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Fiduciary Related News and Intelligence

These are general fiduciary news items. Other topical areas you may find of interest that are not fully covered here include ERISA 404(c) Compliance and Fiduciary Duty, 401k Investment Committees and Fiduciary Responsibility and Liability Issues.


Fiduciary Guarantees -- There's Tinsel on the Tinsel

Summary: Sometimes called the fiduciary promise, industry messaging misleadingly overstates its value to plan sponsors. Words such as "guarantee" and "warranty" connote protection and security -- that sense that I can't be harmed if things go wrong because someone else has promised to protect me. In the 401k context, this generally means its "my provider -- not me-- who will be liable." But these promises fall far short of delivering plan sponsors meaningful protection from fiduciary liability.

Source:, August 2014

Something Else to Concern Plan Fiduciaries -- The Floating NAV Rule

Summary: The SEC has promulgated a rule addressing what it believes could be heavy redemptions of money market mutual funds in the event of economic stress. The MMF Rule intends to make information about money market mutual funds, particularly inherent risk factors, more transparent. It would behoove plan administrators and their investment advisors to reassess the type of money market mutual fund held by the retirement plan and determine if it continues to be a proper investment for the plan.

Source:, August 2014

The Reckless Fiduciary: When Are Imprudent Fiduciaries Liable for Plan Losses?

Summary: A recent Fourth Circuit Court of Appeals case has established its own gloss on the ERISA rules to determine when fiduciaries who follow imprudent procedures will have to make up plan losses. The Fourth Circuit rule is based on what a hypothetical prudent fiduciary, who I will call the "prudent shadow," would have done in the same situation.

Source:, August 2014

The Small Things that Create the Biggest Problems for 401k Plan Sponsors

Summary: When it comes to being a retirement plan sponsor, the greatest threats in breaching fiduciary duty resulting in liability usually comes from the smallest mistakes. This article is to let you know which small mistakes to avoid.

Source:, August 2014

Who Is in Charge Here? Will the Real 403(b) Plan Fiduciary Please Stand Up?

Summary: Distinguishing who the fiduciary is within a 403(b) plan or other qualified plan is an important determination. It is a highly confused, misinterpreted and somewhat gray area in the world of retirement plan compliance. Many plan sponsors wish to forgo all responsibility and risk related to their fiduciary roles in order to avoid liability and pitfalls and would gladly delegate the role to another third-party. If and how that can be done and some common application of the role of the fiduciary is the essence of this article.

Source:, August 2014

Process for Terminating Investment Managers Is Important

Summary: While much time is spent selecting investment managers, not nearly enough time is spent in establishing a processing for terminating such managers, says a recent paper from the Strategic Investment Group.

Source:, August 2014

Do You Protect Against Vendor Conflicts of Interest?

Summary: Hidden vendor conflicts of interest can result in higher fees and unforeseen costs for the plan sponsor and plan participants, so having a system in place to uncover potential conflicts is paramount.

Source:, August 2014

Letter to RMS About Dispelling the 3(16) Myth

Summary: The majority of plans will be using outsourced 3(16) services within a decade. Service providers that don't offer or provide due diligence on these services will lose business. MEPs and aggregated solutions are the easiest way to access 3(16) services today.

Source:, July 2014

Which Fiduciary Should Plan Sponsors Hire: 3(16), 3(21) or 3(38)?

Summary: There has been a lot of discussion about whether plan sponsors should contract with their administrative providers for section 3(16) fiduciary services. This article outlines the different types of fiduciary services available to plan sponsors.

Source:, July 2014

Improving Retirement Plan Participant Decisions

Summary: As a plan sponsor and fiduciary, part of your responsibility is to help your participants make better choices when it comes to their plan investments. This article reviews some of the benefits of preventing participant mistakes, what the most common mistakes are, and some possible solutions.

Source:, July 2014

Interesting, Risky, or Downright Dumb Retirement Plan Investments

Summary: Most retirement plans today follow a rational investment process and keep it simple with a mix of good quality funds covering an appropriate spectrum of asset classes. But for every rule, there is an exception, and what Pete Swisher lays out in this article is just a sampling of the exceptions; interesting, risky, or downright stupid investments that illustrate useful lessons in retirement plans.

Source: , July 2014

Fiduciary Duty Rule: No Way Out

Summary: With the outlook for passage of a uniform fiduciary duty now bleak, it's astonishing to think the prospects for strengthening investment-advice rules to better protect investors looked so bright four years ago.

Source: (free registration may be required), July 2014

What's a Fiduciary to Do?

Summary: Fiduciaries do need to deal with expanded liabilities from the changing regulatory and judicial landscape. Employers, plan administrators, HR staff and plan service providers should make sure that plan fiduciaries meet regularly to discuss plan business and document their deliberations. If you have any concerns about the prior conduct of plan fiduciaries, make sure you consult top notch plan service providers.

Source:, July 2014

Outsourced Fiduciary Services and the Evolution of Warranties

Summary: Retirement plan service providers have continually created new and improved ways of helping plan sponsors with their fiduciary duties and liabilities, including the outsourcing of some duties. Seeking to reduce fiduciary liability, the fiduciary warranty was an early approach. Fiduciary warranties have continued to evolve and reviewed here.

Source:, July 2014

Video: Negative Confirmations

Summary: Sending "negative confirmations" to all participants receiving distributions during the year is an important part of a plan sponsors fiduciary processes. Watch this Sunscreen Moment to learn more.

Source:, July 2014

Fiduciary Warranty: Marketing Gimmick or Fiduciary Protection?

Summary: This paper reviews and analyzes the various types of fiduciary warranties. It exposes various warranty deficiencies and highlights genuine benefits. Details include: The evolution of fiduciary warranties; Three types of fiduciary warranties; and, Analysis of the liabilities and benefits of each type of warranty.

Source: (free registration may be required), July 2014

Video: Importance of Trustee Minutes

Summary: Keeping Board of Trustee minutes for major decisions affecting the plan makes all the sense in the world. Watch this video to learn what information that should be summarized in your plan committee minutes.

Source:, July 2014

The Fall of the Moench Presumption: The Supreme Court's Unfavorable (yet Favorable) Ruling for Fiduciaries

Summary: The Supreme Court issued a decision that will impact fiduciaries of retirement plans that hold employer stock. The Court held that such fiduciaries are not subject to the so-called Moench presumption of prudence and are subject to the same duty of prudence that applies to all ERISA fiduciaries, except to the extent that the duty of prudence requires diversification. The Court's ruling has some redeeming aspects that could be helpful in defending against stock-drop litigation at the motion to dismiss stage of the litigation.

Source:, July 2014

Supreme Court Rejects 'Presumption of Prudence' in ERISA Employer Stock Cases

Summary: On June 25, the U.S. Supreme Court issued its unanimous decision in Fifth Third Bancorp v. Dudenhoeffer, holding that fiduciaries of employee stock ownership plans are not entitled to a "presumption of prudence" when their decisions to buy or hold employer stock are challenged as violations of the fiduciary duty of prudence imposed under ERISA. In rejecting the presumption, the Court disagreed not only with the defendants, but also with all seven U.S. Courts of Appeals.

Source:, June 2014

Fiduciary Warranty, Liability Insurance Have Costly Differences

Summary: Fifty-two percent of retirement-plan sponsors thought a fiduciary warranty would protect them from a participant lawsuit, much like fiduciary liability insurance, according to a survey by Unified Trust. A fiduciary warranty sounds nice and really important, but it's something that isn't worth much, according to Ary Rosenbaum, founding partner of the Rosenbaum Law Firm.

Source:, June 2014

New Round of Fiduciary Feedback May Be Needed According to SEC's Markets Chief

Summary: Last March the SEC requested feedback on the potential impacts a uniform fiduciary standard of conduct. But the level of information was less than the SEC had anticipated. Therefore, a new round of data requests may be needed once a fiduciary options list is completed.

Source:, June 2014

Reish: Why Are There Fiduciaries?

Summary: Why does the law require that employers have fiduciaries? Viewed correctly, the answer is fairly obvious. Committee members make decisions that impact the participants even more than they impact the company. Specifically, committees make decisions that materially affect the quality of the participants' lives in retirement.

Source:, June 2014

Advisors Push Lawmakers on RIA Exams, Uniform Fiduciary

Summary: More than 60 advisors from 21 states are fanning out on Capitol Hill on Tuesday to press members of Congress and their staffers for legislation that would enhance oversight of the RIA sector and made the case for a uniform fiduciary standard that would apply to broker-dealers serving the retail sector.

Source:, June 2014

AARP Lobbying Hard to Expand Fiduciary Role

Summary: One of the AARP's arguments for expanding the rule comes from the fact that 65 percent of sponsors say their providers offer one-on-one consultation to plan participants. And while the powerful lobbying group acknowledges that most people trust financial professionals to offer advice based on the best interest of the one being advised, a legal requirement to do so is nonetheless necessary.

Source:, June 2014

COBRA's Mother Takes on Wall Street in Fight Over 401k's

Summary: Phyllis Borzi spent decades helping invent ways to protect people from unpleasant surprises in their health and retirement plans. Never did she run into the kind of resistance finance firms have mustered against her latest idea. And rarely has the industry met a bureaucrat so difficult to shut down.

Source:, June 2014

Protect Fiduciaries With the Right Insurance

Summary: The ERISA fidelity bond guards against fraud or dishonesty on the part of the plan's fiduciaries. Every fiduciary of a plan and every person who handles funds or other property of a plan must be bonded, but it's not nearly enough, says Matthew Jackson of Segal Select Insurance.

Source:, June 2014

The Inadvertent Fiduciary: Mass Mutual Crosses the Line

Summary: The ruling in Golden Star, Inc. v. Mass Mutual Life Insurance Company makes a clear case for establishing more consistent standards so that plan service providers know in advance whether they have fiduciary responsibilities and exposure.

Source:, June 2014

DOL Fiduciary Rule in 2016?

Summary: It's been in the works for years but it may be 2016 before a new fiduciary rule is in effect, and even that's a bit of a long shot. Pressure from broker-dealers and others in the financial advice business has helped to stymie the DOL's efforts to push through changes in how to define a fiduciary.

Source:, June 2014

What Employee Benefit Plan Sponsors Need to Know About Prohibited Transactions

Summary: Employee benefit plans may engage in business transactions with companies and individuals who are considered parties in interest, but certain transactions are prohibited. At the very broadest level, ERISA prohibits the use of a plan's assets for the benefit of a party in interest or a plan fiduciary.

Source:, June 2014

IRAs May Be "Hot Button Issue" in DOL's Re-Proposed Fiduciary Rule

Summary: The issues to watch when the Department of Labor re-proposes its fiduciary rule involve individual retirement accounts. According to Fred Reish, the re-proposal may include guidance on how far advisers can go when recommending to participants that they take a distribution from their retirement plan and roll it over into an IRA before they become fiduciaries to that plan.

Source:, June 2014

DOL Delaying Fiduciary Redraft Release Until January

Summary: The Department of Labor will delay releasing its controversial fiduciary redraft until at least January 2015 from the originally slated August release date. DOL made the announcement that its proposed rulemaking under its Conflict of Interest Rule would be delayed under a change to its regulatory agenda.

Source:, May 2014

Fiduciary Case Law Provides Insight

Summary: As the highest standard under law, it makes good business sense for advisers to consider ERISA case law when looking for trends and developing a single efficient investment process for all clients, whether institutional or retail.

Source: (free registration may be required), May 2014

Gallagher: SEC Fiduciary Rule Won't Stave Off DOL Redraft

Summary: A fiduciary rulemaking by the Securities and Exchange Commission would not "stave off" the planned upcoming release of a fiduciary redraft by the Department of Labor, SEC Commissioner Daniel Gallagher said this week. The SEC is "getting called out by all sectors" for moving slowly on a fiduciary rulemaking, Gallagher continued, "but it's the best of what the SEC does: acting deliberately."

Source:, May 2014

DOL Fiduciary Redraft Would Kill Many Small-Biz Retirement Plans: Survey

Summary: Nearly 30% of small businesses with a retirement plan say they would likely drop their plan, and nearly half would likely eliminate their employer contribution, if the DOL's reproposed redefinition of fiduciary under ERISA goes into effect, according to a Greenwald & Associates telephone survey.

Source:, May 2014

Get a Co-Fiduciary Advisor to Ease the Burden

Summary: Chances are that your plan's broker is not a co-fiduciary. While they may have given you investment recommendations, that doesn't make them a fiduciary. They are governed by the financial industry regulatory authority under what's called a suitability standard.

Source:, May 2014

DOL Continues Work on Fiduciary Rules, Official Says

Summary: The Department of Labor is still gathering input and information to develop the highly anticipated reproposed rules that define a fiduciary, said Phyllis Borzi, assistant secretary for the Department of Labor's Employee Benefits Security Administration.

Source:, May 2014

Employers Want Fiduciary Duty for 401k Plans, AARP Survey Finds

Summary: An overwhelming number of employers who have retirement plans are in favor of having their plan adviser adhere to a fiduciary standard, according to a new study. The AARP released study that shows that 89% of 401k sponsors favor a fiduciary duty for advisers to those plans. The results are based on responses from 3,010 employers who were surveyed between July and September 2013.

Source: (free registration may be required), May 2014

Lifetime Income: Participant Needs, Retiree Risks and Retirement Solutions

Summary: Plan sponsors have done a reasonably good job of focusing on participant needs in saving for retirement, but haven't been as aware of the importance of addressing their needs after retirement. There is no fiduciary requirement to provide post-retirement help in a 401k or 403(b) plan; but when plan sponsors decide to do so, they face a perceived impediment -- fiduciary responsibility.

Source:, April 2014

Fiduciaries Evades Liability for Use of Float Income

Summary: The U.S. Court of Appeals in St. Louis has affirmed a trial court ruling that plan fiduciaries violated their duties under ERISA by failing to monitor excessive fees remitted to a recordkeeper that was paid through revenue sharing. In addition, the court absolved the recordkeeper of liability for its use of float income retained on plan investments.

Source:, April 2014

Getting It Right - Know Your Fiduciary Responsibilities

Summary: The DOL's "Fiduciary Education Campaign" is designed to improve workers' health and retirement security by educating employers and service providers about their fiduciary responsibilities under ERISA. The Fiduciary Education Campaign includes nationwide educational seminars and webcasts to help plan sponsors understand rules and meet their responsibilities to workers and retirees, thereby improving their financial security. The campaign also includes educational materials on topics such as understanding fees and selecting an auditor.

Source:, April 2014

Fiduciary Duty and Investment Advice: Attitudes of Plan Sponsors

Summary: This AARP survey of employers that sponsor retirement savings plans examines a range of issues related to investment advice available to plan participants from the financial institutions that provide their plan. It reveals widespread support for holding advice to a "fiduciary" standard; that is, requiring advice offered by DC providers to individual plan participants to be in the best interest of the participants.

Source: , April 2014

White, Borzi and Legislators Focus on Fiduciary

Summary: In what may well be a pivotal year for fiduciary decisions, a fiduciary redraft from the DOL seems to be on track, but comments made by SEC Commissioner Daniel Gallagher at the FSR event signal that the SEC may not issue a proposed rule at all.

Source:, April 2014

DOL's Fiduciary Reg Expected in Early '15

Summary: While the Department of Labor has announced that it will re-propose its fiduciary rule by this August, most industry insiders think that the recrafted regulation will come out at the beginning of 2015.

Source:, March 2014

What Are the Responsibilities of a Fiduciary?

Summary: You have a lot of weight on your shoulders as a plan sponsor. After all, if something goes wrong, you could be held personally liable. Not only are you liable for losses resulting from a breach of your fiduciary responsibility, but you're also liable if you have knowledge of another fiduciary's breach and either conceal it or fail to make reasonable efforts to remedy it. And, to top it off, no actual harm is needed for you to be found liable. Deciding who can be held liable is confusing considering the various roles and fiduciary definitions under ERISA. Article looks at what ERISA says about fiduciary responsibility.

Source:, March 2014

Borzi Plays 'Three Questions' With Critics of DOL's Expected Fiduciary Rule Re-Proposal

Summary: Phyllis C. Borzi, assistant secretary for the DOL's Employee Benefits Security Administration, doesn't have 21 questions for people who doubt whether the agency's expected re-proposed fiduciary regulations are necessary. She has only three.

Source:, March 2014

Can Fiduciary Liability Spread?

Summary: A fiduciary should be aware of others who serve as fiduciaries to the same plan, since all have potential liability for the actions of others. For example, if a fiduciary knowingly participates in another fiduciary's breach of responsibility, conceals the breach or does not act to correct it, that fiduciary is liable as well. How can fiduciary liability be reduced?

Source:, March 2014

Labor Department Offers Glimpse Into New Fiduciary Plan

Summary: A U.S. Department of Labor official on Wednesday offered a sneak peak into a controversial plan to tighten regulation of retirement financial advisers, saying it will both minimize conflicts and still permit brokers to earn a living.

Source:, March 2014

Perez: DOL Moving Forward on Fiduciary Redraft

Summary: Labor Secretary Thomas Perez said that the Department of Labor would release "in the coming months" its fiduciary redraft, stating that it was a "very important rule" and that DOL would continue its "due diligence" on the rulemaking.

Source:, March 2014

SEC's Mary Jo White's Top Priority: Uniform Fiduciary Standard

Summary: Securities and Exchange Commission Chairman Mary Jo White said that she is pushing the commission to make a decision on whether to propose a regulation that would raise investment advice standards for brokers.

Source: (free registration may be required), February 2014

Is Your 401k Vendor a Fiduciary? The DOL Thinks It Is

Summary: The DOL has again joined the fray on plaintiffs' side by filing a brief urging the federal appeals court for the 3rd circuit to overturn a lower court decision and find that John Hancock was a fiduciary of its 401k plans. The position taken by the DOL in its brief is that John Hancock was a fiduciary for two reasons.

Source:, February 2014

Fiduciary Liability Where Employer Directs 401k PS Contribution

Summary: A prospective client has a 401k plan. The investment of the plan's assets is directed by the participants with the exception of the employer profit sharing contribution. That is invested at the discretion of the employer. What is the employer's potential fiduciary liability with regard to the profit sharing source?

Source:, February 2014

The Fiduciary Fad: Can Anyone Be a Fiduciary?

Summary: With increased regulatory pressure from the DOL, and seemingly ever-growing responsibilities for retirement plan sponsors, it's no wonder that turnkey fiduciary solutions are popping up everywhere. But what risks do these newfangled "fiduciaries" bring to their plan sponsor clients? The answer lies in the complex responsibilities and liabilities of the fiduciary role.

Source:, February 2014

Suitability Versus Fiduciary Standard

Summary: A survey of nearly 400 investment professionals sheds new light on the potential benefits to consumers of a uniform fiduciary standard and highlight the perceived impacts of changing one's standard of care. This article focuses on those perceived impacts and a few of the potential consumer benefits, as well as provide an overview of the current and proposed regulatory landscape.

Source:, February 2014

House Democrats Seek Dialogue With DOL on Conflict-of-Interest Rule Re-Proposal

Summary: Thirty House Democrats have requested to have a "dialogue" with Secretary of Labor Thomas E. Perez about the agency's re-proposal of the rules expanding the definition of fiduciary before the rules are submitted to the Office of Management and Budget.

Source: , January 2014

The Lost Art of Plan Design: Origins of Fiduciary Liability

Summary: The commoditization of plan documents has become so engrained in the industry that rarely does the plan sponsor's management or its board have the draft plan reviewed by independent legal counsel before approving it, accepting on faith the bulk of a complex standard form document on the advice of a service provider who is acting neither as an attorney nor a fiduciary. Besides ending up with a sub-optimal plan design, such a process places fiduciaries in untenable positions. Read how.

Source:, January 2014

Fiduciaries Can Sometimes Rely on Legal Advice (or Why ERISA Counsel is a Good Thing to Have)

Summary: One of the hallmarks of the fiduciary obligation is to make decisions on an informed basis and to be reasonably diligent when making decisions related to the plan and its administration. Fiduciaries can reasonably rely on experts, like plan counsel, when making decisions related to plan administration. In Clark v. Feder Semo and Bard, P.C., the United States Court of Appeals for the D.C. Circuit recently affirmed that "relying on the advice of legal counsel" was a good thing for the plan administrator.

Source:, January 2014

Top Ten New Year's Resolutions for Retirement Plan Fiduciaries

Summary: You can become a better retirement plan fiduciary. To get you started down the right path in the new year, this article lays out the top ten new year's resolutions that retirement plan fiduciaries should consider making for 2014.

Source:, January 2014


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