RetireAware Blog - Page 3 of 4 - : RetireAware Blog

Allen Steinberg

12.12.2018 06.53 GMT+0000

In the absence of new regulatory support, employers need to use their power in the market to protect participants from conflicted service models.

The (Financial) Empires Strike Back

Initiatives to provide participants with protection from conflicted service models frequently meet with resistance from…the financial industry. What can employers do?

financial industry Regulations

Government initiatives aimed at protecting retirement plan participants from conflicted advice are often resisted -- and occasionally derailed -- by the financial services industry. Employers must understand that regulatory agencies are constrained and, rather than wait for regulatory protections employers must understand that they are in the best position to protect participants.

Allen Steinberg

27.11.2018 04.33 GMT+0000

A complaint filed by the SEC illustrates how brokers can create -- and capitalize on -- employee confusion about their employer-sponsored retirement plan.

Caveat Emptor. Really.

Want To Buy A Bridge? Retirement Plan Providers Profit from Participant Confusion.

Plan Provider Complaint Plan Provider Confusing Plan Provider Deceptive

A complaint brought last year by the Securities and Exchange Commission alleges that four brokers targeted federal employees in the federal employees’ defined contribution plan and misled participants about the brokers’ relationship with the federal employees’ plan. Although the conduct described in this case is particularly egregious, this case has lessons for all plan sponsors and fiduciaries.

Allen Steinberg

07.11.2018 11.35 GMT+0000

A number of long-term market trends are creating significant pressure on bundled recordkeepers’ revenues. The recordkeepers are responding to these revenue pressures through a variety of ways that impose additional costs on plans and participants.

Fee Compression: Fiduciaries Take Note

Retirement plan recordkeepers are seeing ongoing pressure on fees. Their approach to developing alternative revenue sources could have implications for plan fiduciaries.

Fees fiduciary Recordkeeper

Revenue for “bundled” recordkeepers have been facing downward pressure for years--both on recordkeeping fees and asset management fees. Over the past decade recordkeeping fees have dropped 50 percent and investment fees paid by 401(k) plans have dropped by 38 percent over a similar period. These bundled recordkeepers are looking to fund managers, plans, and individual participants to compensate for this decline. The recordkeepers’ search for new revenue sources can create challenges for plan fiduciaries and sponsors and should be monitored closely.

Allen Steinberg

27.09.2018 04.19 GMT+0000

Retirement plan fiduciaries should review disclosures from plan providers carefully. Disclosures provided may not be true or false; rather, they may be somewhere in between.

True or False…or Somewhere in Between?

Federal securities law may contain some helpful insights for retirement plan fiduciaries, as they assess disclosures supplied by service providers.

disclosure fiduciary misleading

Retirement plan fiduciaries rely on plan providers (such as recordkeepers) for key pieces of information to fulfill the fiduciaries’ legal obligations -- even if those disclosures reveal some unflattering truths about a provider. In assessing representations from providers, plan fiduciaries would benefit from guidance in assessing when and how to push back. Federal securities laws may provide some help in this regard.

John Enyart

12.09.2018 09.24 GMT+0000

Listen to an overview discussing what Principal Review does--and why it matters

Why This Matters: A Conversation with Dan Alexander

Understanding Conflicts of Interest in Retirement Plans

403bWise Conflict fiduciary

Listen to Dan Otter of 403bWise interview Dan Alexander (Founder, CEO and Managing Director of Principal Review) to discuss how conflicts of interest and undisclosed compensation structures pose risks to plan sponsors and plan participants - and what can be done.

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

18.07.2018 11.21 GMT+0000

A recent study provides strong evidence that the financial industry implicitly tolerates adviser misconduct and that certain firms have created a secondary market for advisers who engage in misconduct.

Patterns of How the Financial Industry Tolerates Misconduct: Birds (and Advisers) of a Feather Flock Together

This paper helps demonstrate how it is not enough for plan fiduciaries to rely on regulatory rules to protect against predatory behavior; as in so many horror movies, the predator is already inside the house.

Advisers FINRA Misconduct

A recent paper raises some important - and troubling - issues about how the financial industry treats advisers who engage in serious misconduct. The paper demonstrates how investment adviser misconduct is tolerated and how advisers who engage in misconduct are likely to be concentrated in certain firms.

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.”