By now, most advisors know that the Pension Protection Act of 2006 encouraged 401(k) plan sponsors to offer advice to individual plan participants and help them make better money allocation choices. And many of you no doubt know that the Department of Labor came out with rules in March that tried to explain which financial advisors were qualified to do it. Unfortunately, the DOL rules only muddied the waters for many financial advisors.

However, a handful of professionals across the country have prepared themselves, setting up thriving businesses that provide investment advice to the 401(k) plan participants-not the sponsors-for a fee.

One professional working in this business is Charles Scott of Pelleton Capital Management Inc. in Scottsdale, Ariz. Scott, who has been an advisor for 15 years, changed his business model a year and a half ago to focus on participants in these plans. He reasoned that a house and a 401(k) are the main assets most families have, and that while these investors have been inundated with education and workshops, what they actually want is more specific:
"They want advice," Scott says.

Specifically, they want to know which of the options in their 401(k) plan they should choose and how much money should go into each one. That's what he gives them.

A number of planners have begun to use 401(k) advice as the cornerstone of their financial planning practices and four of them that I spoke with, including Scott, say it is the fastest-growing part of their business. Some charge an asset-based fee; some charge a flat dollar fee. And they are able to achieve economies of scale by offering services to dozens, hundreds or even thousands of participants at a time. Groups of professionals such as doctors and lawyers, among others, are good candidates for participant advice, these advisors say.

One advisor working in this space, Chad Griffeth, markets 401(k) advice through his company BeManaged in Grand Rapids, Mich. ( The company was four years old on Valentine's Day.

"I used to be a broker," says Griffeth, who does the marketing while his partner, John Whaley, a CFA, does the research on investment options and determines asset allocations. "The first thing people would ask is if I could manage their 401(k) plans for them." He and Whaley set up their company hoping to give investors with just $30,000 in their accounts an institutional level of service.

Companies that seek 401(k) advice for employees tend to be paternalistic, to want the best for their workers and to offer a good plan with well-thought-out options, Griffeth says. In its pursuit of such business, BeManaged has won the contract to work with the 4,600 401(k) plan participants at health and beauty products marketer Amway, whose headquarters are located near where BeManaged is based.

Amway performed a five-year due diligence search to find advisors for their employees before settling on BeManaged. "Other vendors wanted to sell products or move the 401(k) somewhere else," Griffeth says. The way the firm works is to set up its consulting site at Amway's offices, sometimes for three weeks at a time. The firm is happy to use the funds in the company's plan, which Griffeth says are good ones.

"We don't have clients come to us," he says. "We have a very humble office and that allows us to be efficient." Employees have a choice to either simply be advised on their plan or to be managed. Most choose the latter.