Plan sponsors need to think about it in these terms: Does it make sense to have a pork-belly ETF on a 401k investment menu? How about orange futures?
Tag "liability"
The process of transferring assets is not without its own liabilities. The exact nature of the fiduciary risk depends on the nature of the transfer.
The DOL seems to use the same metric that it earlier employed in its statement on the Fiduciary Rule. Still, the Advisory Opinion is very precise in what it allows. Citi will have to tread carefully to not cross the line into the realm of fiduciary.
The antiseptic compliance regime spelled out by the DOL and ERISA has to date defined fiduciary services. Perhaps, if we’re going to consider what is “beyond” that sterile definition, we might want to go back to the future. In a sense, rediscovering where “fiduciary” initially came from might suggest where it is headed.
Overall, nearly 1 in 5 companies still have not adopted auto-enrollment. There are common reasons why companies would not include auto-enrollment in their plans.
This week is all about those wayward 401k features that are well beyond their expiration date. Careful, though. In the process, you’ll see what’s garbage to one is a work of art to another.
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.
You cannot understate the fiduciary aspect of lower fees. Most 401k plan sponsors, and especially those in smaller plans, don’t have the time or expertise to administer their company’s retirement plan. If they skimp on fees, are they also skimping on the fiduciary protection those professionals are supposed to provide?
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.
If a fiduciary feels carrying out legal duties entails a high cost, there is an acceptable strategy for dealing with this, but the fiduciary must execute it before the client signs the contract.
