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

DOL Delivers Lump of Coal to ESG Funds

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

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.

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

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.

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.

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

Winning While Losing

Terminated Providers May Represent a Special Fiduciary Challenge.

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.

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.

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.

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.

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

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.

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.

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?

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.

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.