Fiduciary Archives - Page 2 of 2 - RetireAware Blog : RetireAware Blog

Allen Steinberg

11.09.2018 12.42 GMT+0000

Recordkeepers who also sell financial products and services are subject to regulation by the SEC. Recent events indicate that the SEC may fill the void left by DOL inactivity on replacement of the defunct fiduciary rule.

From DOL to SEC and Beyond

Will the SEC Play a Larger Role in Retirement Plan Governance?

DOL fiduciary SEC

Events of recent months indicate that a regulatory shift may be occurring. The Department of Labor has gone silent on the conflicts of interest in the financial industry that affect retirement plans, while the Securities and Exchange Commission seems to have taken up the responsibility for addressing these issues.

Allen Steinberg

22.06.2018 10.46 GMT+0000

Over 20 million Americans are employed by state and local governments, including teachers, police officers, and social workers. ERISA, and the fiduciary protections of ERISA, do not apply to these governmental employees. This represents a risk to the retirement security of these employees - a risk that is likely to become more significant in the future.

Public Employees: (Un)Equal Protection Under the Law

Governmental employee retirement savings do not have the same protections as employees in the private sector.

ERISA fiduciary Governmental

ERISA’s fiduciary protections do not apply to governmental plans and participants in governmental plans do not receive the same fiduciary protections as employees in corporate or private, non-profit plans. This gap places governmental employee retirement savings at risk and as the role of defined contribution plans in the governmental sector expands, it becomes increasingly important that these risks are addressed.

Allen Steinberg

31.05.2018 01.21 GMT+0000

There is significant evidence that consumers are placing their trust - and their money - with financial professionals who have financial incentives that conflict with consumers’ best interests. It does not appear that the current debates over professionals’ standards of conduct will make real progress in addressing this issue.

Dancing on the Head of a Pin

Regulators and courts may focus on the different rules for “investment advisers” and “brokers.” But, in the real world, this distinction confuses investors and undermines consumer protections.

Broker fiduciary Investment Adviser

There are key legal differences between investment advisers and brokers. However, consumers do not understand the implications of these differences. Consumers’ confusion is exacerbated by industry advertising, with references to “financial advisers,” “wealth managers” and “financial consultants” further blurring the difference between investment advisers and brokers.

Allen Steinberg

10.05.2018 11.30 GMT+0000

Financial firms have both the opportunity and the financial motivation to move customers from employer-sponsored plans to individual products, such as retail managed accounts and annuities. An investigation of Wells Fargo bank may disclose whether the bank succumbed to the temptation.

Et Tu, Wells Fargo?

An investigation does not mean there was any wrongdoing by Wells Fargo.

fiduciary Leakage

Wells Fargo bank is reportedly under investigation for practices in the bank’s retirement plan division. The investigation apparently focuses on practices that may have been intended to move clients from employer-sponsored plans into more expensive individual retirement accounts when they leave their jobs. If these reports are accurate it may help shine a light on industry practices that contribute to plan “leakage.”

Allen Steinberg

10.04.2018 04.07 GMT+0000

The latest court decision invalidating the DOL’s proposed rewrite of the fiduciary rules adds more uncertainty for plan fiduciaries. How do fiduciaries get past the “noise” of conflicting courts and regulators and go about the business of protect plan interests?

Nature Abhors a Vacuum – and So Should Fiduciaries

Conflicting court opinions, dueling regulators and uncertain direction from the executive branch are making it harder for plan fiduciaries to do their jobs.

Courts DOL Fiduciary Duties

The U.S. Court of Appeals for the Fifth Circuit decision to invalidate the DOL’s new fiduciary rule is the latest in a string of confusing (and often conflicting) messages to plan fiduciaries. However, fiduciary duties under ERISA are grounded in some core principles that have not changed. The legal confusion surrounding certain fiduciary issues cannot obstruct fiduciaries’ execution of those duties.

Allen Steinberg

19.03.2018 09.00 GMT+0000

A new court decision could give the Administration an opportunity to completely withdraw the regulations expanding ERISA’s definition of fiduciary and limit the ability to expand the scope of ERISA’s fiduciary protections in the future.

Court of Appeals Strikes Down Fiduciary Rule

The U.S. Court of Appeals for the Fifth Circuit has issued an opinion striking down the DOL’s new fiduciary rule. The decision will add more (unwelcome) uncertainty.

Court fiduciary

On March 15 the U.S. Court of Appeals for the Fifth Circuit struck down the DOL’s new fiduciary rule. The decision, in very sweeping terms, concluded that the DOL did not have the regulatory authority to expand the previous definition of “fiduciary” contained in 1975 regulations. The breadth of the Court’s ruling, if upheld, makes it virtually impossible for the DOL to somehow modify the fiduciary proposal or to issue new fiduciary rules.

Allen Steinberg

07.03.2018 06.43 GMT+0000

ERISA requires that plan fiduciaries must evaluate the “reasonableness” of provider contracts. This goes beyond provider revenue generated directly from plan services and includes all revenue generated in connection with the plan. Fiduciaries should take note.

Selecting and Retaining Service Providers: Time to Dig Deeper?

Plan fiduciaries need to respond to changing industry practices. The next challenge in protecting plans may be fees for non-plan related financial products.

Compensation fiduciary Indirect

There is ongoing pressure on plan providers to continue to lower fees. And, it is reasonable to expect providers to seek alternative sources of revenue that may not be part of plans’ direct costs. In monitoring providers, fiduciaries should take note of rules under ERISA that require fiduciaries to obtain information from providers about both direct and indirect compensation that will be received by providers “in connection with” the plan services. This requirement goes beyond simply negotiating plan fees and beyond the general “prudence” requirements.

Allen Steinberg

25.01.2018 04.59 GMT+0000

A new chapter may be opening in the ongoing saga of litigation against plan fiduciaries. A new target in this sage - plan vendors’ use of participant confidential financial to facilitate the cross-sales of non-plan financial products.

Fiduciary Lawsuits: A New Chapter Opening?

Latest Complaint Against NYU Raises New Challenges

Data fiduciary litigation

Plaintiffs in the lawsuit against the NYU retirement plans have filed an amended complaint. This new complaint challenges the use, by the plans’ recordkeeper, of participant confidential financial data and the recordkeeper’s cross-selling of non-plan financial products to plan participants.