Common Vendor Conflicts
| Vendor | Potential Conflict | Disclosure Required? |
|---|---|---|
| Broker/consultant | Carrier overrides, bonuses, contingent compensation | Yes (CAA Section 202) |
| PBM | Manufacturer rebates, spread pricing, DIR fees | Partial (CAA requires some disclosure) |
| TPA | Vendor referral fees, network access fees | Yes (CAA Section 202) |
| Carrier | Reinsurance arrangements, vendor relationships | Partial |
| Wellness vendor | Referral fees from other vendors | Yes (CAA Section 202) |
Reviewing Disclosures
Fiduciaries must review vendor compensation disclosures and determine whether the compensation is reasonable for the services provided. This is not a rubber-stamp exercise — fiduciaries must actually evaluate whether the compensation creates conflicts of interest and whether those conflicts affect vendor recommendations. Document the review process and the basis for the reasonableness determination.
Conflict Management
IQ Insight
The best way to manage vendor conflicts of interest is to require fee-only compensation — vendors who are paid only by the employer, not by third parties. Fee-only brokers, consultants, and TPAs have no financial incentive to recommend products that benefit them at the employer's expense. Fee-only compensation is increasingly available and is the gold standard for fiduciary compliance.