Nevin's Data "Points"

Plan sponsors often gloss over the reality that they are ERISA fiduciaries – or think that if they have hired an advisor, they’ve basically hired a stand-in for that responsibility. But there’s another mistake that even the most well-intentioned make – with remarkable frequency, based on what I hear from advisors. In the marketplace, it’s normal – even expected – that firms extend more favorable terms and/or discounts to those who do business with them across various offerings. But those “normal” practices can cause you trouble when it comes to doing business with ERISA-governed plans. Here’s how:   If you make decisions regarding the plan or plan assets, you’re an ERISA fiduciary. If you have discretion in administering and managing the plan, or if you control the plan’s assets (such as choosing the investment options or choosing the firm that chooses those options), you are a fiduciary to the extent of that discretion or control. Ditto if you ...

The 2017 media-bashing of the 401(k) is off to an early start. The most recent is a Wall Street Journal article (subscription required) whose headline notes that “The Champions 1 of the 401(k) Lament the Revolution They Started” (the third-most read article on the WSJ site as I write this). It’s fair to say, I think, that their regrets aren’t so much about the 401(k) itself, but their sense that the existence of the 401(k) – which transformed the notion of retirement savings in so-called savings and thrift plans by allowing regular workers to defer paying taxes on money they set aside for retirement – led to the demise of the traditional defined benefit plan. Well, maybe. Trust me, I “get” the affection for the promise of a DB plan. Who wouldn’t like a plan that is funded (and paid for) by your employer, invested by your employer, and at retirement, produces regular, predictable distributions without you having to do anything except making sure they know where to send the ch...

As I talk to retirement plan advisors and plan sponsors around the country, there seem to be three camps of thought on the Labor Department’s fiduciary reproposal: those who think it will be a big deal; those who think it will be a big deal but manageable (once certain key issues are addressed); and those who are nearly completely oblivious as to the proposal, its potential impact or its current status. Unfortunately for advisors in the first and second category, nearly all plan sponsors seem to be in the third group. Here’s why plan sponsors should care about the proposal. You might have to change your plan education materials. Remember back when your plan education materials only had generic fund references, and your participants struggled to figure out which of the specific funds on their plan menu were supposed to match up with those colored pie chart pieces? Remember how frustrated they were when you couldn’t tell them? And how poor the results were? Perhaps not, bec...