Expert Q&A on Outsourcing Fiduciary Investment Responsibilities
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Fiduciary and Plan Governance Material Expert Q&A on Outsourcing Fiduciary Investment Responsibilities Summary: Fiduciaries who outsource their investment responsibilities to third-party service providers must do so prudently, considering the interests of the plan and its participants, and in a manner consistent with the terms of the plan documents. This is an expert Q&A with David N. Levine and Allison Tumilty of Groom Law Group on issues employers should consider when outsourcing fiduciary investment responsibilities. Source: Practicallaw.com Introduction to Institutional Investor Fiduciary Duties Summary: This paper explores the importance of guiding legal principles in protecting beneficiaries and society from abuse of delegated investment powers by fiduciary agents. It argues that countries that can most effectively navigate the transition to modern and sustainable fiduciary investment practices will be able to allocate capital more efficiently, reduce the negative side effects of investment practices and have a long-term competitive advantage in the 21st century. Source: Reinhartlaw.com
Plan Automation Implementing Automatic Features in DC Plans -- Frequently Asked Questions Summary: This Frequently Asked Questions resource is the third in a series on best practices in implementing automatic features in DC plans and seeks to provide clarification on common regulatory questions that plan sponsors and their advisors may have when putting auto features into practice. These FAQ's were developed by the Public Policy Committee of DCIIA and the law firm of Morgan, Lewis & Bockius. Source: Dciia.org Let the Questions Begin: Preparing for DC Plan Automation Summary: Defined contribution plan changes can bring forth more questions than a typical 4-year-old asks -- lots of why's, what's and how's. When you've decided to tackle automation, be it auto enroll, auto escalation or even default investments, it's helpful to get prepared before you call the consultants, lawyers, and your service providers. Source: Dciia.org
Insight: Studies, Research and White Papers Financial Education and Retirement Security Top Priorities for Employers in 2014 Summary: The International Foundation of Employee Benefit Plans released preliminary findings from a new report that found 68 percent of employers offer some kind of financial education for employees. The report, Financial Education for Today's Workforce: 2014 Survey Results, reflects the growing need for employers to offer programs that help their staff navigate the often complex systems required for retirement planning and financial security. Source: 401khelpcenter.com Poll Suggests Plan Sponsors Are Evaluating Their Current Target-Date Funds Summary: SEI released a poll that found defined contribution plan sponsors are evaluating their current target-date funds and considering whether or not custom TDFs are a better option. Of those plan sponsors already offering TDFs, 12 percent currently use custom funds rather than proprietary or pre-packaged options. The poll suggests that percentage is rising as more than a third (37 percent) of those surveyed said their organization is likely or somewhat likely to implement or revise custom target date solutions in the next 18 months. Source: 401khelpcenter.com Using Index Funds in Defined Contribution Plans Summary: What effect does the use of index funds in defined contribution plans have on plan and participant costs? The answer is that it depends. Source: Cammackconsulting.com
Items of Special Interest to Service Providers Study Confirms fi360 Method for Investment Due Diligence Summary: fi360 announced that its fi360 Fiduciary Score methodology for investment due diligence has been found to contain statistically significant content for the mutual fund portfolio construction process, according to a recent MacroRisk Analytics study. Source: 401khelpcenter.com Active vs. Passive Investment Management Marketing Practices Summary: The issue of active versus passive management is a perennial debate for asset managers and investors. This white paper examines how three firms (American Funds, MFS and Vanguard) promote their services in the active and passive management spheres. The whitepaper compares the firms' marketing strengths and weaknesses and places a special emphasis on online thought leadership, examining the value, volume and website placement of the pieces the firms produce. Source: Corporateinsight.com White, Borzi and Legislators Focus on Fiduciary Summary: In what may well be a pivotal year for fiduciary decisions, a fiduciary redraft from the DOL seems to be on track, but comments made by SEC Commissioner Daniel Gallagher at the FSR event signal that the SEC may not issue a proposed rule at all. Source: Thinkadvisor.com Study Reveals Previously Unpublicized Conflict of Interest Can Harm Mutual Fund Performance Summary: What is this heretofore ignored conflict-of-interest. FiduciaryNews spoke with Ashish Tiwari about it. Tiwari, Associate Professor of Finance and Tippie Research Fellow, University of Iowa, identifies this culprit as "cross trading." He and his co-author published a study that formally provides evidence on the magnitude of the performance penalty imposed by the potential conflicts of interest related to cross trades. Source: Fiduciarynews.com How a 401k Financial Advisor Can Limit Their Liability Summary: Some of retirement plan financial advisors worry so much about reducing their plan sponsors' fiduciary risk that they often neglect their own risk as the plan's financial advisor. This article is about how, as a retirement plan financial advisor, you can limit your own liability. Source: Jdsupra.com SEC Reconsiders TDF Glide Path Illustrations Summary: The Securities and Exchange Commission is again seeking public comment on rule amendments proposed in 2010 that would change the way target-date funds are marketed. The rule amendments would, if adopted as originally proposed, require marketing materials for TDFs to include a table, chart or graph depicting the fund's asset allocation over time, i.e. an illustration of the fund's so-called asset allocation "glide path." Source: Planadviser.com
Court, Legal, Legislative and Washington DC Tussey v. ABB - Opening Up New Avenues for Excessive Fee Litigation Summary: A broader argument for rethinking how we analyze fiduciary prudence in the context of fees opens up new avenues for prosecuting fee claims, but also raises a red flag that prudent and conscientious plan sponsors need to pay attention to; namely, is the overall structure of plan choices optimal for the participants, rather than just whether there are some low cost choices open to the participants who are sophisticated enough to want to avoid the higher cost options. Source: Bostonerisalaw.com Summary: This decision serves as a reminder that fiduciaries overseeing plans with revenue sharing arrangements must understand these arrangements and determine whether their service providers are receiving more than "reasonable" compensation for their services. Recordkeepers subject to the service provider disclosures are required to provide plan fiduciaries with a separate disclosure of recordkeeping costs. Plan fiduciaries will want to carefully review these disclosures. Source: Ebia.com Battle Over Presumption of Prudence Heats Up Ahead of High Court Arguments Summary: The question of whether a judge-made presumption of prudence should protect fiduciaries of employer stock plans from liability for declining stock prices will be front and center at the U.S. Supreme Court next week, with the court receiving nine amicus briefs in the months leading up to oral arguments. Source: Bna.com
Compliance and Regulatory Related IRS Issues New Guidance on Windsor Decision -- Notice 2014-19 Summary: IRS Notice 2014-19 provides guidance on how qualified retirement plans should treat the marriages of same-sex couples following the Supreme Court's decision in United States v. Windsor. The Windsor decision invalidated Section 3 of the 1996 Defense of Marriage Act that barred married same-sex couples from being treated as married under federal law. Source: Irs.gov Summary: This questions and answers provide additional information regarding the application of the Supreme Court's decision in United States v. Windsor (June 26, 2013) and the holdings of Rev. Rul. 2013-17 (published in the Internal Revenue Bulletin on September 16, 2013) to qualified retirement plans and regarding Notice 2014-19, which will appear in IRB 2014-17. Source: Irs.gov April 30, 2016 Deadline for PPA Defined Contribution Restatements Summary: Employers will have until April 30, 2016, to restate their plans onto the new documents. This is the end of the six year restatement cycle for preapproved defined contribution plans. April 30, 2016, is also the deadline for employers to submit determination letter requests for these plans. Under relatively new IRS policy, employers using a prototype document cannot use the short and inexpensive Form 5307 to request an individual determination. Form 5307 is now reserved for adopters of volume submitter documents who make relatively minor changes to the document. Source: Relius.net CAPSA Releases Final Guideline -- Canadian DC Plans Summary: On March 28, 2014, the Canadian Association of Pension Supervisory Authorities released the Defined Contribution Pension Plans Guideline. While CAPSA's guidelines do not have the force of law, these guidelines may be used as a benchmark by the courts and/or regulators to assess whether a DC plan administrator has fulfilled its fiduciary obligations. Source: Pensionsbenefitslaw.com
General Items Creating Results With Benefits Communication -- Frequently Asked Questions Summary: It is more important than ever that employers not only provide programs that support employees' health and financial security, but also invest in educating people and supporting them to make good decisions. Benefits account for almost 30% of total compensation spending. An effective communication program helps your company make the most of its investment. Source: Benzcommunications.com Why Employers Should Sponsor a Retirement Plan Summary: While employees can help grow your business, they do cost money in terms of the employer portion of Social Security, unemployment insurance, health insurance, and other benefits. One benefit that employers should offer their employees is a retirement plan and there are many good reasons why. Source: Jdsupra.com
Marketplace News Great-West Acquires JP Morgan's Large-Market 401k Recordkeeping Business Drinker Biddle Announces SECurities Law Perspectives Retirement Revolution Integrates vWise Into Recordkeeping Services Fidelity Reports Record Sales in Small- and Mid-Sized DC Market Great Lakes Employee Benefit Services Changes Name ABG North Central Launches Mobile Employee Benefits App Pensionmark and Retirement Plan Solutions Form Wisconsin Partnership Pentegra Adds West Coast Business Development Director CFDD Launches Liquid Alternatives Web Resource for DC Plans ING Launches Online Planning and Budgeting Tool
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