“Industry participants also argue that the rule transforms one-off transactions into fiduciary relationships in violation of the common law, but the common law of the states is divided on this, and there is a need for a federal standard regulating investment advice fiduciaries.”
Tag "conflict of interest"
For all the good intentions, however, what will happen when the rubber finally meets the road? Will the new DOL Fiduciary Rule really level the playing field?
Herein lies the potential for a direct conflict of interest. This applies generally to all proxy voting in commingled portfolios.
I don’t think the plan service providers should provide participant advice. Advice to participants should be provided by a non-related third-party fiduciary.
The conflicts-of-interest inherent in selecting proprietary funds are apparent. Less so are the criteria used to determine what a suitable process might be.
In a nutshell, what was initially considered a “pick me because you like me” decision on the part of the prospect has been reframed as a “pick me because I sold you investments” decision. It’s a subtle distinction, but it drives the difference between a fiduciary act and a non-fiduciary act.
Here’s something you don’t always see, but maybe you should.
401k plan sponsors can’t afford to fall victim to the lure of heuristics. Index funds can generate just as much fiduciary headaches as actively managed funds.
These may not be the only rules, but they rank up there as among the most practical for fiduciaries and, in some cases, for any other professional.
FiduciaryNews.com Trending Topics for ERISA Plan Sponsors: Week Ending 10/19/18
More regulatory silliness, Son of Fiduciary? and Looking for Mr. Low-Fee Bar.