What Will Replace Fiduciary?
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In This Issue
Items of Special Interest to Service Providers Abstract: Industry commentator Michael Kitces suggested the SEC's recently promulgated Regulation Best Interest "leaves little room for RIAs to market their fiduciary obligation to act 'in the best interests of the client' as a differentiator when broker-dealers will be able to use substantively identical words." Others echo this concern not merely from the point of view of a service providers marketing strategy, but from the point of view of the customer. What once represented a clear distinction of service (i.e., fiduciary standard vs. suitability standard) has now been muddied by the formal introduction (and redefinition) of the term "best interest." Source: Fiduciarynews.com Do Data-Privacy Rules Make Cross-Selling More Difficult? Abstract: Data privacy rules are causing concern that cross-selling retail products and services to 401k plan participants may not always be kosher. It's unclear whether financial advisers and other parties like recordkeepers can use 401k participants' individual information, such as investment choice and proximity to retirement, to sell them a product like insurance that's outside the scope of a workplace retirement plan. It may also be a thorny issue for managed-account providers, since account aggregation may run afoul of the rules, as well as some financial wellness services. Source: Investmentnews.com (registration may be required) Convergence of Retirement and Wealth Management Is Next 'Battleground' Abstract: This convergence, which sees wealth managers do more business with 401k plans and participants, and 401k advisers do more wealth management for individual clients, is occurring as firms see the need to diversify revenue streams and cater to client demand. Source: Investmentnews.com (registration may be required) General Items Student-Loan Matching Hits Snags Abstract: Plan sponsors have shown a lot of interest in a recent ruling that allowed one company to make 401k matching contributions while employees repay their student loans, but two attorneys following the progress of the idea are doubtful that federal guidance allowing others to implement the idea will be issued any time soon. Source: Workforce.com Ten Retirement Planning Tips for the Self-Employed Abstract: The self-employed think about and plan differently for retirement compared with their counterparts working for companies and corporations; they also have double the emergency savings. Source: Planadviser.com Fiduciary and Plan Governance How Much (Should) a New Retirement Plan Committee Member Know? Abstract: A recent federal court decision should remind us all of the importance of plan committee education. The case involved a suit by participants in the SunTrust 401k plan that challenged the initial selection of, and subsequent acquiescence with, an ostensibly imprudent plan investment menu. The court's decision focused on one aspect of the case: the liability of "new" plan committee members for actions that predated their involvement on the committee but continued after their involvement. Source: Napa-net.org Abstract: Managing a thoughtful retirement plan while trying to keep up with the ever-changing legal and regulatory environment can be challenging. Often, concerns over managing a retirement plan can vary, and plan fiduciaries are unsure of what needs to be addressed. This article reviews five ongoing concerns that sponsors should keep in mind to guarantee they have an effective retirement plan in place not only to ensure the retirement readiness of their employees, but to avoid liability should an audit occur. Source: Planpilot.com Revenue Sharing: Five Reasons for 401k Fiduciaries to Avoid It Abstract: All 401k plans require three basic administration services including asset custody, participant recordkeeping, and Third-Party Administration. A 401k provider can be paid "direct" or "indirect" fees from plan assets to deliver these services. Direct fees are deducted from participant accounts, while indirect fees are paid by plan investments. The most common form of indirect fee is revenue sharing. Here are five reasons why 401k fiduciaries should pay direct fees for plan administration services instead. Source: Employeefiduciary.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Millions of American Workers Still Lack Access to 401k Plans Abstract: According to a new state-by-state analysis published by the American Retirement Association (ARA), more than five million employers in the United States still don't offer a workplace retirement savings benefit, a generation after the 401k plan design was first introduced. Source: 401khelpcenter.com The Self-Employed Are Defying Retirement While Overlooking Essential Preparations Abstract: Only 26 percent of the self-employed are "very much" looking forward to retirement according to findings from Self-Employed: Defying and Redefining Retirement, a new study released today by nonprofit Transamerica Center for Retirement Studies. The self-employed are enjoying life. Given the autonomy and flexibility in their work situations, the concept of retirement is less relevant to them and not necessarily something they aspire to. The survey of 755 respondents explores the retirement outlook of individuals who are primarily self-employed. Source: Transamericacenter.org »» Click here for More Studies, Research, and White Papers 403b Plans New Texas Law Enhances School District Role in 403bs Abstract: A new Texas law will increase the role that school districts in the state play in the 403b plans they offer their employees. Rep. Dan Flynn introduced the measure on March 1, 2019. The state House of Representatives passed it on April 10; the Texas Senate received the bill the next day and passed it one month after the House did. Gov. Greg Abbot signed it into law on May 24; it goes into effect on Sept. 1, 2019. HB 2820 rescinds the power of the Teacher Retirement System of Texas to regulate those 403bs. Source: Napa-net.org »» Click here for More 403b Material Plan Education and Communications Does Your Company's 401k Employee Education Address These Five Topics? Abstract: A new kind of 401k education program has emerged, one that emphasizes everyday concerns. Plan sponsors increasingly are looking for help in providing financial wellness education and resources. They are looking for retirement plan providers and financial intermediaries to help them offer tools to help employees get a handle on their financial issues and solve them, both in the short- and long-term. Is your employer keeping pace? Here are five topics now being addressed in these 401k meetings. Source: Forbes.com »» Click here for more on Plan Education and Communications Compliance and Regulatory Is It Time for Your Employee Benefit Plan Check-Up? Abstract: Employee benefit plans can be a wonderful tool to attract new talent or reward and retain existing talent. And, much like encouraging your employees to have annual check-ups to remain healthy, you should do the same for your employee benefit plan. A best practice is to schedule a periodic review of your plan, at least annually, to make sure it complies with any changes in laws or regulations. Also, examine the plan provisions to verify they are being applied appropriately in their day-to-day operation. Source: Eisneramper.com Retirement Plan Audit Changes Spark Concerns of New Burdens Abstract: The ERISA Advisory Council is examining the retirement plan audit process, and some in the plan sponsor community are concerned its recommendations could lead to additional burdens and costs. If the council were to recommend changes to the way sponsors must select an auditor, such as a step-by-step checklist to which they must adhere, it would be to the detriment of sponsors and their participants, according to one source. Source: Pionline.com Three Issues Companies With 401k Plans Must Have On Their Radar Abstract: Contrary to popular belief (and marketing), running a 401k is not a "turnkey" proposition. The investment and insurance companies that hold your plan's money do not guarantee that they will properly address the complex and ever-changing legalities of your plan. In fact, it seems that recordkeepers sometimes bully their employer clients into doing things their way, instead of the legally compliant way and in the best interest of the client employer. This article briefly addresses three issues for employers' attention. Source: Hawleytroxell.com Traps for the Unwary: 401K Coverage Testing During Mergers and Acquisitions Abstract: With a recent uptick in mergers and transactions, it's worthwhile to provide a refresher on some coverage testing issues related to retirement plans. Although a seemingly mundane topic, coverage testing should be kept in mind in corporate transactions where the buyer is acquiring an entity that sponsors a 401k plan and the fate of that plan is not resolved prior to the closing of the transaction. Failure to consider coverage testing concerns in the years following an acquisition can lead to qualification failures in retirement plans, which potentially can require millions of dollars to correct. Source: Ogletree.com »» Click here for more Compliance and Regulatory Material
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