Nevin's Data "Points"

A week from today the nation will celebrate Independence Day—though of course independence didn’t actually occur on July 4. Let’s face it, the Declaration of Independence [i] was little more than that—a declaration. One that had yet to be backed by anything beyond the artfully crafted and narrow consensus of a handful of delegates appointed by a wide variety of means and mechanisms, with correspondingly disparate levels of responsibility and accountability for their alignment with the principles outlined in that document.  As practically meaningless as that declaration might have been, we commemorate and celebrate those actions because, eventually, events transpired that made those aspirations a reality. But it came only after years of hard-fought fighting, and while we don’t often talk about this, it ultimately divided the nation between those who wanted to be free from what they viewed as tyranny—and those who viewed those actions and aspirations as nothing less t...

There is frequently a difference between doing what the law requires and doing everything that you could do as a plan fiduciary. That said, there are things that plan fiduciaries must do—and things that, while not required, can keep the plan, and plan fiduciaries out of trouble. Let’s get started. 1. Not having a plan/plan investment committee ERISA only requires that the named fiduciary (and there must be one of those) make decisions regarding the plan that are in the best interests of plan participants and beneficiaries, and that are the types of decisions that a prudent expert would make about such matters. ERISA does not require that you make those decisions by yourself—and, in fact, requires that, if you lack the requisite expertise, you enlist the support of those who do have it.  You may well possess the requisite expertise to make those decisions—and then again, you may not. But even if you do, why forego the assistance of other perspectives? However, h...

It is something of a tradition this time of year to look back, to reminisce about past events and lessons learned, and sometimes to look ahead – and who am I to buck that trend? Here’s a look back – and some “things” that I hope will help lay the groundwork for a productive and prosperous 2020 for both you, and those you serve. ‘THINGS’ FOR PLAN FIDUCIARIES 7 Smart Shopping Steps to Avoid Buyer’s Remorse Shopping for a new provider is not something one would normally equate with a Black Friday foray or a Cyber Week scramble. But if you have a plan sponsor – or plan sponsor prospect – who’s thinking about shopping for a new provider, here are some ideas to share. 6 Things That Scare Plan Fiduciaries Halloween is the time of year when one’s thoughts turn to trick-or-treat, ghosts and goblins, and things that go bump in the night. But what keeps – or should keep – plan fiduciaries up at night? Well, there are the things like … 5 Things Plan Sponsors (Stil...

As we prepare to celebrate the Declaration that marks the birth of this nation, it seems a good time to reflect on some lessons from that experience that hold true even today. Inertia is a powerful force. By the time the Second Continental Congress convened, the “shot heard round the world” had already been fired at Lexington, but many of the representatives in Philadelphia still held out hope for some kind of peaceful reconciliation. Little wonder that, even in the midst of hostilities, there was a strong inclination on the part of several key individuals to put things back the way they had been, to patch them over, rather than to take on the world’s most accomplished military force. As human beings we are largely predisposed to leave things the way they are, rather than making abrupt and dramatic change. Whether this “inertia” comes from a fear of the unknown, a certain laziness about the extra work that might be required, or a sense that advocating change sugge...

Anyone who has ever found their grand idea shackled to the deliberations of a committee, or who has had to kowtow to the sensibilities of a recalcitrant compliance department, can empathize with the process that produced the Declaration of Independence we’ll commemorate next week. Indeed, there are any number of things that the experience of today’s investment/plan committees have in common with that of the forefathers who crafted and signed the document declaring our nation’s independence. Here are four: It’s hard to break with the status quo. By the time the Second Continental Congress convened in May of 1775, the “shot heard round the world” had already been fired at Lexington, but many of the 56 representatives there still held out hope for some kind of peaceful reconciliation, even as they authorized an army and placed George Washington at its helm. Little wonder that, even in the midst of hostilities, there was a strong inclination on the part of several key individuals to ...

Working with retirement plans is a complicated, challenging and constantly changing process. That said, there are certain constants — and things that bear repeating and/or reconsidering from time to time. Since I published my first list of 15 last fall (one of my most popular, as it turns out), I’ve gotten several very good suggestions — and had an epiphany or two. Here are a few (more) points to ponder: Cheaper isn’t always better, unless it’s the only difference. Sometimes you do get what you pay for — but not always. If you’re not doing anything “wrong,” you probably aren’t doing anything much. You can spend a lot of money in court being right. A fund whose allocation is based solely on date of retirement is sure to miss something, but not as much as a fund whose allocation doesn’t take that into account. If you don’t know how much you’re paying, you’re likely paying too much. Don’t assume that those who aren’t saving via your workplace retirement plan know what they ...

There is frequently a difference between doing all that the law requires of a plan sponsor and doing everything that could be done. Here are five things that plan sponsors don’t always do — but should. 1. Have a Plan/Plan Investment Committee. ERISA only requires that the named fiduciary (and there must be one of those) make decisions regarding the plan that are in the best interests of plan participants and beneficiaries, and that are the types of decisions that a prudent expert would make about such matters. ERISA does not require that you make those decisions by yourself — and, in fact, requires that, if you lack the requisite expertise, you enlist the support of those who do have it. However, having a committee for having a committee’s sake can not only hinder your decisions — it can result in bad decisions. Make sure your committee members add value to the process. (Hint: Once they discover that ERISA has a personal liability clause, casual participants generally drop out ...

Every plan, and every investment committee, is unique — and yet, conducted properly, there are inevitably areas of commonality. As the quarter draws to a close and preparations for these meetings get underway, here are some questions that could enhance the discussion, if not the outcome, of your next meeting. 1. Do we really need to have all these funds on the menu? We know that participants tend to hold four or five funds on average, regardless of how many choices are on the menu. And for years we’ve known that the more choices participants have, the more difficult it is for them to make choices. (Remember the famous study about jam choices ?) Sure, it can be hard to let go of a fund, especially if some participants have invested money in that option. But what tends to happen over time is a kind of fund menu inflation, where new funds get added but old ones never leave. The funds on your menu should have a purpose. If they don’t — even if they once did — you aren’t doing anyon...

Two things have been overlooked by many people in the days leading up to the Supreme Court’s decision in Tibble v. Edison International and the weeks thereafter: (1) most of the wrongs 1 initially alleged did not survive the judgment of the district court ; and (2) only a single issue — the determination as to how to apply ERISA’s statute of limitations to fund selection — was before the nation’s highest court. While the Supreme Court rejected the notion that an initial fund review was sufficient in the absence of significant changes in circumstance to preclude the need for an ongoing assessment, the defendants in Tibble did a lot of things right that many plans don’t. Here are five: 1. They had a plan investment committee. ERISA only requires that the named fiduciary (and there must be one of those) make decisions regarding the plan that are in the best interests of plan participants and beneficiaries, and that are the types of decisions that a prudent expert would make about...

Plan investment committee members come in all shapes and sizes, sometimes drawn exclusively from staff of the employer sponsoring the plan, sometimes not. More importantly, they are frequently tapped for this important role for reasons that may have little to do with their background or expertise in the matters that will come before the committee. Now, with luck they’ll learn early on about the requirement to act solely in the interests of plan participants and beneficiaries, the importance of process (and documenting that process) and the implications of the prudent expert rule. But as important as those considerations are, there are some important things that every plan committee member should know before  they sit down at their first committee meeting. You are an ERISA fiduciary. Even as a small and relatively silent member of the committee, you’ll direct and influence retirement plan money — and it’s that influence over the plan’s assets that makes you an ERISA fiduciary....