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Fiduciary Related News and Intelligence

These are general fiduciary news and 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.


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

Fiduciary Questions in the MassMutual Case, Part Two

Summary: Author discussion last month focused on the failure to administer the plan in accordance with the governing plan documents and the selection of unreasonably priced and imprudent investment options. In this month's column, he discusses certain allegations in a specific paragraphs of the complaint and how the business temptation for entities such as MassMutual to use their own proprietary mutual funds must be overwhelming, and yet acting on this temptation, at its core, appears to be thoroughly conflicted, fiduciary-wise.

Source:, January 2014

DOL Fiduciary Rules Delayed Until August

Summary: The re-release of the Department of Labor's fiduciary rules will be delayed until August so that Labor Secretary Thomas Perez can work closely with both sides of the political aisle to come up with new fiduciary rules to govern the financial advisors who work within the retirement space. The original release date for the rules was in the spring.

Source:, December 2013

Supreme Court to Decide Applicability of the "Prudence Presumption" in ERISA Stock Cases: Fiduciaries Take Note

Summary: In Fifth Third Bancorp v. Dudenhoeffer, the U.S. Supreme Court will decide whether investments in employer stock are entitled to a "prudence presumption" under ERISA. The outcome of the Court's ruling will have important implications for employee stock ownership plans (ESOPs) as well as other ERISA-eligible individual account plans (EIAPs), such as 401k plans that offer employer stock as an option on the menu of investment funds.

Source: , December 2013

Fiduciary Standard Getting Watered Down?

Summary: Even as the SEC is contemplating an expansion of fiduciary rules to include broker-dealers who operate in the retail space, some advocates argue that the regulatory interpretation of the responsibilities under a fiduciary standard has strayed from common-law precedent and become dangerously diluted.

Source:, December 2013

"Where Does Fiduciary Responsibility End," One Plan Committee Member's Thoughtful Perspective

Summary: How can an employer truly be considered to be acting in the best interests of plan participants and beneficiaries in terminating a defined benefit plan or in freezing benefits under such a plan?

Source:, December 2013

Fiduciary Questions in MassMutual Case

Summary: Recent lawsuit raises questions about a company providing its own products and services to its own employees in its own qualified retirement plans.

Source:, December 2013

Are Plan Sponsors Required to Provide Fiduciary Training to Their Fiduciaries?

Summary: Neither the provisions of ERISA or interpreting regulations require fiduciary training, but that doesn't mean a plan sponsor shouldn't. Author thinks it is a best practice to offer training routinely (at least annually) and when internal fiduciaries are appointed.

Source:, December 2013

Solicitor General Asks High Court to Strike Pro-Fiduciary Presumption of Prudence

Summary: The U.S. Supreme Court should strike down the pro-fiduciary presumption of prudence that some federal courts have used to shield fiduciaries of employer stock plans from liability for declining share value, the U.S. solicitor general said in a brief filed with the high court (Fifth Third Bancorp v. Dudenhoeffer, U.S., No. 12-751, brief filed 11/12/13).

Source:, December 2013

SEC Puts Fiduciary Duty on 2014 Agenda as 'Long-Term Action'

Summary: The Securities and Exchange Commission is pursuing a rule that would raise investment-advice standards for brokers -- just not in the near future. The SEC put the rule on a 2014 regulatory agenda that included 43 items. It was slated for "long-term action" without a specific timetable.

Source: (free registration may be required), December 2013

Advisory Panel Calls On SEC to Move Fiduciary Duty to Front Burner

Summary: In a voice vote, the SEC Investor Advisory Committee approved a recommendation that the commission promulgate a rule that would require brokers to act in the best interests of their clients when providing retail investment advice. That would subject brokers to the same standard that investment advisers meet.

Source: (free registration may be required), November 2013

ERISA Fiduciary Accused of Breaching Duty May Have a Right to Seek Contribution or Indemnification From Co-Fiduciaries

Summary: Claims for contribution or indemnification among co-fiduciaries may or may not be allowed depending on the jurisdiction in which the claim is pending. If the claim is permitted, the court likely will turn to traditional trust-law principles to determine when a contribution or indemnification claim is appropriate. Claims for contribution or indemnification can, in any event, be an important part of a fiduciary's plan to protect against losses of personal assets. If an ERISA fiduciary is accused of breaching a fiduciary duty, the conduct of other fiduciaries may give rise to a claim for contribution or indemnification.

Source: , November 2013

Vendors Segment Fiduciary Services as DOL Treads Water on New Definition

Summary: While most retirement plan sponsors and their vendors think being deemed a plan fiduciary is an "all-or-nothing" proposition, it is in fact becoming a growing continuum of service-provider job titles and responsibilities, one industry expert suggests. As a new definition of fiduciary to replace that of 1974 approaches from the DOL, different tiers of fiduciary roles are emerging.

Source:, November 2013

Don't Expect a Fiduciary Proposal for Retirement Advisers Until Next Spring

Summary: The earliest that the Labor Department is likely to propose a rule that would raise investment advice standards for retirement plan advisers is April or May 2014, according to a policy expert. The rule proposal apparently is just reaching DOL Secretary Thomas Perez' desk and will likely take the rest of this year to get to the Office of Management and Budget.

Source: (free registration may be required), November 2013

Advisors Warned of DOL's Coming Fiduciary Rules

Summary: Despite a recent show of political opposition, the Department of Labor seems poised to press ahead with a proposal to broaden the definition of fiduciary to cover advisors working in the retirement plan segment, a leading opponent of the measure warned. "All signs seem to be suggesting they're pretty close to getting this thing done."

Source:, November 2013

Mixing SEC Filings and SPDs? Could Lead to a Fiduciary Hangover

Summary: While "stock-drop" cases are not new these days, a recent Ninth Circuit case added a new spin that retirement plan fiduciaries should be aware of. In Harris v. Amgen, the court found that statements made in SEC filings and expressly incorporated into a plan's SPD are fiduciary activities that can form the basis of liability under ERISA.

Source:, November 2013

Fiduciary Standard, 401k Enhancements Touted by the DOL's Borzi

Summary: At the end of a long process that could have many in the retirement world seriously considering their futures in the business – or how they go about getting expert input to make those plan decisions – the Department of Labor is apparently close to finishing its controversial work on establishing a fiduciary standard.

Source:, October 2013

Fiduciary Management for Pension Plans

Summary: The safety net concept attached to bringing a third party on board, combined with fiduciary fatigue, is reflected in the global growth of firms that describe themselves as fiduciary managers. While the retirement plan regulatory regime varies by country, the investment outsourcing model is gaining sway in the United States, the United Kingdom, the Netherlands and elsewhere. The undeniable trend to delegate merits discussion.

Source:, October 2013

New Fiduciary Rules Create Opportunities for Retirement Plan Advisors

Summary: Target date funds have grown phenomenally in the past five years from virtually zero in 2007 to about $1 trillion today, half in mutual funds and the rest in custom funds and collective investment trusts. And it's just beginning. The DOL recently issued a must-read guide on target date funds for defined contribution plan fiduciaries. These new rules clarify several safe harbor provisions, as well as provide several opportunities for proactive investment advisors.

Source: , October 2013

Fiduciary Rules Could Spawn Thousands of RIAs

Summary: Today's Department of Labor is the most aggressive in years and one of its biggest initiatives -- imposing the fiduciary standard on broker-dealers -- will flood the market with hundreds, if not thousands, of new RIAs. So said Fred Reish at the recent 2013 Center for Due Diligence conference.

Source:, October 2013

Fiduciary Rules Will Cost Millions in Compliance

Summary: A survey by the National Association of Insurance and Financial Advisors found that 84 percent of financial advisors believe their business costs will increase if the SEC raises its bar on financial advice. Nearly 44 percent of respondents to the survey said they would pass on the higher costs to their clients by increasing their fees, and another 48 percent said they would limit their practice to clients with a minimum amount of assets.

Source:, October 2013

SEC Settles With Nebraska RIA Over Fiduciary Breach

Summary: The SEC determined that Manarin Investment Counsel, of Omaha, and its founder and president, Roland Manarin, arranged for the investment vehicles at issue -- which are funds of funds -- to purchase Class A shares of underlying mutual funds while cheaper, institutional shares of the same funds were available.

Source:, October 2013

Considering Money Market Reforms

Summary: The debate over the stability of money market funds highlights this important fiduciary obligation to act in clients' best interests. In fiduciary terms, this translates into establishing a consistent process to ensure that all investment recommendations are suitable, even when the recommendation involves a product as seemingly benign as a money market fund.

Source: (free registration may be required), September 2013

Pension Plan Fiduciaries Should Know Basics of "Responsible" Investing

Summary: Working with investment managers on optimal asset mixes and maximizing returns long has been important for employer retirement plan sponsors and committees. But in recent years it also has become advisable for those overseeing fund managers to understand responsible investing principles -- at the same time they have become more important for many plan participants.

Source:, September 2013

Fiduciary Rule May Not Appear Until Spring, 408(b)(2) Guide Out Soon

Summary: Some in the retirement community are in a state of unrest while awaiting the re-proposal because they can't make plans for the new fiduciary regime, but others are glad that EBSA is taking its time with the rule. One "wild card" in the fiduciary re-proposal will be how the DOL addresses individual retirement accounts and associated rollovers and rollover solicitations.

Source:, September 2013

How Investment Theory Explains 401k Plan Sponsors' Evolving Fiduciary Duties

Summary: Understanding the dominant investment theory of the era helps explain the fiduciary motivations of 401k plan sponsors. It is both instructive and ominous to see how plan sponsors respond.

Source:, September 2013

DOL Pushes Back Fiduciary Rule Again

Summary: Department of Labor's Phyllis Borzi says the agency will not meet its original October deadline to produce a new rule on the definition of a fiduciary under ERISA. "While we've been making progress on our fiduciary proposal, you will not see anything in October because we're not finished," Borzi says.

Source:, September 2013

Borzi: DOL Fiduciary Rule Won't 'Outlaw' Commissions

Summary: Commissions will not be outlawed when the Labor Department submits its final proposal redefining the fiduciary responsibilities of advisors working with retirement, according to Assistant Secretary of Labor Phyllis Borzi. The final rule proposal might allow "potentially problematic, conflicted" transactions that might have a positive benefit, as long as these transactions were accompanied by appropriate disclosure, she added.

Source:, September 2013

What Do Advisors Have to Say About the Fiduciary Standard?

Summary: Advisors had a chance to speak out about the fiduciary standard in the 2013 fi360-ThinkAdvisor Fiduciary Survey. What stands out in the findings is a wide gap between executives of traditional broker-dealers and the advisors at those companies who work with clients.

Source:, August 2013

Do Common Benchmarks Mislead the 401k Fiduciary?

Summary: Benchmarking 401k plans seems to come down to two metrics: fees and investment performance. Measuring performance has become a cottage industry. With the advent of 408(b)(2), fee analysis has suddenly become the dimension de jour. What are the real important benchmarks and how much of a burden do they have on the fiduciary duties of the 401k plan sponsor? The answers are at once both easier and more complicated than one would think.

Source:, August 2013

Adviser Identifies Ways Plan Sponsors Can Manage Fiduciary Risk

Summary: Because employers want to avoid litigation, which could result in personal liability for investment committee members, many plan sponsors are seeking ways to manage the risk associated with serving as an ERISA fiduciary. Article outlines four options that may help DC plans sidestep high-profile class-action lawsuits alleging breach of fiduciary duty on investment selection and monitoring.

Source:, August 2013

DOL Provides a Reminder to Plan Sponsors and Committees of Certain Fiduciary Responsibilities

Summary: Some mutual funds that are made available by a 401k plan for investment by its participants may make payments to the plan's record-keeper for certain services in connection with the plan's investment. DOL Advisory Opinion 2013-03A addresses whether certain payments of this type might be deemed "plan assets" under ERISA. Significantly, the DOL also points out obligations of plan sponsors and committees (and any other fiduciary responsible for making payment decisions) in choosing to approve and to continue such arrangements, since failure to do so could result in liability to these fiduciaries.

Source:, August 2013


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