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.
Summary: The practical consequence of Tibble v. Edison is that advisers should make recommendations based on the share classes available and must educate plan sponsors about the available share classes, including their costs, and plan sponsors must understand that multiple share classes may be available and must investigate which are best for their plan and participants.
Source: Fredreish.com, May 2013
Summary: Much has been said about the inability of ordinary people -- whether they are 401k plan sponsors or investors -- to fully embrace the concept of "fiduciary standard" and why it's so important. Here it is explained simply.
Source: Fiduciarynews.com, May 2013
Summary: Assistant Secretary of Labor Phyllis Borzi recently tipped her hand to advisors, offering a glimpse of some new rules her agency may be releasing later this year that industry leaders say could be a boon to IRA rollovers for RIAs. The details of the rules haven't been finalized yet, but it appears that there could be exemptions for certain conflicts of interest, while some fiduciary standards could be stiffened.
Source: RIAbiz.com, May 2013
Summary: The fiduciary role is a fragile one and should be altered with great caution. Arbitrary and myopic changes that add large numbers to the ranks of fiduciaries or policies that end the fiduciary lifespan will produce the unintended consequence of lowering quality standards and replacing the most competent fiduciaries with those ill-equipped to assume such a responsibility.
Source: Dalbar.com 
, May 2013
Summary: A little reported decision out of the Central District of California, Santomenno v. Transamerica Life Ins. Co., No. 12-2782, has the opportunity to cause great heart burn (or worse) to insurance company platforms for retirement plans. In a sweeping decision on TLIC's motion to dismiss, the court found that plaintiffs have plausibly alleged numerous fiduciary violations of ERISA including that TLIC, because of the facts and circumstances alleged, may be a fiduciary with responsibility to monitor its own compensation.
Source: Fraplantools.com, April 2013
Summary: The twin rulemakings at issue come from the Securities and Exchange Commission, which has floated the idea of holding broker-dealers to the same fiduciary standard of care that guides the conduct of investment advisors, and the Department of Labor, which in the coming months is expected to issue a revised proposal for a rule that would extend fiduciary responsibilities to certain retirement plan advisors.
Source: Onwallstreet.com, April 2013
Summary: In a comment letter to the SEC, Davis & Harman LLP asserts that a pending DOL rule that would expand the scope of professionals falling under the "fiduciary" definition under federal retirement law would have such a wide-ranging impact on individual retirement accounts that it would undermine a cost-benefit analysis the SEC is conducting to determine whether to proceed with its own fiduciary-duty rule for retail investment advice.
Source: Investmentnews.com (free registration may be required), April 2013
Summary: A top executive with Fidelity on Wednesday urged congressional action to stave off what he described as "a looming retirement crisis," appealing to lawmakers to pressure the Department of Labor to avoid an expansive redefinition of fiduciary responsibilities for advisors, among other things.
Source: Financial-Planning.com, April 2013
Summary: The courts, regulators and plan fiduciaries need to understand that with regard to a plan's investment options, it is the quality of the investment options, in terms of the benefits provided to plan participants, not the quantity of the plan's investment options or their absolute fees, that truly matter under ERISA.
Source: Prudent Investment Adviser Rules, March 2013
Summary: Little more than seven months ago, the U.S. Department of Labor issued a press release it had reached a settlement with a Connecticut investment adviser for claims involved a breach of fiduciary duty. The August 23, 2012 release is entitled "USI Advisors of Glastonbury, Conn., agrees to pay $1.27 million to 13 defined benefit pension plans following US Labor Department investigation." At the time, except for a few industry rags and a local Connecticut newspaper, very little attention was paid to that DOL release. Last week changed all that.
Source: Fiduciarynews.com, March 2013
Summary: Company officers who play roles in company benefit plans -- often simply as an adjunct to their usual list of job responsibilities -- are sitting ducks for fiduciary exposure. What such officers have to understand is that they face potentially significant, and substantial, personal liability under ERISA for problems in the operations of such plans and therefore. They need to treat this part of their responsibilities as also part of their "real" responsibilities.
Source: Bostonerisalaw.com, March 2013
Summary: Target-date retirement funds generally refer to a related group of investment funds that automatically rebalance and become more conservative as a participant moves towards a designated retirement year. You can use these tips to ensure compliance by your ERISA plan fiduciaries.
Source: Benefitsbryancave.com, March 2013
Summary: The Labor Department's fiduciary re-proposal is at least four months away, but that hasn't diminished speculation about what the rule will entail. The DOL is expected to impose higher standard of care on brokers; 'in-your-face disclaimer'.
Source: Investmentnews.com (free registration may be required), March 2013
Summary: Chairman Walter predicted that the SEC will issue a formal request for information regarding the costs and benefits of a rule imposing a uniform standard of conduct. This next step in this process will be critical, because it will form the basis upon which the SEC is likely to make its final decision.
Source: fi360.com, February 2013
Summary: 12b-1 Fees have become such a fixture in marketplace that there seems to be a growing sense that these fees belong to the plans whose assets generate them and that fiduciaries are somehow entitled to them. Except that this isn't quite so. There is actually another competing set of fiduciary rules which need to be considered when dealing with revenue sharing, and 12b-1 fees in particular.
Source: Businessofbenefits.com, February 2013
Summary: In keeping with the tradition of making a new year's resolution, we suggest the following five resolutions that plan sponsors and fiduciaries can make in 2013 to encourage effective plan governance in the new year, and thereafter.
Source: Truckerhuss.com, February 2013
Summary: The Securities and Exchange Commission is expected to issue a concept release as early as this summer on how to establish a uniform fiduciary duty for brokers and financial advisers. But a congressional call to establish a self-regulatory organization for advisers appears to be on a fast track to nowhere.
Source: Investmentnews.com (free registration may be required), February 2013
Summary: Qualified retirement plans can be rewarding and beneficial for both employees and employers. However, plan sponsors, administrators and officials who have discretion over a plan must take care to meet the high standards of conduct for fiduciaries under ERISA. Non-compliance with ERISA can expose benefit plan sponsors to serious risk and litigation.
Source: EJReynoldsinc.com, January 2013
Summary: To gain a marketing advantage some advisors and brokers willingly or inadvertently become plan fiduciaries assuming personal liability imposed by ERISA. Providing investment services to 401k plans is not without pitfalls. However, if one understands how the services provided fit into the regulatory framework, the assumption of fiduciary responsibilities and liability can be avoided.
Source: Lewis and Roca LLP, January 2013
Summary: While there is no express ERISA requirement that fiduciaries be trained, the DOL seems to take the view that training is evidence of a fiduciary properly exercising his or her duty of prudence.
Source: Benefitsbryancave.com, January 2013
Summary: As we deep dive into how the fiduciary rules actually work, one is struck by the manner in which fiduciary allocations were initially structured under ERISA, and how they have evolved since then. Looking closely at the original statutory language, it is clear that plans were established with a single fiduciary, a "trustee," in mind. But the market has moved dramatically away from a centralized independent authority which took full responsibility for operating a plan.
Source: Businessofbenefits.com, December 2012
Summary: The Department of Labor plans to repropose its controversial rule to amend the definition of fiduciary under ERISA "in several months," according to Phyllis Borzi, assistant secretary for the DOL's Employee Benefits Security Administration.
Source: Advisorone.com, December 2012
Summary: The Securities and Exchange Commission plans to "move forward" next year with a uniform fiduciary standard rule for advisors and brokers when providing personalized investment advice as well as "continue to assess" ways to better harmonize advisor and BD rules when they are providing similar services, according to the agency's just-released 2012 Financial Report.
Source: Benefitspro.com, December 2012
Summary: White paper discusses the fiduciary process for deciding whether to offer a brokerage window and selecting the provider of the window; the requirements under the new participant disclosure rules; and the implications of the fiduciaries or a participant selecting an RIA to serve as an investment manager or advisor for a participant's individual brokerage window.
Source: TDAinstitutional.com , November 2012
Summary: Retirement plan fiduciaries found to have violated federal law claim some of the plaintiffs that sued them are also liable. A federal district court agreed, in part, and moved forward some of the defendant's claims.
Source: Plansponsor.com, November 2012
Summary: John Bogle, founder of Vanguard, said Thursday that fiduciary duty comes down to "simple mathematics" and that even if Securities and Exchange Commission Chairwoman Mary Schapiro decides to leave her post at year-end and a fiduciary duty rule loses momentum, "We'll keep at it."
Source: Benefitspro.com, November 2012
Summary: The District Court granted summary judgment in favor of a number of union benefit funds and found the Company's CEO personally liable for the company's failure to pay fringe benefit contributions owed to the funds due to his breach of his ERISA fiduciary duties. This decision is a cautionary tale that every executive should heed -- substantial personal liability may flow from decisions affecting ERISA plans, even where the decisions are made with the intention of benefiting employees.
Source: Seyfarth Shaw LLP, November 2012
Summary: The Sixth Circuit Court determined that UMC did exercise discretionary control over plan assets as a fiduciary, but did so in compliance with the QDIA safe harbor rules. As a result, UMC did not breach its fiduciary duties and is not liable for the losses.
Source: Fiduciary Risk Assessment , October 2012
Summary: Fee disclosure rules require third party providers, who are ERISA fiduciaries, to disclose any direct or indirect compensation that they receive from plan assets. This means that if a provider is a fiduciary of a retirement plan, it must disclose float compensation. In addition, if the provider is a non-fiduciary third party, it is now obligated to estimate how much float income it might receive.
Source: Smith, Gambrell & Russell LLP, October 2012
Summary: As an individual fiduciary, if you fail to meet the needs of the beneficiaries in any manner, you may be held personally liable for such failure. But there are ways to reduce your liability. This is the first in a five-part series of articles devoted to helping fiduciaries, especially individual trustees and ERISA plan sponsors, best align investment goals with beneficiaries' needs.
Source: Fiduciarynews.com, October 2012
Summary: The legislative and regulatory activity since 2008 has been focused on increasing the fiduciary level of care to the investment market, motivated by the belief that investors are being injured - in spite of the protections that have been in place for decades. The superficial assumption is that investors will benefit from a fiduciary level of care.
Source: Fiduciaryregistry.com , October 2012
Summary: Being sued or assessed monetary sanctions is an effective but expensive way for 401k advisors to become familiar with the Labor Department's way of viewing things. There's a better way: learning from the mistakes of other plan sponsors and financial advisors. Perhaps nowhere is this more true than in the nettlesome area of fees -- hidden ones, excessive ones and ones that fit the revenue-sharing mold.
Source: RIAbiz.com, October 2012
Summary: Fiduciaries who use experts for advice and counsel properly can sometimes be insulated from breach of fiduciary duty claims because they made diligent efforts to reach a conclusion, even if it was ultimately a bad decision. But, fiduciaries are charged with the obligation to provide accurate and complete information, and to properly review and become familiar with recommendations and advice.
Source: Fox Rothschild LLP, October 2012
Summary: This paper puts forth questions that will help senior management assess whether or not their 401k vendors and advisors are helping or hindering efforts to meet corporate goals, not to mention avoiding unnecessary lawsuits alleging breaches of 401k fiduciary duties.
Source: Investmenthorizons.com , September 2012
Summary: Nearly 20 months ago, the SEC delivered a report to Congress recommending that the commission issue a regulation that would require all providers of retail investment advice to act in the best interests of clients. Today, the best-case scenario for such a rule is that it will be stalled for years. In Washington terms, that's effectively a death sentence.
Source: Investmentnews.com (Free Registration May Be Required), September 2012
Summary: Despite a push by some industry heavyweights, including Shapiro, to include these requirements as part of Dodd-Frank, the larger regulatory reform mandate, the rule remains optional and may not go into effect. In the meantime, the president and founder of IFS, Knut Rostad, who is also a regulatory and compliance officer at RIA Rembert Pendleton Jackson, is hoping that the lull will give advocates a chance to build their campaign and garner support.
Source: Financial-Planning.com, September 2012
Summary: According to a new survey of 500 registered investment advisors, investment advisory representatives and registered reps, many advisors of all stripes aren’t as fiduciary as they think they are. The survey graded advisors based on questions dealing with fiduciary best practices, along with additional questions focused on legal and procedural aspects related to fiduciary services.
Source: Financial Advisor, September 2012
Summary: Back in the Day, moats were excavated around castles and settlements as part of their defensive system. In today's terms, we would call it "risk management." The author uses the moat metaphor to discuss how fiduciaries can shore up their defenses and improve their governance practices.
Source: Retirement Plan Blog, September 2012
Summary: The survey was completed by 380 advisors across the wide spectrum of advisor business models and affiliations. The survey not only sought advisors' opinions on the fiduciary standard but also gauged their understanding of what the fiduciary standard means now, or would mean in the future, to their businesses.
Source: 401khelpcenter.com, June 2012
Summary: 3ethos and Boston Research Group announced that they will be conducting the first annual survey on the impact a fiduciary standard has on the industry.
Source: 401khelpcenter.com, April 2012
