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.
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Thereās not a sin in listening to radio shows sponsored by those selling gold and silver. Itās quite another thing to actually act on their ārecommendation.ā
Just because you donāt have a fiduciary duty to other employees doesnāt mean you shouldnāt continue to think like a fiduciary.
Once a person enters retirement, the number of scenarios proliferate. Unless the plan sponsor is a financial professional, itās going to be a challenge to quickly comprehend all these options.
This isnāt to say younger employees should be left out of this type of education altogether. They shouldnāt. Itās important the message is drip, drip, dripped from the beginning of the onboarding sequence.
While some may consider this heresy, the best option for a fiduciary managing a portfolio is to include a consistent percentage of assets outside the equity markets and in assets that preserve capital.
Familiarity may breed contempt, but it also makes you sloppy. Do you know plan sponsors that have forgotten they need to address these matters?
Although the Rule appears to be directed primarily at service providers, plan sponsors still have a fiduciary duty to monitor plan compliance, and that includes complying with the demands of this new rule.
Because things happened so fast, everyday folks could see in real time how long-term financial systems unfold. In the end, this may have been the greatest lesson of all, and it came courtesy of living in the real-world economic laboratory that was 2020.
You might think you can ignore PEPs. And you might be in for a surprise.
