COLLECTED WISDOM™ on 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, Fiduciary Responsibility and Liability Issues, and DOL's Final Fiduciary Rule and Best Interests Contract Requirement.
Abstract: When thinking about fiduciary support services and outsourcing, really the important considerations should be about process and time management, more than fiduciary risk transfer.
Source: Planadviser.com, June 2018
Abstract: While the SEC has proposed to impose a limited, or transaction-based, best-interest standard on broker-dealers, that only applies to investment recommendations made to "retail customers." Based on the SEC's definitions, it does not appear that, for the court, retirement plans are retail customers. As a result, broker-dealer investment recommendations to retirement plans would not be covered by the best-interest standard.
Source: Investmentnews.com (registration may be required), June 2018
Abstract: The last deadline for resuscitating the fiduciary rule passed when the government declined to ask the U.S. Supreme court to reconsider the appeals court’s decision. The prospect of holding advisers accountable to retirement savers hasn't disappeared entirely, though. The SEC is considering its own version of the fiduciary rule, known as the best-interest rule.
Source: Bloomberg.com, June 2018
Abstract: Taco trucks. Thinking outside the box is often a valued attribute. In the retirement plan universe, it can find expression in arrangements and plan features that offer flexibility, liquidity and portability. But a recently released paper suggests that it is important to be mindful of fiduciary duties while embracing innovation.
Source: Asppa.org, June 2018
Abstract: Sophistication gaps always cause vulnerabilities because one can potentially take advantage of another and cause harm. There is an ethical element to this that seems to be absent in many dialogues with regards to this subject that is inevitably inescapable but is rather hard to grasp because its obligation was not created by a contract.
Source: 401khelpcenter.com, June 2018
Abstract: Since the clear majority of plan sponsors need to involve external plan managers in some capacity, it's important to understand how financial professionals of different classes differ in what they bring to the table. Two major categories of professional assistants are available to sponsors. Broadly speaking, they can be grouped as investment brokers and retirement plan consultants.
Source: Planpilot.com, June 2018
Abstract: Under ERISA, those who administer, manage, or control plan assets have a fiduciary duty to plan participants. This fiduciary duty requires them to act solely in the interest of plan participants and beneficiaries. It is important for plan fiduciaries to understand their roles and responsibilities in deciding whether to outsource some of the administrative tasks to a 3(16) administrative service provider.
Source: Bsllp.com, May 2018
Abstract: The FAB states that during the period from June 9, 2017 until after regulations or prohibited transaction exemptions or other administrative guidance have been issued, neither the DOL nor IRS will pursue prohibited transactions against investment advice fiduciaries who are working diligently and in good faith to comply with the impartial conduct standards for transactions that would have been exempted in the Best Interest Contract and Principal Transactions Exemptions, or treat such fiduciaries as violating the applicable prohibited transaction rules.
Source: Wagnerlawgroup.com, May 2018
Abstract: Under the FAB, DOL states that it "will not pursue prohibited transaction claims against investment advice fiduciaries who are working diligently and in good faith to comply with the impartial conduct standards for transactions that would have been exempted in the BIC Exemption and Principal Transactions Exemption, or treat such fiduciaries as violating the applicable prohibited transaction rules."
Source: Groom.com, May 2018
Abstract: The Proposed Interpretation sets forth the SEC's views of investment advisers' fiduciary duties under the Advisers Act, including the duties of care and loyalty, and the SEC's views on an investment adviser's ability to vary or modify the fiduciary duty. Such an interpretive proposal of an existing obligation, unlike a rule or form proposal, could have some legal effect from the date of its publication and could be cited in SEC enforcement proceedings.
Source: Akingump.com, May 2018
Abstract: Fred Reish, partner at Drinker, Biddle and Reath, told attendees of the Plan Sponsor Council of America 71st Annual National Conference, from his perspective, plan sponsors have a "best practices hat," meaning "plan sponsors have an option of going beyond looking at what benefits the participants or employer. Meeting minimal objectives of the law is not the goal."
Source: Plansponsor.com, May 2018
Abstract: Many plan sponsors falsely believe that loan defaults do not merit fiduciary attention. Yet the Employee Retirement Income Security Act characterizes plan loans as investments, requiring care and prudence to meet the fiduciary standard. With all the litigation targeting defined contribution plans, now is a good occasion for plan sponsors to re-evaluate their loan practices.
Source: Loaneraser.com, May 2018
Abstract: Since fiduciaries can be personally liable for losses caused by a fiduciary breach, and there are other ERISA penalties, committee members have a lot of exposure. The good news I was able to give him was that special fiduciary liability coverage is available in the market. It just requires purchasing the right policy. But the policies are not fungible.
Source: 401ktv.com, May 2018
Abstract: When it comes to being a workplace retirement plan fiduciary, the best defense is a good offense. That said, if your fiduciary plays are more about keeping yourself out of hot legal water than they are about doing what's in your participants' best interests, even your best defense may not be good enough.
Source: 401ktv.com, May 2018
Abstract: The Trump administration unveiled guidance aimed at the burgeoning socially responsible investment industry that left some investors scratching their heads. The Department of Labor, which oversees retirement-plan funds, published guidelines that said investments based on environmental, social and governance issues aren't always a "prudent choice" and that such factors shouldn't "too readily" be considered as economically relevant by fiduciaries.
Source: Investmentnews.com (registration may be required), April 2018
Abstract: Proxy voting and company engagement practices are moving from a mere compliance issue to an integral component of investment and risk management. The old "set it and forget it" approach which relies on off-the-shelf proxy voting processes has become a risky practice. Fiduciaries are well advised to re-evaluate how their legal obligations relate to use of proxy voting in this changing environment.
Source: Reinhartlaw.com, April 2018
Abstract: Given the high stakes, it is important that plan fiduciaries understand their duties and how best to fulfill them. For employers who have not yet undertaken the task, training of plan fiduciaries should be a top priority for 2018. This article reviews 10 key topics that should be included in an ERISA fiduciary training program.
Source: Thompsoncoburn.com, April 2018
Abstract: ERISA broadly prohibits plan fiduciaries from causing the plan to enter either a direct or an indirect transaction involving the plan or its assets that would have a potential for conflicts of interest. This one-page article provides an overview of these prohibited transactions.
Source: Boutwellfay.com, March 2018
Abstract: The Department of Labor's fiduciary rule may be on hold indefinitely, but that doesn't mean that fiduciary duties similarly are in limbo. This article offers some tips for meeting them.
Source: Asppa.org, March 2018
Abstract: Share class confusion is an increasing concern and focus of regulators. While it might seem like an evergreen and ongoing issue for the investment industry, a new wrinkle in the form of the fiduciary rule is adding a frenzied air.
Source: 401kspecialistmag.com, March 2018
Abstract: The running debate about the standards of care in the financial services industry is beginning in earnest. Pete Swisher provides a discussion of current fiduciary law and the country's options with respect to standards of care.
Source: Pentegra.com, March 2018
Abstract: While compliance pressures continue to rise for executives charged with overseeing their organizations' employee benefit plans that are qualified under ERISA, sophisticated technology solutions are beginning to offer a reassuring light at the end of a seemingly endless regulatory tunnel.
Source: Rolandcriss.com, March 2018
Abstract: Three key areas of vulnerability arise from last year's ERISA litigation. This article discusses these vulnerabilities in detail and suggest ways plan fiduciaries can defend against them and reduce their exposure to liability.
Source: Fiduciaryplangovernance.com, March 2018
Abstract: In Singh v. RadioShack Corp., the Plaintiffs held RadioShack stock in their 401k accounts after November 30, 2011. They appeal the dismissal by the district court of their claims that Defendants breached their fiduciary duties under ERISA by allowing plan participants to invest in RadioShack stock despite the company's descent into bankruptcy. The Fifth Circuit Court of Appeals affirmed the district court's dismissal.
Source: Erisalawyerblog.com, March 2018
Abstract: According to a recent survey of DC plan executives, many don't acknowledge their role as a fiduciary. You'd think fiduciary awareness would improve over time, but the surprising fact is that fiduciary awareness seems to be declining at a time when all roads are leading to greater fiduciary scrutiny in the marketplace.
Source: Hrexecutive.com, March 2018
Abstract: Fulfilling ERISA fiduciary responsibilities is a constant challenge. Carol Buckmann has been blogging and speaking about fiduciary best practices for many years. Her guidance for fiduciaries has been compiled in a new 2018 edition of the Intelligent Fiduciary Guide.
Source: Cohenbuckmann.com, March 2018
Abstract: Unfortunately for employers, the DOL has been aggressively challenging the adequacy of employer efforts to locate and contact missing participants. Numerous plan sponsors have received letters from the DOL during missing participant audits that threaten sanctions against plan fiduciaries for alleged violations of ERISA, despite a lack of definitive guidance on exactly how employers should follow up on a variety of challenges.
Source: Winston.com, February 2018
Abstract: An SEC fiduciary rule should provide investors clarity about the role of their adviser, enhanced protection and offer regulatory coordination, Chairman Jay Clayton said Friday. The SEC and DOL have promised to work together on investment-advice standards.
Source: Pionline.com, February 2018
Abstract: Legislation before the Maryland legislature would create a fiduciary duty for agents and investment advisers, as well as broker-dealers, to act "primarily for the benefit" of their clients.
Source: Ntsa-net.org, February 2018
Abstract: The focus on compliance obscures the compelling business case that fiduciary conduct (1) is what clients want, (2) is operationally efficient and reliable, (3) strengthens client-adviser relationships and makes them more enduring, (4) provides the adviser with greater pricing power, and (5) enhances the advisory firm's brand and market valuation.
Source: Investmentnews.com (registration may be required), February 2018
Abstract: An Interview with ERISA attorney David Levine. His advice to plan sponsors and service providers is "that while there are compliance and litigation challenges for plan sponsors and service providers, the sky is not falling. Yes, there are bumps in the road but as the adage says, an ounce of prevention is worth a pound of cure."
Source: Fiduciarynews.com, February 2018
Abstract: The best interest requirement may lead some to think that advisors have to meet an essentially impossible standard. As with a lowest-cost recommendation, a mandate to recommend the best investment is a myth...it just isn't true. Even the DOL has said so.
Source: Brokerdealerlawblog.com, February 2018
Abstract: A decision by Massachusetts' regulators to file state charges against Scottrade by claiming it violated the Department of Labor fiduciary rule has surprised many industry analysts. In short, the state claims Scottrade ignored the policies and procedures it put in place starting June 9 to comply with the DOL rule.
Source: Advisornews.com, February 2018
Abstract: For those fiduciaries self-aware enough to know there are things they need to learn, here are some suggestions for ways they can raise the bar in fulfilling their fiduciary responsibilities.
Source: Cohenbuckmann.com, February 2018
Abstract: It doesn't need to be difficult for employers meet their 401k fiduciary responsibilities and avoid liability. They just need to understand these responsibilities and take action in six key areas.
Source: Employeefiduciary.com, February 2018
Abstract: Not following sound decision-making processes and procedures can result in plan disqualification, fiduciary breaches, lawsuits, and personal liability. This article outlines fiduciary best practices related to 401k plan decision-making and documentation.
Source: Lawtonrpc.com, February 2018
Abstract: You are at risk because no plan is safe when there are so many class action lawyers out there aggressively looking for lawsuits to file. Some plans are more attractive lawsuit targets than others, and there are things fiduciaries can do to lower their risk of being hit with a 401k lawsuit.
Source: 401ktv.com, February 2018
Abstract: Worrying about plan documents probably is not keeping you up at night, but maybe is should. Although most plan fiduciaries are aware of their duties of prudence and loyalty, they may not be tuned into their equally important duty to follow the terms of their written plan documents. This "sleeper" duty could catch you by surprise.
Source: Boutwellfay.com, February 2018
Abstract: A good fiduciary will always look for opportunities to teach and test for understanding of clients and savers. The author asked financial experts from around the country what they felt it was important to convey to retirement savers. Here are the top five.
Source: Fiduciarynews.com, January 2018
Abstract: With the new Department of Labor fiduciary rules further pushed back to go into effect on January 1, 2019, plan fiduciaries have more time to review employee benefit plan best practices.
Source: Bsllp.com, January 2018
Abstract: The myth is that broker-dealers and RIAs -- and their advisors -- must only recommend the lowest cost investments. For example, mutual funds with the lowest expense ratios. That is not correct.
Source: Fredreish.com, January 2018
Abstract: Duane Thompson argues that "the SEC's examination and enforcement arms appear to be moving closer to ERISA's fiduciary standard mandating reasonable compensation for investment advice" by focusing on compensation received for rollover advice and on fees that result from the use of mutual fund share classes in retail and retirement accounts.
Source: Asppa.org, January 2018
Abstract: Implementation of the DOL's fiduciary rule has been delayed, and the rule may not have the teeth it originally did. But it would be a mistake to assume that means a complete demise for a new fiduciary standard for advisors. That depends in part on what the Securities and Exchange Commission does with its own fiduciary rule, work that reportedly is accelerating.
Source: Asppa.org, January 2018
Abstract: This Q&A addresses issues raised in the DOL's recent release which provides for an 18-month Extension of Transition Period and Delay of Applicability Dates for the Best Interest Contract Exemption; the Class Exemption for Principal Transactions; and PTE 84-24. In particular, it focuses on the issues the DOL raised regarding the status of "enforcement" procedures during the transition period.
Source: Jdsupra.com, January 2018
Abstract: Legislation is before the New Jersey legislature that would require certain disclosures by non-fiduciary investment advisors regarding their fiduciary status with clients.
Source: Asppa.org, January 2018
Abstract: In both teaching and spirit, Trust Law instructs ERISA. Trusts are characterized by the relationship between the trustee and the beneficiary of the assets dominated by the former's fiduciary duties to the latter. The relationship between the trustee and beneficiary is measured and recognized not by the result of the interaction but the sincerity of the behaviors that yield the result.
Source: 401khelpcenter.com, January 2018
Abstract: There had been a common belief among advisors that fiduciary status could be avoided by presenting a list of investments to plan sponsors. It was thought that since the list did not "recommend" any particular investments, it could not be a fiduciary recommendation.
Source: Ntsa-net.org, January 2018
Abstract: Failure to deal with cybersecurity issues could be a fiduciary breach under these rules and fiduciaries could have personal liability for the resulting losses, for example, if hackers are able to steal plan assets or fraudulently obtain distributions online by pretending to be participants. Participants whose personal accounts are hacked might also have claims against fiduciaries who failed to protect their data.
Source: 401ktv.com, January 2018
Abstract: Plan sponsors are not legally compelled to set up committees. Most standardized plan documents give plan sponsors the flexibility to set one up or not. But just because you are not required to do something doesn't mean it's not a good idea.
Source: Fiduciaryplangovernance.com, January 2018
Abstract: Any organization that sponsors a regulated retirement plan needs a blueprint for compliance and a system for governing the plan that integrates with its overall business risk strategy. This article presents five tips that are fundamental to an integrated compliance solution.
Source: Rolandcriss.com, January 2018
Abstract: With the core of the DOL fiduciary rule in place and the rest of it delayed for 18 months, can advisers expect all to be quiet on the fiduciary front in 2018? In a word, no. The regulatory baton has been passed from the DOL to the SEC and it's likely we will see an SEC fiduciary rule proposal by midyear.
Source: Investmentnews.com (registration may be required), January 2018
Abstract: There's a chance for savers to increase the odds they'll retire in comfort thanks to the 2017 tax law. Here's how, but the window of opportunity will close fast.
Source: Fiduciarynews.com, January 2018
Abstract: When it comes to a 401k plan, there is a difference between outsourcing and delegation. This helps 401k plan sponsors understand what outsourcing plan administration with an ERISA Section 3(16) administrator entails and the traps you should avoid if you choose that route.
Source: Jdsupra.com, December 2017
Abstract: Three new officials -- one at the Labor Department and two at the Securities and Exchange Commission -- will help the agencies advance their work on investment advice standards. Senate confirms Preston Rutledge to key Labor Department role, while Hester Peirce and Robert Jackson Jr. join SEC as commissioners.
Source: Investmentnews.com (registration may be required), December 2017
Abstract: The topic is the fiduciary risk to plan sponsors in vendor contracts as a result of the DOL Fiduciary Rule.
Source: Fiduciaryplangovernance.com, December 2017
Abstract: Since the DOL put the final rule redefining an investment advice fiduciary under ERISA into effect, there have been six lawsuits filed in four federal courts. The goal? To vacate the fiduciary rule in whole or at least in part. This chart reviews what has happened with these lawsuits.
Source: Columbiathreadneedleus.com, December 2017
Abstract: How long should fiduciary records be kept? The Court has said that although the statute of limitations for bringing an action against a plan fiduciary for an imprudent investment begins on the date of the investment, the limitation period begins anew if at any time during that period the fiduciary should have reviewed its portfolio and replaced the investment.
Source: Fiduciaryplangovernance.com, December 2017
Abstract: Author writes, "Secretary Acosta's newly created loopholes, "good faith" and "willful" are inconsistent with long-standing fiduciary law, and the burden on Secretary Acosta and the department is to do their job and truly enforce the new fiduciary rule in order to carry out the department's mission."
Source: Iainsight.wordpress.com, November 2017
Abstract: In the debate between suitability and fiduciary standards, reliance on disclosure may be viewed as a loophole and many see the "harm" emerging from harmonization. Reliance on more disclosure as a remedy will water down the fiduciary standard and provide weak consumer protection. The very term "harmonization" implies compromise.
Source: Fiduciarynews.com, November 2017
Abstract: This Captrust Advisors 'Fiduciary Update' provides an update on the DOL's conflict of interest rule for other investor protections, late loan payments as taxable distribution, pension overpayments, and other fee related litigation.
Source: Captrustadvisors.com, November 2017
Abstract: Top officials from the Labor Department's benefits agency were tight-lipped on the substance of the fiduciary rule delay that could come as soon as Thanksgiving.
Source: Bna.com (registration may be required), November 2017
Abstract: Ethical behaviors are not determined by outcomes structured within the confines of a contract. Attempts to do so only make "what is fair" and "what is ethical" esoteric. FINRA provides us all with a guideline -- if not a fair warning -- in Rule 2111 Supplementary Material.
Source: 401khelpcenter.com, November 2017
Abstract: Retirement plan committees have a host of responsibilities, most of them fiduciary. To help them fulfill their varied, and demanding, fiduciary role, advisers can turn to a number of practical strategies.
Source: Planadviser.com, October 2017
Abstract: There's an old saying that when you assume...well, you know the rest. Here are five assumptions that can create real headaches for retirement plan fiduciaries.
Source: Asppa.org, October 2017
Abstract: The House Financial Services Committee gave its stamp of approval to the latest attempt to block the Department of Labor's fiduciary rule. The committee passed the Protecting Advice for Small Savers (PASS) Act Of 2017, moving it a step closer to a full vote.
Source: 401kspecialistmag.com, October 2017
Abstract: Of all the industries facing these risks, few have seen more litigation than the financial industry which has faced a barrage of lawsuits over the in-house mutual funds in their respective 401k plans. Currently, there are more than 20 different financial institutions facing lawsuits challenging these in-house 401k investments.
Source: Willistowerswatson.com, October 2017
Abstract: ERISA fee litigation is moving downstream to smaller plans and that this ought to be a source of worry for small plan sponsors.
Source: Fiduciaryplangovernance.com, October 2017
Abstract: In the complex and litigation-prone world DC plans occupy, it is important to underline what the real focal points for fiduciaries should be. Here are five guiding principles under ERISA that can aid fiduciaries in selecting and monitoring investment options and assessing active strategies within their plan lineups.
Source: Troweprice.com, September 2017
Abstract: While the DOL has provided guidance on the overall responsibilities of plan sponsors, these guidelines fall short of speaking to best practices when dealing with recordkeepers. This 7-page paper aims to help plan fiduciaries maximize their recordkeeper relationships with the end goal of better retirement outcomes.
Source: Porteval.com, September 2017
Abstract: This paper addresses whether robo-advisors are fiduciaries. The simple answer is yes. But that is only half of the equation. Merely labeling robo-advisors as "fiduciaries" does not signify what fiduciary standard of care they are subject to, which should be of most interest to investors and regulators and is the subject of this paper.
Source: Ssrn.com, September 2017
Abstract: Running the plan and investing its assets in a way mindful of environmental, social and governance (ESG) concerns is a practice some plans follow. But a recent commentary questions whether that complements -- or compromises -- fulfilling fiduciary responsibility.
Source: Asppa.org, September 2017
Abstract: Eight of ten employers say they're concerned about an increase in fiduciary litigation. And more than a quarter listed fiduciary liability and litigation as their top 401k concern. Who can blame a fiduciary for thinking, "Can someone just tell me what I have to do?"
Source: Manning-Napier.com, September 2017
Abstract: If an investment adviser makes a recommendation to a retirement plan sponsor or investment manager, who then follows that recommendation and later challenges it as a breach of fiduciary duty, there are several types of defenses available to the adviser.
Source: Investmentnews.com (registration may be required), September 2017
Abstract: DC plan sponsors often worry about landing in hot water for doing the wrong thing. However, many fiduciary issues crop up because plan sponsors have failed to take action. Here are eight potential fiduciary traps and suggest ways to avoid them.
Source: Callan.com, September 2017
Abstract: The DOL has cut financial advisors some slack in getting ready to comply with its new fiduciary rule. But DC plan sponsors don't have the same luxury. That's because plan sponsors have been subject to ERISA. Based on the results of ABG's latest survey, many don't know it.
Source: Abglobal.com, August 2017
Abstract: The author wonders "why more plaintiffs' attorneys, plan sponsors and other investment fiduciaries have not fully utilized the cost-consciousness 'blueprint' that the Restatement provides in drafting pleading and addressing potential liability exposure based on alleged breaches of a fiduciary's duties of loyalty and/or prudence."
Source: Iainsight.wordpress.com, August 2017
Abstract: Failing to follow best practices may leave a fiduciary personally liable for losses to the plan and result in removal from their duties. There are a number of actions fiduciaries can take to limit potential liability.
Source: Bsllp.com, August 2017
Abstract: One argument to use in seeking early dismissal of breach of fiduciary duty claims is the ministerial defense. The recent case that highlights the point is Turner v. Volkswagen Group of America, Inc.
Source: Boomerisablog.com, August 2017
Abstract: A Qualified Default Investment Alternative is a provision available to 401k and 403b plans that reduces the potential personal liability of plan fiduciaries while improving the ability of participants to build toward retirement. Since a QDIA offers advantages to plan sponsor and participants alike, one might wonder what would prevent an employer from implementing one.
Source: Alliantwealth.com, August 2017
Abstract: There are widespread reports of Department of Labor audits focusing on plan procedures with respect to "missing participants." The DOL is treating the failure to adopt and follow adequate missing participant search procedures as a fiduciary breach and a possible prohibited transaction. This article reviews current rules and practice with respect to missing participants.
Source: Octoberthree.com, July 2017
Abstract: With retirement plan fees serving as the centerpiece of fiduciary breach lawsuits, it is no wonder that this is the leading topic of interest with retirement plan fiduciaries.
Source: Cammackretirement.com, July 2017
Abstract: The Supreme Court appears to have barred equitable tolling under ERISA Section 413's six-year statute of repose for fiduciary breach claims, subject only to well-pled allegations and proof of fraud or concealment.
Source: Erisa-employeebenefitslitigationblog.com, July 2017
Abstract: Defined contribution plan sponsors often worry about landing in hot water for doing the wrong thing. However, many fiduciary issues crop up because plan sponsors have failed to take action. Here, we list eight potential fiduciary traps and suggest ways to avoid them.
Source: Callan.com, July 2017
Abstract: There are many reasons that a plan sponsor and/or a plan advisor would look to engage an investment manager under section 3(38) of ERISA. But if you invite flexibility into your 3(38) services, you should understand the risks.
Source: 401kspecialistmag.com, July 2017
Abstract: Employee-benefit attorneys advising retirement plan sponsors frequently mention that plan fiduciaries are not liable for the acts or omissions of an appointed investment manager, and aren't obligated to invest or otherwise manage plan assets subject to their oversight. However, a recent district court decision has implications for how retirement plan sponsors should monitor their adviser.
Source: Investmentnews.com (registration may be required), July 2017
Abstract: In most professional settings, avoiding conflicts obviously matters. It's self-evident. Yet, in many quarters in brokerage and investment advice, it's not self-evident at all.
Source: Thefiduciaryinstitute.org, July 2017
Abstract: What to many was an implementation of the fiduciary rule by the DOL that ran counter to an apparent hostility to the rule throughout various quarters of the Trump administration has now been followed by a steady flow of further action that can be characterized as questioning, or maybe even indicating outright hostility to, the Rule.
Source: Dechert.com, July 2017
Abstract: The new DOL rule seeks to bring brokers and insurance reps to heel by establishing a stronger baseline of fiduciary protection. If they wish to continue providing advice to company retirement plans, they now will be held to a higher standard: the best interests of the client. And employers will need to monitor their activity to ensure these advisors are fully compliant.
Source: Alliantwealth.com, July 2017
Abstract: A 3(38) arrangement is a way of outsourcing the burden of investment decision making -- and risk -- to a qualified expert. 3(38) investment managers are a distinct breed of fiduciaries legally required to act in their clients' best interests when it comes to choosing funds and managing assets.
Source: Captrustadvisors.com, July 2017
Abstract: Hiring an independent investment fiduciary for a participant directed 401k plan offers both the fiduciary protection for owners/executives intended by ERISA and the unbiased advice needed by America's workers to maximize their standard of living in retirement.
Source: Brentwood401k.com, July 2017
Abstract: Courts, plan sponsors, and investment fiduciaries in general must be able to differentiate between nominal returns, load-adjusted, and risk-adjusted returns in order to (1) know when each is appropriate, and (2) to be able to properly determine whether a fund is providing commensurate value for higher fees in order to ensure that they are properly comparing "apples to apples" in order to act in the "best interests" of a plan and its participants.
Source: Iainsight.wordpress.com, June 2017
Abstract: Some advisors may now find themselves unexpectedly wearing a "fiduciary hat" with respect to benefit plan clients (including individual retirement accounts). While it is expected that the scope of the final DOL fiduciary rule has limited effect for fund managers, there are certain marketing and promotional activities that could implicate the final regulation.
Source: Winstead.com, June 2017
Abstract: The provision in the DOL fiduciary rule that says distribution and rollover recommendations are fiduciary advice was not changed; it was only delayed from April 10 to June 9. Therefore, any rollover recommendation on or after June 9 will be deemed fiduciary advice and will require a prudent process and an exemption from the prohibited transaction rules.
Source: Planadviser.com, June 2017
Abstract: The DOL fiduciary rule expansion establishes ERISA fair dealing requirements in the sale and service of health savings accounts; employers have a lot of questions about what this means.
Source: Planadviser.com, June 2017
Abstract: Calculating recordkeeping fees and charging them to participants is a matter that should be carefully considered by fiduciaries, especially in light of emerging methods in this area. The best model for one plan may not be the best model for another due to demographic plan differences, such as the number of small account balances.
Source: Cammackretirement.com, June 2017
Abstract: As a plan fiduciary, the goal is to deliver a top performing vendor plan to your employees with low fees and great service. How does the DOL's new fiduciary rule impact that goal and what should you do as a result? This short article outlines a few steps to take with respect to the rule.
Source: Pension-Consultants.com, June 2017
Abstract: No one can predict the excess return relative to a benchmark (Alpha) that is usually associated with active investment management. Then it should come as no surprise that no one can predict the market (beta). Choosing investments is a subjective endeavor. So why are so many legal actions and allegations against Employer Retirement Plans Sponsored Plans based on subjective endeavors with unknown outcomes?
Source: 401khelpcenter.com, June 2017
Abstract: The SEC chair issued only a brief statement on his intention to work with DOL officials on reforming conflict of interest regulations, but his language is revealing.
Source: Planadviser.com, June 2017
Abstract: This article provides an update on the DOL's conflict of interest rule expansion and compliance, deathbed beneficiary changes, required minimum distribution, and other fee related litigation.
Source: Captrustadvisors.com, May 2017
Abstract: Labor Secretary, Alexander Acosta, threw in the towel in his effort to delay the application date of the Fiduciary Rule. Barring any additional developments, the Rule will now become applicable, as scheduled, on June 9, though certain provisions do not become applicable until January, 2018.
Source: Cammackretirement.com, May 2017
Abstract: Sometimes the "basics" get so shopworn they lose their punch, like the solemn performance of fiduciary duty and its importance to every retirement plan sponsor and nonprofit institution and their investment committees. This is a brief refresher.
Source: Vanguardinstitutionalblog.com, May 2017
Abstract: A new bill introduced by Senate Democrats, seeking to protect ERISA exemptions for state- and city-run retirement plans for the private sector, would likely be made redundant with the removal of the Obama-era fiduciary rules.
Source: Planadviser.com, May 2017
Abstract: It appears that laws of fiduciary prudence under ERISA are evolving. A recent district court decision, in Lorenz v. Safeway, demonstrates this point. The prudence requirement in being gauged based on the portfolio in aggregate but also on individual investment options.
Source: Investmentnews.com (registration may be required), May 2017
Abstract: Their ire stems from changes that Fidelity is making to its business in relation to compliance with the DOL's fiduciary rule. Fidelity is taking on fiduciary responsibility for both plan-level and participant-level advice in some DC plans, which itself may not seem out of the ordinary since the conflict-of-interest regulation is creating a massive shift in the way retirement plan providers operate. The way Fidelity is going about it, though, is where there's tension.
Source: Investmentnews.com (registration may be required), May 2017
Abstract: Fiduciaries can't insulate themselves from being sued, but they can minimize their risk and be in a good position to defend a lawsuit if they follow good fiduciary practices. Attorney Carol Buckmann has been writing on the topic for years and has now complied some of her more popular works in this free booklet.
Source: Cohenbuckmann.com, May 2017
Fourth Circuit Agrees: Fiduciaries' Faulty Process for Eliminating Stock Funds Did Not Cause Plan's Losses
Abstract: This case demonstrates that the "would have" standard for showing that a plan fiduciary's breach did not cause a loss is difficult, but not impossible, to satisfy. Making a prudent choice by an inadequate process, however, is just lucky. Plan fiduciaries are on much safer ground when they establish and carefully follow a prudent process.
Source: Thomsonreuters.com, May 2017
Abstract: The fulfillment of fiduciary duties becomes apparent where there is evidence of behaviors and methodology, in "content and oversight," that improve the likelihood that the beneficiary of the asset(s) achieve their goals. When one is compelled to discover evidence of fiduciary behaviors, clues materialize in the products that were purchased, the timing of the purchases, how such products meshed and correlated with other assets, the level of compensation, and any compensation relationships if applicable.
Source: 401khelpcenter.com, May 2017
Abstract: The DOL's fiduciary rule is also pro-business by making it easier for 401k plan sponsors to meet their fiduciary responsibilities and lower their plan expenses. The author writes, "While I understand the COC is representing the interests of the financial services industry by opposing the Fiduciary Rule, I think their position is myopic -- they should be supporting the rule to better represent their much bigger constituency of 401k plan sponsors."
Source: Employeefiduciary.com, May 2017
Abstract: Vendors who service retirement plans will use the terms 3(16), 3(21) and 3(38) to describe their service offering. The terms have often been taken for granted, and sometimes abused by service providers looking for a marketing edge. This article offers some clarification and understanding regarding the terms.
Source: Alliantwealth.com, May 2017
Abstract: Last year was a signal year for ERISA fiduciary responsibility. And, no, we're not talking about the DOL conflict of interest rule. The author shares some developments on the fiduciary responsibility litigation front that may require your attention.
Source: Fiduciaryplangovernance.com, April 2017
Abstract: The complicated task of establishing a Retirement Committee or a Benefits Committee come with some basic Do's and Don't's and selecting the right fiduciaries is as important as selecting the right advisor or vendor. This article covers some tips for plan sponsors when selecting committee members.
Source: 401ktv.com, April 2017
Abstract: The article and chart provides a high-level summary and timeline of the applicability of the various aspects of the fiduciary rulemaking, and identifies a few discrete issues that industry participants might consider in anticipation of the June 9 applicability date.
Source: Dechert.com, April 2017
Abstract: The resident plan fiduciaries (the company officers and key employees who act on behalf of the sponsor as plan administrator or trustee) have a legal duty to "select and monitor" plan investments and, in the case of sponsors who have hired investment professionals, to monitor not only investment performance but also the performance of the investment professionals. So, how do you "select and monitor"?
Source: Retirementplanblog.com, April 2017
Abstract: A greater number of advisers and firms servicing 401k plans and their participants could be at risk of litigation in a few months' time, when implementation of some provisions of the Labor Department's fiduciary rule are set to kick in. This is due to the details of the recently finalized delay to the fiduciary rule issued last week by the Trump administration, as well as nuances of the regulation and its interplay with federal retirement law.
Source: Investmentnews.com (registration may be required), April 2017
Abstract: While the Department of Labor delayed the controversial Obama-crafted fiduciary rule for 60 days, it also expressed surprising support for the regulation. The DOL clearly does not back down from the Fiduciary Rule and exemptions as a general matter.
Source: Insurancenewsnet.com, April 2017
Abstract: Target-Date Funds are as diverse as the universe. Plan sponsor fiduciaries -- who must exercise prudence and demonstrate expertise in selecting the investments that will be offered to plan participants -- must understand the unique features of their workforce as well as the features of each TDF series they consider before making their selection. Failure to do so "as an expert" can result in potential personal liability for fiduciaries.
Source: Alliantwealth.com, April 2017
Abstract: On April 4, 2017, the DOL released for public inspection its final regulation extending the applicability date of the Fiduciary Rule from April 10, 2017 to June 9, 2017 as well as providing additional transition relief through the end of the year. While the final extension offers some relief, it is a mixed bag.
Source: Groom.com, April 2017
Abstract: Following several high-profile excessive fee lawsuits, more 401k plan sponsors than ever are hiring fiduciary-grade financial advisors to lower their liability. The kicker? Their impartial advice is often cheaper than potentially-conflicted, non-fiduciary advice.
Source: Employeefiduciary.com, April 2017
Abstract: Dick Friedman with IRON Financial clears up confusion over the '3s.' Why 3(38), 3(21) and 3(16) services are more important than ever, and why advisors are so confused about each.
Source: 401kspecialistmag.com, March 2017
Abstract: The wealth management units at Merrill Lynch and Morgan Stanley within the past few weeks announced substantive changes to their respective 401k businesses, and while each approach shares common ground they also differ in notable ways.
Source: Pionline.com, March 2017
Abstract: Plan sponsors worry about participants suing over inferior investment choices or high fees. At the same time, they're anxious about the Labor Department or Internal Revenue Service finding fault with their plan design or processes. They want advisers who are experts on the intricacies of the laws governing retirement plans, as well as a partner to share the stressful liability.
Source: Investmentnews.com (registration may be required), March 2017
Abstract: Even though its fate is unclear, the Department of Labor's fiduciary rule is upending the retirement plan adviser market, which spans the adviser spectrum from "dabblers" to defined contribution "specialists." Observers say such changes began taking root prior to the promulgation of the rule last year but are being accelerated by the DOL regulation.
Source: Investmentnews.com (registration may be required), March 2017
Managing Critical 403(b) Issues through Proper Allocation of 3(16) and 3(21) Fiduciary Responsibility
Abstract: Service providers are demonstrating their ability to customize their fiduciary services to their customers needs and -- just as important -- to their own capacity to provide selected services where they feel they can add value. The complex nature of handling 403(b) plans make these plans uniquely suited to customized fiduciary services.
Source: Businessofbenefits.com, March 2017
Abstract: Plan fiduciaries worry not only about being a target of class action lawsuits, but also about the possibility of being selected for an IRS or Department of Labor audit. More and more fiduciaries are coming to realize that memorializing a set of carefully-thought out plan policies and following them can be their best defense in these situations.
Source: Cohenbuckmann.com, March 2017
Abstract: Whether the Department of Labor fiduciary rule continues to be delayed, eventually takes effect, or ends up being repealed, the proverbial beans have been spilled, as many advisors and their respective firms have already taken the actions needed to comply, thus proving some areas of debate true and others false.
Source: Marketstrategies.com, March 2017
Abstract: Fee reasonableness is a fundamental and widely discussed fiduciary topic. Despite the importance of the topic, the DOL hasn't given much insight or guidance as to what is considered a reasonable fee. As a result, much of the interpretation of what is and is not reasonable has come from the courts. As a fiduciary, it is important to turn to litigation for guidance, acknowledge how excessive fee allegations have evolved, and most importantly, to appropriately manage this risk in the future.
Source: Manning-Napier.com, March 2017
Abstract: If you're a 401k fiduciary, you don't want to be in the dark about your plan fees. The potential consequences for paying excessive 401k fees are too great. This FAQ will answer some of the most common 401k fee questions.
Source: Employeefiduciary.com, March 2017
Abstract: The U.S. and British golf associations recently announced that significant changes are being proposed to make the rules of golf easier to understand, and the game less time-consuming and more fun to play. Imagine what would happen if the DOL was put in charge of writing the Rules of Golf.
Source: 401khelpcenter.com, March 2017
Abstract: Defined contribution plans find themselves in an increasingly complex and litigation-prone world. Therefore, it is important to debunk common investment misperceptions, and instead underline what the real focal points for fiduciaries should be.
Source: Troweprice.com, March 2017
Abstract: Despite the news that advisers may not be legally required to provide advice that benefits their clients more than themselves (in the form of commissions and kickbacks), a lot of good come from the fiduciary rule already. There are at least four major benefits.
Source: Castlerockinvesting.com, March 2017
Abstract: Even if the DOL leadership under President Trump declines to enforce a strict fiduciary standard, private litigators will undoubtedly pick up any slack if the administration fails to fully eliminate the Obama-era conflict of interest rulemaking.
Source: Planadviser.com, March 2017
Abstract: Retirement plan fiduciaries and their advisors are well served by identifying primary goals, major obstacles and both short-term and long-term nightmares that would generate serious pain for participants. Said differently, risk management is a good thing unless it prevents someone from achieving important milestones.
Source: Pensionriskmatters.com, March 2017
Abstract: Under a fiduciary rule, there is only a legitimate need for one or two share classes at most. Thus, whether it's the DOL fiduciary rule, or one that follows within a few years from the SEC, what we'll soon see is an Armageddon that destroys most mutual fund and variable annuity share classes, as we complete the shift from selling whatever products we can get paid to sell, into advisors who actually sell advice and implement the best solutions we can at the lowest cost available.
Source: Kitces.com, February 2017
Abstract: Investment in equity index funds -- and other passively-managed investments designed to track a market index -- is exploding. If you are a 401k fiduciary, this trend is great news. While it can be difficult for 401k fiduciaries to insulate themselves from investment-related liability using actively-managed funds, this job can be dead simple using index funds.
Source: Employeefiduciary.com, February 2017
Abstract: Any law that holds human beings to the standards of an expert in any field is a high standard, and one that can be difficult to meet even with the ablest of expert assistance. It's often said that ERISA's prudent man rule is the highest duty known to law. But is that enough?
Source: Napa-net.org, February 2017
Abstract: There have been so many misconceptions that plan sponsors and advisors have had concerning ERISA 404(c) plans. They had this belief that if they just give a mutual fund lineup and some fund profiles to plan participants that they are exempt from liability. But, ERISA 404(c) protection is about following a process and fund profiles are just not enough education to give to plan participants. On the flipside, education to participants doesn't have to amount to an MBA education.
Source: Jdsupra.com, February 2017
Abstract: Retirement plans are increasingly in the crosshairs for plaintiffs' lawyers. Allegations of breach of fiduciary duty based on payment of higher-than-reasonable fees to ERISA plan service providers are becoming more common. In the past 18 months, at least 38 ERISA class actions have been filed.
Source: Lockton.com, February 2017
Abstract: There are different kinds of fiduciaries, and some offer more layers of protection than others. So make sure you understand the nuances behind the designations.
Source: Kiplinger.com, February 2017
Abstract: Investment advisor conflicts of interest can cause participants to overpay for investment related services, which reduces their net investment returns and exposes their employers to fines and class action lawsuits. The DOL points out that the organizations that sponsor the plans, not the investment firms, are accountable for any excessive fees paid from plan assets. If you're unsure of where your plan's investment program aligns with the DOL's revelations, here's what to look for.
Source: Rolandcriss.com, February 2017
Abstract: There's no question fees are a hot topic for defined contribution plan sponsors. But one risk of focusing too tightly on fees is creating a distortion that addresses cost while possibly overlooking other retirement-saving factors. With so many equal or greater concerns, it's important for plan sponsors to keep a broad perspective and maintain a comprehensive approach to their fiduciary duties.
Source: Abglobal.com, January 2017
Abstract: Checklists. Doctors use them. Engineers use them, Pilots use them. A checklist is a tool to manage complicated jobs. Now let's put that concept into the context of an individual who has fiduciary responsibilities for an ERISA plan. A checklist can help ensure that you are meeting all your responsibilities and accomplishing the plan's objective.
Source: Retirementplanblog.com, January 2017
Abstract: On Jan. 20, President Trump signed a regulatory freeze pending review, but did that affect the timing of the fiduciary rule?
Source: Asppa.org, January 2017
Abstract: Perhaps the biggest legislative effort since 1940 to put client interests ahead of Wall Street will be allowed to effectively die in a Texas court at the hands of what was once deemed to be a two-bit lawsuit, according to Jason Roberts, CEO of the Pension Resource Institute in Los Angeles.
Source: Riabiz.com, January 2017
Abstract: Numerous surveys conclude that individual company 401k retirement plan participants want independent, third-party investment advice from an investment advisor who acts in their best interests regarding their retirement plan assets. The DOL fiduciary rule provides you exactly that opportunity now.
Source: Insurancenewsnet.com, January 2017
Abstract: Right now there is no universally accepted minimum competency standard for financial advice, though certainly recognized rigorous designations that include both education and an advice process provide a likely path of safety for Financial Institutions. Which means in the coming year, there may soon be explosive growth in programs like the CFP and RMA, as Financial Institutions recognize and then try to minimize their exposure to a class action lawsuit for failing to meet the fiduciary duty of care.
Source: Kitces.com, January 2017
Abstract: Though uncertainty prevails around the future of the fiduciary rule under a new administration, there are clear indications that the titles financial advisers use will play a bigger role in fiduciary regulation going forward. Even opponents of the DOL rule appear to be zeroing in on titles that cause confusion with the investing public.
Source: Investmentnews.com (registration may be required), January 2017
Abstract: While the DOL's conflict-of-interest guidance is unquestionably the most high-profile fiduciary issue today, it is far from being the only fiduciary consideration to those who sponsor or administer retirement plans. The DOL issued Interpretive Bulletin 2016-1 addresses retirement plan fiduciaries' responsibilities for voting proxies related to retirement plan investments. Notable in this guidance is the DOL's affirmation that plan fiduciaries may consider environmental, social, and governance factors.
Source: Ascensus.com, January 2017
Abstract: While the DOL's new fiduciary rule arguably helps define the duties owed by financial advisers who provide investment advice to retirement plans and their participants, from a purely legal standpoint, those duties may already be sufficiently defined regardless of the actions the Trump administration may take.
Source: Iainsight.wordpress.com, January 2017
Abstract: All three elements described in the DOL's Fiduciary Rule -- (1) a fiduciary (2) that renders (non-discretionary) investment advice (3) for compensation -- must be present in order for the Rule to apply to an advisor communicating with a plan participant or an IRA owner.
Source: Morningstar.com, January 2017
Abstract: With the selection of Jay Clayton to head up the SEC, President-elect Trump has not chosen a government veteran or an attorney with a long record of investor advocacy. Instead, Clayton is someone who some expect to scale back enforcement activity and unlikely to race toward major new rulemakings.
Source: Financial-Planning.com, January 2017
Abstract: Since the DOL conflict of interest rule's publication, mutual fund providers and their adviser-intermediaries have also been asking the SEC extensive questions about sales loads, fee schedules, etc.
Source: Planadviser.com, January 2017
Abstract: The DOL has issued an Information Letter on the application of ERISA's fiduciary provisions to default investments with lifetime income features that contain certain liquidity and transferability restrictions.
Source: Benefitsforward.com, January 2017
Abstract: The Guidance Update will make it easier for mutual funds to create and administer compensation arrangements tailored to comply with the fiduciary rules. It does not address, however, the extent to which brokers may independently set their compensation.
Source: 401kspecialistmag.com, January 2017
Abstract: Employee benefit plan fiduciaries can exercise their shareholder rights with proxy voting as part of their fiduciary duty to manage plan assets, the Department of Labor said Dec. 28.
Source: Bna.com (registration may be required), December 2016
Abstract: This article discusses establishing a program for fiduciary governance, a program that defines the roles and responsibilities of those who oversee and manage your corporate retirement plan, as well as processes and tasks for their committee meetings.
Source: Alliantwealth.com, December 2016
Abstract: The New Year is a perfect time to address many of the annual review items in the 401k compliance and governance checklist. As the New Year unfolds, plan sponsors may want to evaluate the composition of their Investment Committee.
Source: 401ktv.com, December 2016
Abstract: How much work and liability do you want to take on? How much expertise can you delegate internally? What do you want your team to spend their time on? This article compares the full spectrum of work you can delegate out to an ERISA fiduciary.
Source: Forusall.com, November 2016
Abstract: This 9-page paper starts by understanding the decades old federal law that establishes the duties of a fiduciary and then explore how advisors who find themselves in a fiduciary role can demonstrate compliance.
Source: Sourcemedia.com, November 2016
Abstract: Regulators are but one of the three key influencers shaping best practices for new fiduciaries. Financial institutions are working aggressively to comply with the DOL's new rule; however, advisors can take actionable steps today to better identify the needs and best interests of retirement plan participants and IRA holders.
Source: Manning-Napier.com, November 2016
Abstract: The primary reason for the Department of Labor's fiduciary rule doesn't involve protecting qualified retirement plans but rather unsuspecting IRA owners.
Source: Morningstar.com, November 2016
Abstract: ERISA does not prohibit retirement plan revenue sharing or even the retention of revenue sharing payments by retirement plan service providers. So, what's the concern? What do 401k plan fiduciaries need to know about revenue sharing? Here are some answers.
Source: Klgates.com, November 2016
Abstract: Did the DOL just fire a warning shot to those charging adviser fees on top of target-date funds and index funds? A close reading of its just released "Conflict of Interest Exemptions FAQs," the DOL may be suggesting advisers may be overcharging for popular "set-it-and-forget-it" retirement investments.
Source: Fiduciarynews.com (registration may be required), November 2016
Abstract: A class action complaint was recently filed against the owner of the Emerald Coast Eye Institute. The two plaintiffs allege that they were terminated because of complaining to the owner and Plan Trustee about breaches of fiduciary duty with respect to the 401k Plan resulting in losses and damages over $1 million.
Source: Benefitsnotes.com, October 2016
Abstract: Over the last several months, plan participants of the 403(b) and 401k plans of many not-for-profit institutions filed class action lawsuits against their respective retirement plans, alleging excessive fees and mismanagement of retirement assets by the plan sponsor. This article suggests plan sponsors of both not-for-profit and for-profit organizations to review and ensure they're following best practices outlined here in an effort to meet their fiduciary obligations.
Source: Plantemoran.com, October 2016