29.10.2019 01.55 GMT+0000

Employers need to develop strategies for dealing with state/federal tug-of-war over regulatory authority.

The (Individual) States of America vs The United States of America

The (Individual) States of America vs The United States of America

The states and the federal government are engaged in a tug-of-war over the ability to issue rules affecting key HR and benefits matters. This is a game with no winners.

There is an ongoing conflict between the federal government and individual states over benefits and HR policies--with states seeking to fill gaps left by the federal government and the federal government claiming that the state initiatives are preempted.

12.09.2019 01.12 GMT+0000

More fiduciaries are reading and hearing about the risks posed by conflicted provider service models.

Focus on Conflicts Gains Visibility

Focus on Conflicts Gains Visibility

Awareness--and concern--about the impact of DC provider conflicted service models continues to gain visibility.

Concern about plan providers and the risks of conflicted service models continues to gain visibility as RetireAware leadership takes this message to two national audiences.

02.09.2019 02.36 GMT+0000

States are acting to fill gaps in federal rule. Can they?

State Action on Fiduciary Standards – Is An Opposite and Equal Industry Reaction Looming?

State Action on Fiduciary Standards – Is An Opposite and Equal Industry Reaction Looming?

What Happens When States Seek to Set Their Own Fiduciary Standards?

Federal law “preempts” conflicting state law. As states increase activities to protect investors—and impose fiduciary standards—we can expect to see the financial industry push back. A key battleground is likely to be the application of preemption to these state initiatives.

19.07.2019 02.55 GMT+0000

The SEC’s new Regulation BI relies heavily on increased disclosure of conflicts of interest to protect investors. However, there is research indicating that, where an economic conflict exists increased disclosure makes things worse--not better. This research is worth considering as we assess the implications of these new rules.

Understanding the Impact of Disclosure

Understanding the Impact of Disclosure

Research indicates that disclosing conflicts of interest may not have the desired effects.

SEC rules to protect investors from brokers (with conflicting economic incentives) relies heavily on disclosure of these conflicts. However, some academic research raises questions about the impact of increasing disclosure where parties’ interest may conflict. Significantly, conflicted advisors may provide more biased advice (to offset the impact of the disclosure) and customers may not adequately assess or consider the nature of the conflict.

25.06.2019 05.38 GMT+0000

SEC Finalizes New Standards for Broker Dealers

SEC Finalizes New Standards for Broker Dealers

The SEC has adopted new rules for broker-dealers that expand disclosure requirements and require broker-dealer to act in the “best interest” of customers.

The SEC has finalized rules governing the behavior of broker-dealers. Under this rule broker dealers need to (i) provide investors with additional disclosure regarding fees, services and conflicts of interest and (ii) use care and diligence to develop a reasonable belief that a recommendation is in the “best interest” of the customer and not place the interest of the broker dealer “ahead of” the interest of the customer.

10.05.2019 04.29 GMT+0000

Awareness of Emerging Fiduciary Risk Grows

Awareness of Emerging Fiduciary Risk Grows

An article published in Benefits Quarterly by RetireAware’s Dan Alexander and Steinberg describes how retirement plan providers may exploit access to plan participants to promote nonplan products and services--and how these behaviors create fiduciary risk.

25.04.2019 01.27 GMT+0000

It’s official--retirement plan fiduciaries need to start caring about vendors’ use of participant data to promote non-plan related financial products and services.

Vanderbilt Settlement Sends Fiduciaries a Message

Vanderbilt Settlement Sends Fiduciaries a Message

• The settlement focuses on limiting the ability of the current recordkeeper (Fidelity) and any future recordkeeper from using participant data.

In a significant development, Vanderbilt University has settled a fiduciary lawsuit--and the settlement includes prohibitions on the use of participant data by plan vendors to market non-plan products.

11.04.2019 07.34 GMT+0000

Plan provider “disclosures” of conflicts of interest do little to protect participants.

Disclosure: A Fox’s Guide to the Henhouse

Disclosure: A Fox’s Guide to the Henhouse

Plan fiduciaries rely on disclosure to protect participants from plan providers whose economic interests conflict with the best interests of participants. This reliance is misplaced.

One of the great challenges facing plans is how to deal with plan providers who have dual loyalties. Conflicted providers represent a significant challenge--and risk--to plan fiduciaries by capitalizing on participant confusion over the role of the financial “advisors” who work for these providers. The most common response is to rely in legal notices and disclosures to “address” concerns over conflicted providers. However, this reliance on legal notices and disclosures needs more careful examination -- especially since the disclosures are prepared by these (conflicted) providers.

20.03.2019 01.42 GMT+0000

More employers are implementing asset retention strategies. This may require more than a few changes to the plan design.

Ensuring the Effectiveness of an Asset Retention Strategy

Ensuring the Effectiveness of an Asset Retention Strategy

Is Your Recordkeeper Undermining Your Initiatives?

Attitudes about employer-sponsored retirement plans’ retaining the assets of terminated employees are starting to change. Asset retention strategies can benefit the plan as a whole and participants. However, an employer implementing an asset retention strategy needs to determine if the plan recordkeeper is also vying for those same assets and has an economic interest in undermining the employer’s strategy.

04.03.2019 07.47 GMT+0000

In recent weeks a new fee, imposed by Fidelity on low cost mutual funds options offered on Fidelity’s recordkeeping platform, has been described in the media and in a new lawsuit against Fidelity.

Who’s Inside Your (Participants’) Wallets ?

Who’s Inside Your (Participants’) Wallets ?

Plan recordkeepers, facing challenges to their traditional revenue models, are looking for new revenue sources. These new sources pose legal challenges for the recordkeepers and practical challenges for plan fiduciaries.

In recent weeks a new fee has been described in the media and in a new lawsuit against Fidelity. The fee, identified as an “infrastructure fee,” is imposed on mutual funds that seek “shelf space” on Fidelity’s recordkeeping platform and that do not otherwise pay sufficient amounts to Fidelity in other (more traditional) fees. The infrastructure fees have triggered a lawsuit and, according to the Wall Street Journal, a DOL investigation. More importantly, these latest revelations about Fidelity’s infrastructure fee serve as a stark reminder that plan providers’ quest to identify the true amount of recordkeeper fees -- and determine if such fees are reasonable -- is an ongoing and constantly evolving challenge.