The root of these broader fiduciary concerns lies within the domain of compliance. Everything derives from what the regulators require, what any DOL audit might look at, and what might pique the interest of class-action attorneys.
Tag "DOL"
The Biden Rule, like the Trump Rule, does not encourage or discourage the use of ESG criteria when selecting investments. This allows fiduciaries to either adopt ESG principles or ignore them.
It’s critical that plan sponsors consult with compliance professionals before adding the Deemed IRA feature.
Let’s not just blame certification providers. Government agencies responsible for monitoring and enforcement are also responsible for market confusion and the dilution of the “fiduciary” standard.
The story arc of the 401k mimics that of software. Each release adds to and builds on features and benefits over and above those of previous releases.
Unlike previous definitions, this version takes a definitive step towards allowing plan sponsors to forgo traditional financial measures. Rather than relying on extensive academic studies, this new Rule represents a certain leap of faith.
There is an out, of course, but that might eliminate the so-called “institutional pricing” advantage former employees have for staying in the plan in the first place.
“I was [once] a major skeptic of the use of annuities, I have subsequently changed my mind regarding the efficacy of low-cost fixed and variable annuities in both personal and retirement accounts.”
Today, in reading some of the headlines, you’d think they’re greater than sliced bread. They may be. They may not be. Still, there are differences, and 401k plans sponsors would benefit from practicing the utmost in due diligence when determining if CITs are the right fit for their plan.
Should the platform offer ESG doesn’t necessarily mean good news for the 401k plan sponsor. Including ESG funds might introduce other risks.
