02.03.2021 03.16 CST
Plaintiffs’ must use truly comparable benchmarks in claiming imprudent fiduciary decisions.
A recent court case provides some potentially valuable guidance into ways plan fiduciaries can approach fiduciary litigation. Most importantly, the case could force plaintiffs to focus on truly comparable situations in alleging that a plan’s actions were imprudent--this would limit plaintiffs’ ability to use, as benchmarks of prudent behavior, general industry data or different categories of investments (such as comparing index funds to actively managed funds).
15.07.2020 11.54 CDT
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.
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.
03.07.2020 06.45 CDT
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.
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.
19.11.2018 08.31 CST
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.
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.
05.06.2018 12.08 CDT
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.
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.