The Duty of Prudence and the Net Cost of Investments
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June 22, 2015
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By now, you’ve probably read about some of the details of the Department of Labor’s fiduciary proposal. This article isn’t about the details; it’s about the essence. What’s the big picture? First, the proposal significantly expands the definition of fiduciary advice. As a result, almost every person who makes an
Over the last few months, the most common questions asked by clients . . . and most of my work . . . have been about three issues: The DOL’s new fiduciary proposal . . . not surprising. Capturing rollovers from retirement plans. Again, not surprising because of the large
The hottest ERISA issue of 2015 is the DOL’s proposal to expand the definition of fiduciary advice. That proposal has become highly publicized because of the White House endorsement and the aggressive Wall Street opposition. Unfortunately, political rhetoric on both sides has dominated the discussion . . . to the
Little has been written about how a plan fiduciary should prudently select insurance companies and guaranteed retirement income for participants. There’s a DOL “safe harbor” regulation, but it doesn’t give fiduciaries a checklist for compliance. To address this, Lincoln Financial hired us to work with an insurance consultant to develop
Not much has been written about ERISA considerations for referring investment managers to retirement plans . . . and the receipt of solicitor’s fees for a referral. However, there are a host of legal issues. First, the person making the referral is receiving “indirect” compensation (that is, the solicitor’s payment
As baby boomers approach retirement in a defined contribution world, the regulators are focusing on distributions and rollovers to IRAs. The SEC, FINRA, DOL and GAO have all spoken on the subject. Their conclusion appears to be that plan fiduciaries, advisors and recordkeepers need to reconsider their current practices and,
As you have undoubtedly heard, the Department of Labor has pushed back the date for the re-proposal of the fiduciary advice regulation to January of next year. In addition, the SEC is working with the DOL to help determine the impact of an expanded fiduciary advice regulation on the ability
The increasing regulation of 401(k) distributions and rollovers to IRAs continues to be a subject of great interest to my clients . . . and a considerable amount of work for me. One of the benefits of concentrated work in that area has been an enhanced appreciation of the difficulty
Several of my colleagues and I have provided comments to the DOL about its proposal to require a 408(b)(2) guide Most other commentators have or will be addressing the policy issue — is it a good idea to require a guide or not? We avoided the policy issues. Instead, our
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