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.
Tag "liability"
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.
Documentation, due diligence, and other formal compliance matters are critical to reducing the fiduciary liability of 401k plan sponsors. But ultimately, they are responsible for safeguarding the assets of plan participants.
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.
Even without these extremes, this asset class brings with it a roller coaster experience, something many retirement savers won’t be able to stomach.
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.
But this rookie mistake doesn’t bypass veteran plan sponsors. If they’ve grown too complacent with their plan, they may wake up one day to find out they’ve got a dinosaur on their hands.
Retirees should think for themselves and what alternatives they have regarding their retirement assets. These aren’t the same as they were when they were working.
Just as these changes come bearing down, so, too, does a need for greater hand holding. Pressures within the provider industry, however, appear to be reducing the number of available hands.
There’s not a sin in listening to radio shows sponsored by those selling gold and silver. It’s quite another thing to actually act on their “recommendation.”
