fiduciary Archives - RetireAware Blog : RetireAware Blog

Allen Steinberg

19.01.2021 03.46 GMT+0000

Recent guidance from the DOL illustrates the outgoing administration’s desire to leave its mark.

Outgoing Administration Offers a Few Parting Shots

Recent guidance from the DOL illustrates the outgoing administration’s desire to leave its mark.

Conflict ESG fiduciary

Over the past few months the Department of Labor has issued three pieces of guidance that are (potentially) significant for plan sponsors and plan fiduciaries. These include final regulations describing new restrictions on the use of environmental, social and governance factors (“ESG”) in the selection of plan investments, an interpretative bulletin) containing new rules for plan fiduciaries with respect to proxy voting, and a class-wide prohibited transaction exemption permitting fiduciaries to receive (otherwise prohibited) forms of compensation--such as commissions. These three pieces of guidance may prove to be significant--if they are ever allowed to go into effect.

Allen Steinberg

16.07.2020 01.51 GMT+0000

New DOL guidance would provide advisors with incentives to sell commissionable products.

DOL Completes Trifecta of Questionable Policies

The DOL’s new guidance reinstates prior definition of investment fiduciary and offers new exemption for (otherwise prohibited) forms of compensation for plan fiduciaries.

Commissions fiduciary

The Department of Labor has issued new guidance defining when an investment adviser is a plan fiduciary--and the standards that must be followed by investment fiduciaries. The guidance reinstates a 1975 test defining investment fiduciaries and proposes a new prohibited transaction exemption allowing fiduciaries to collect commissions and third-party payments.

Allen Steinberg

02.07.2020 09.56 GMT+0000

The U.S. Department of Labor has issued new proposed regulations that provide guidance on the process that plan fiduciaries should use in selecting ESG investments. In issuing the proposed regulations the DOL targets ESG funds and creates new requirements--and hurdles-to the use of such funds.

DOL Delivers Lump of Coal to ESG Funds

Proposed DOL regulations would add new restrictions to the use of ESG funds.

ESG fiduciary investments

The Department of Labor has issued new proposed regulation regarding intended to guide plan fiduciaries seeking to invest in funds that utilize environmental, social and governance (“ESG”) considerations. The proposed regulations identify specific (additional) steps that fiduciaries must take in order to utilize ESG funds and would prohibit use of ESG funds within plan “default” investments.

Allen Steinberg

25.02.2020 02.26 GMT+0000

Fiduciary litigation targets another large plan--but in some new ways.

Suit Against Shell Plan Drills for New Legal Claims

Perhaps the most significant claim raised against Shell pertains to the claim that the Shell fiduciaries allowed Fidelity to use participant data to promote non-plan products and services.

Data fiduciary Managed

A new lawsuit filed against the Shell Oil Company’s 401(k) plan raises several new challenges to fiduciary’s behavior. Most significantly, the suit assets that participant data is a plan asset and the use of such data by the plan recordkeeper to promote non-plan products generates several new fiduciary challenges.

Allen Steinberg

25.01.2020 05.01 GMT+0000

In selecting new providers and reducing plan costs, fiduciaries need to be alert to the conduct of deselected providers.

Winning While Losing

Terminated Providers May Represent a Special Fiduciary Challenge.

Broker fiduciary Provider

Scrutiny of plan fees may create situations where an incumbent plan provider can make more by losing a highly competitive bid for an employer-sponsored plan -- and then actively “harvesting” accounts and assets from that plan--than by retaining that plan. And, once deselected, the provider-- and individual representatives employed by that provider--may have a strong economic incentive to encourage participants to move assets out of the employer-sponsored retirement plan and into the retail products of the (deselected) provider.

Allen Steinberg

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

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

Conflict fiduciary

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.

Allen Steinberg

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?

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

fiduciary Preemption

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.

Allen Steinberg

10.05.2019 04.29 GMT+0000

Awareness of Emerging Fiduciary Risk Grows

Conflicted fiduciary

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.

Allen Steinberg

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

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

fiduciary Participant Data Vanderbilt

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.

Allen Steinberg

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 ?

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.

disclosure Fees fiduciary

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.