Category: best interest


Best Interest and Best Practices #13

Posted on January 16, 2019, by Fred Reish in 401(k), best interest, DOL Activity, fiduciary, Plan Sponsors, prudent. Comments Off on Best Interest and Best Practices #13

Best Practices: Why Wait Until After You are Sued?

This is the 13th of a new series of articles titled “The Bests.” The series focuses on Best Interest and Best Practices. Those topics give me flexibility to discuss a range of subjects that affect both service providers, including advisors, and plan sponsors, including 401(k) and 403(b) committees.

I am surprised that, after all of the fiduciary litigation against 401(k) plan sponsors, many plan sponsors and their committees have not taken the basic steps to minimize the risk of being sued, or if sued, of being liable. In most of the settled cases, the plaintiffs’ class action attorneys require that certain conditions—or “best practices”—be adopted by the plan fiduciaries. And, in settlement after settlement, those conditions are, by and large, the same. That raises the obvious question, why haven’t plan committees … Read More »

Share

Best Interest and Best Practices #11

Posted on December 11, 2018, by Fred Reish in best interest, fiduciary, prudent, SEC. Comments Off on Best Interest and Best Practices #11

What Does Best Interest Mean . . . In the Real World? (Part 3)

This is the 11th of a new series of articles titled “The Bests.” The series focuses on Best Interest and Best Practices. Those topics give me flexibility to discuss a range of subjects that affect both service providers, including advisors, and plan sponsors, including 401(k) and 403(b) committees.

In my last two posts (Bests #9 and #10), I discussed the definition of the Best Interest standard of care, with a particular focus on the duty to exercise care, skill, prudence and diligence in developing recommendations for investors. Those articles commented on the consistency in the Best Interest and fiduciary standards being developed by the SEC and several states (including New York), as well ERISA’s duty of care and duty of loyalty.

Bests #9 discussed the similarities of the standards … Read More »

Share

Best Interest and Best Practices #10

Posted on November 28, 2018, by Fred Reish in best interest, Reg BI, Registered Investment Advisers, RIA, SEC. Comments Off on Best Interest and Best Practices #10

What Does Best Interest Mean . . . In the Real World? (Part 2)

This is the 10th of a new series of articles titled “The Bests.” The series focuses on Best Interest and Best Practices. Those topics give me flexibility to discuss a range of subjects that affect both service providers, including advisors, and plan sponsors, including 401(k) and 403(b) committees.

My last article, Bests #9, discussed different definitions of a “best interest” standard of care. The point of that article is that, while there may be slight differences in the wording, the rules converge to require that an advisor (and the advisor’s supervisory entity) act with care, skill, diligence and prudence to make recommendations that are in the best interest of the investor. This article discusses how the standard applies to specific circumstances.

As background, there are three parts to any … Read More »

Share

Best Interest and Best Practices #9

Posted on November 13, 2018, by Fred Reish in 401(k), 403(b), best interest, DOL Activity, prudent, Reg BI, Registered Investment Advisers, RIA, SEC. Comments Off on Best Interest and Best Practices #9

What Does “Best Interest” Mean? (Part 1)

This is the 9th of a new series of articles titled “The Bests.” The series focuses on Best Interest and Best Practices. Those topics give me flexibility to discuss a range of subjects that affect both service providers, including advisors, and plan sponsors, including 401(k) and 403(b) committees.

“Best Interest” has become part of the American lexicon . . . as an aspirational goal or a demanding standard—depending on the point of view. But, what does best interest mean? It may mean different things to different people . . . and perhaps even to different regulators. However, I believe that most people would agree on the definition in this article.

As I read the guidance issued by the Department of Labor (DOL), the Securities and Exchange Commission (SEC), and New York State, there are actually … Read More »

Share

Best Interest and Best Practices #6

Posted on October 17, 2018, by Fred Reish in best interest, fiduciary, Plan Sponsors, prudent, Service Providers. Comments Off on Best Interest and Best Practices #6

What is the Baseline for A Committee to Act in the Best Interest of its Participants? (Part 3)

 This is the sixth of a new series of articles titled “The Bests.” The series focuses on Best Interest and Best Practices. Those topics give me flexibility to discuss a range of subjects that affect both service providers, including advisors, and plan sponsors, including 401(k) and 403(b) committees.

 In my last two posts (Bests #4 and Bests #5), I discuss the NYU case and the “bad” and “good” behavior of committee members. I concluded my last post with the point that process matters. Of course, it was unspoken that I was referring to a good process. This article discusses the fundamentals of a good process and the lessons learned from the NYU decision.

The NYU committee met quarterly.

There isn’t a prescribed timing … Read More »

Share

Best Interest and Best Practices #5

Posted on October 11, 2018, by Fred Reish in 401(k), 403(b), best interest, Plan Sponsors, prudent, Service Providers. Comments Off on Best Interest and Best Practices #5

What is the Baseline for A Committee to Act in the Best Interest of Its Participants? (Part 2)

This is the fifth of a series of articles titled “The Bests.” The series focuses on Best Interest and Best Practices. Those topics give me flexibility to discuss a range of subjects that affect both service providers, including advisers, and plan sponsors, including 401(k) and 403(b) committees.

This is my second article about the case of Sacerdote v. New York University. As I discussed in my last post, the Court’s opinion pointed out the deficiencies in the understandings and conduct of some committee members. However, the Court ultimately ruled in favor of the plan fiduciaries and against the plaintiffs. Why was that?

Despite the deficiencies (or “bad practices”) of some committee members, others on the committee were engaged and knowledgeable. Obviously, that was an important factor. … Read More »

Share

Best Interest and Best Practices #3

Posted on September 26, 2018, by Fred Reish in 401(k), 403(b), best interest, Plan Sponsors, Service Providers. Comments Off on Best Interest and Best Practices #3

Best Practices for Plan Sponsors: Projection of Retirement Income

This is the third of a new series of articles titled “The Bests.” This series focuses on Best Interest and Best Practices. Those topics give me flexibility to discuss a range of subjects that affect both service providers, including advisors, and plan sponsors, including 401(k) committees.

My first two posts of “The Bests” were about Best Interest for advisors. In this article, I am shifting to Best Practices for plan sponsors. Keep in mind that a Best Practice is above and beyond the legal requirements. Best Practices are not mandated; they are elected.

While the most obvious Best Practices are automatic enrollment and automatic deferral increases, I want to start with the projection of retirement income for participants. That’s partially because it is in a current legislative proposal—in the Retirement Enhancement and Savings … Read More »

Share

Best Interest and Best Practices: Improving Retirement Outcomes #2

Posted on September 19, 2018, by Fred Reish in best interest, DOL Activity, FINRA, prudent, Reg BI, SEC. Comments Off on Best Interest and Best Practices: Improving Retirement Outcomes #2

This is the second of a new series of articles titled “The Bests.” This series focuses on Best Interest and Best Practices. Those topics will give me flexibility to talk about a range of subjects that affect both service providers, including advisors, and plan sponsors, including 401(k) committees.

In my last post, I discuss the remarkable similarities among the SEC’s proposed Regulation Best Interest, the SEC’s proposed Interpretation for investment advisors, the DOL’s Best Interest standard of care (which is a combination of ERISA’s prudent man rule and duty of loyalty), and the New York State Best Interest standard for sales of annuities and insurance products. All of those rules require that advisors act with care, skill, prudence and diligence, and that they place the interests of the investor ahead of their own.

In the first post, I conclude that the Best … Read More »

Share

Best Interest and Best Practices: Improving Retirement Outcomes #1

Posted on September 12, 2018, by Fred Reish in best interest, BICE, prudent, SEC. Comments Off on Best Interest and Best Practices: Improving Retirement Outcomes #1

What is the “Best Interest?”

This is the first of a new series of articles titled “The Bests.” This series will focus on Best Interest and Best Practices. Those topics will give me flexibility to talk about a range of subjects that affect both service providers, including advisors, and plan sponsors, including 401(k) committees.

For this inaugural article, let’s talk about the meaning of “Best Interest.”

There are at least four Best Interest standards. (While “best interest” can also refer to management of conflicts of interest, this article is about the best interest standard of care.)

ERISA’s best interest standard of care for plan sponsors and fiduciary advisors for private sector retirement plans. (While ERISA doesn’t literally have a best interest standard—because the Best Interest Contract Exemption was vacated by the 5th Circuit Court of Appeals, that best interest standard was a combination of … Read More »

Share



Recent Insights

Best Interest and Best Practices #13

Best Practices: Why Wait Until After You are Sued?

This is the 13th of a new series of articles titled “The Bests.” The series...

Best Interest and Best Practices #12

What Does Best Interest Mean . . . In the Real World? (Part 4)

This is the 12th of a new series of articles titled...

Best Interest and Best Practices #11

What Does Best Interest Mean . . . In the Real World? (Part 3)

This is the 11th of a new series of articles titled...