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Allen Steinberg

27.04.2018 03.36 GMT+0000

The SEC’s proposed new rules require broker-dealers’ obligations to act in customers’ “best interests.” The SEC proposal, in some ways, fills some of the gaps created by the recent court decision to invalidate DOL regulations expanding the definition of ERISA “fiduciary.”

The SEC Enters the Fiduciary Fray

The SEC has now weighed into this fiduciary fray, proposing new rules governing the behavior of broker-dealers.

Broker Conflicts Disclosures

The SEC has proposed new rules governing the behavior of broker-dealers. Under this proposal a broker- dealer “shall act in the best interest of the retail customer . . . . without placing the financial or other interest of the [broker-dealer] ahead of the retail customer.” The primary requirements of “best interest” are that broker-dealers disclose fee structures and not place their financial interests ahead of customers’ interests.

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.

Allen Steinberg

12.01.2018 02.58 GMT+0000

Plan participants and representatives servicing your retirement plan may be “trapped” by hidden incentive programs.

Unchecked Revenue: Show Me the Fees

Recordkeepers can engage in practices to mask the total revenue they obtain from plan participants. Plan sponsors need to be smarter and more aggressive in eliminating these practices.

ACTing Commissions Fees Recordkeepers

As recordkeeping fees continue to decline, recordkeepers are becoming more resourceful. As a result, representatives servicing your retirement plan may be paid based on their ability to sell financial products to your employees. Employer beware.

Allen Steinberg

16.12.2017 10.24 GMT+0000

Under current law, financial firms can play fast and loose with significant amounts of personal financial data. Employers are a key source of financial firms access to employees’ financial information (through employer-sponsored retirement plans). So, with employers already involved in providing employees’ financial information, what can employers do to protect that data.

Twenty-One Years After HIPAA Added Protections for Health Information, What About Financial Information?

Employers can play an active role in protecting employees’ financial data – and, have a roadmap for doing so by looking at HIPAA.

Data providers security

There are few rules under current federal law to prevent financial firms from exploiting individuals’ personal financial information. Employers are a key source of financial firms access to employees’ financial information (through employer-sponsored retirement plans). So, with employers already involved in providing employees’ financial information, what can employers do to protect that data?

Allen Steinberg

28.11.2017 09.31 GMT+0000

Your employees’ financial data is vulnerable – and not just to illegal hacking – but to your retirement plan provider. These providers also have powerful financial incentives – and plenty of opportunity – to use plan participants’ data to market (unrelated) financial products to these participants.

Data Insecurity: It’s Not Just the Hack

Employers need to pay attention to how retirement plan providers use participant data – and start establishing limits on how that data can be used.

Data providers security

Employers focused on data security need to look beyond computer hacks as they try to keep employees’ confidential financial information secure. Retirement plan providers have access to a wealth of plan participants’ data. These providers also have powerful financial incentives – and plenty of opportunity – to use plan participants’ data to market (unrelated) financial products to these participants.

Allen Steinberg

16.11.2017 08.22 GMT+0000

Legally required reporting and disclosure materials provide employees with lots of information- but not enough insight. As a result, billions of dollars are rolled over each year into costly financial products.

Retirement Plan Disclosure: Why are Participants Adrift in a Sea of Information?

Employers’ communication to employees about their retirement plans are designed to comply with various legal requirements.

Rollovers

Compliance with government required reporting and disclosure requirements gives participants lots of information – and pieces to the retirement puzzle. However, in their efforts to comply with these requirements, participants are not provided enough to assemble the disparate pieces of information available. And, there are some key pieces missing.

Allen Steinberg

26.10.2017 07.33 GMT+0000

Retirement plan assets are an attractive target for financial services firms. These firms (often including providers hired by the employer) have a wide variety of ways to steer employees to high priced products and services. And, despite efforts to help employees save and invest for retirement, employees remain vulnerable. Employers need to do more if they want to protect employees – and themselves.

Employees (Still) at Risk: Distributable Events

Protecting Employers by Protecting Employees’ Accounts

disclosure ERISA fiduciary

Employers provide lots of information to retirement plan participants about their investment choices and distribution options. Despite these efforts, there is a significant gap in efforts to protect employee savings. The gap occurs because financial services firms make a lot of money by steering employees to higher priced investment and insurance products. New Department of Labor regulations will still leave gaps – gaps that financial firms are sure to exploit. There is more that employers can do to protect plan participants – and themselves. But it will require a new approach.