
- Plan documents. For a workplace 401(k) or 403(b), the summary plan description and 408(b)(2) fee disclosure identify which providers have accepted fiduciary roles. Look for the phrases “3(21)” or “3(38)” to confirm whether Empower has formally accepted fiduciary liability for the plan’s investments.
- 404(a)-5 participant notice. The annual fee disclosure breaks down what you’re actually paying on each option in the plan.8eCFR. 29 CFR 2550.404a-5 – Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plans
If You Think a Duty Was Breached
Which regulator you go to depends on which side of Empower is involved. Problems with the advisory arm go to the SEC, which oversees registered investment advisers. Problems with the broker-dealer go to FINRA through its online complaint program.10FINRA. File a Complaint Fiduciary breaches inside an ERISA-governed retirement plan go to the Department of Labor’s Employee Benefits Security Administration.
Under ERISA, the exposure is meaningful. Section 409 makes a breaching fiduciary personally liable to restore any losses the plan suffered and to return any profits gained from improper use of plan assets. Courts can also order other remedies, including removing the fiduciary. Before you file, put your concerns in writing to the firm’s compliance department. A lot of disputes resolve there, and the written record helps if you have to escalate.