fi360 Blog

Fiduciary Links: 403(b) Compliance Summit Report a must read for all retirement plan professionals

>>>>An article in PLANSPONSOR this week alerted us to the release of a report from ASPPA’s National Tax Sheltered Accounts Association’s 403(b) Compliance Resolution Summit. The purpose of the summit is to “identify service issues and develop  best practices for the resolution of those issues.” Included in the report from this year’s summit are recommendations related to new 408(b)(2) and 404(a)(5) fee disclosure regulations , the effects of the DOL’s proposal to redefine “fiduciary” and other compliance and plan servicing concerns.

 While specific to 403(b) plans, the report and recommendations are a valuable resource for any professional servicing retirement plans and wrestling with how best to prepare for upcoming regulatory changes. Here is an overview of just some of the recommendations made by the participants at the event:

• In regards to fee disclosure:
  • How to better educate plan sponsors
  • Set expectations at the outset as to who is responsible for which aspects of disclosure
  • Perform a self-evaluation to determine 408(b)(2) obligations
• In regards to participant advice and fiduciary issues:
  • “[R]egardless of whether the definition of fiduciary remains as it has been for the last 35 years, or in the alternative may be expanded, it is always a best practice for employers and participants to select advisors who are competent and helpful, and who will provide full disclosures as to fees and any potential conflicts as it may affect the plan or the participant(s).”

A summary of the report, including a link directly to the report itself, can be found on the NTSAA’s website.

>>>>If you are reading this blog post, you might be inclined to share a particular link you think is interesting or insightful or instructive to your prospects and clients. You might even choose to do so by using a social media platform, such as Twitter, LinkedIn, Facebook, or others. The publishers of those links certainly make it easy to do so with buttons that remove any manual steps for “Liking” or otherwise sharing the article to your audience. However, an article in RIABiz last week reminds you to think first before doing so, lest you be in violation of your firm’s policies or even SEC compliance.  The article summarizes SEC guidance on the issue of social media use by advisers, as well as recommending you be aware of your company’s policies and to pay particular attention to violation of the “testimonial” rule. Fi360 General Counsel Kristina Fausti did a similar blog post just a couple of weeks ago that points advisors to the pertinent guidance as to their use of social media.

Now on to the rest of the best links from the past week:

Fiduciary Links: 2012 State of the Union address

Tomorrow, President Obama will deliver the annual State of the Union address to Congress. Beyond the expected emphasis on jobs, the economy and the military, one thing we'd like to see is a raising of the fiduciary bar for members of Congress and other public officials. If we could give him a few bullet points of our own, we would ask him to request Congress for legislation to promote ethics in government, including provisions that would:

• require a statutory fiduciary duty for Congress, the President, and political appointees.
• set up blind investment trusts for all elected and politically appointed federal officials.
• set up an independent ethics agency for Congress, using the GAO structure to limit political influence (fifteen-year appointment for agency head).
• implement and better enforce more uniform ethics rules and procedures across government as it relates to former staff going to work and lobbying for regulated entities, including ‘cooling off’ periods before being paid to lobby or ‘consult’ on public policy issues.
• provide meaningful campaign funding reform.

The White House has an interactive feature for the State of the Union address that will be streaming the event along with other information, as does the Speaker of the House, to cover the Republican response.

Now on to the rest of the best links from the past week:

Fiduciary Links: No end in sight for the fiduciary wait

>>>>At one point, shortly after Dodd-Frank was passed, there almost seemed to be a race between the SEC and DOL to see who would get out their fiduciary rule first. Now, however, who knows when we'll see a new rule from either.

The SEC's 2012 schedule for implementing Dodd-Frank rules lists fiduciary rulemaking under "dates to be determined" (see Title IX, sec. 913, near the bottom of the page). Meanwhile, Reuters reported last week on a request sent from the DOL to various securities trade organizations for an "inordinate amount of data" that seemingly would be used to formulate the cost-benefit analyses that the industry pressed DOL for with the release of the initial rule last year. A quote in the article speculates that the requests may have been a strategic move by the DOL. Nonetheless, it looks as if the DOL rule, too, is a ways off and, from here, it is tough to see just when we might expect these rules to come out.

>>>>Regardless of when we might see the DOL rule, Chris Carosa of Fiduciary News has a good take on what fiduciary progress to expect for retirement plans in 2012. With fee disclosure rules fully coming into effect, the affects won't be insignificant. Plan sponsors are coming to understand the scope and magnitude of their responsibilities much more acutely and many are going to see some eye-opening data on fees and expenses.

Now on to the rest of the best links from the past week:

Fiduciary Links: Asset allocation for volatile markets

>>>>Everyone has an opinion on where they think the economy is going next, and yet no one really knows for sure. It is a fiduciary's job to balance that short-term uncertainty with the long term goals of the client.

Join us for a discussion on asset allocation in today’s markets from 4:00-5:00 p.m. EST next Thursday, December 15 with two of the subject’s preeminent experts: Roger Gibson and Harold Evensky. We'll put the current environment into a historical context, discuss asset class correlations, look at the importance of understanding the client's risk tolerance and other behavioral concerns, and examine the relevance of Modern Portfolio Theory at a time of global financial crisis.

The session will be moderated by fi360’s Blaine Aikin and will include the opportunity for Q&A. The session is free and will be reported for one hour of continuing education credit for the AIF, AIFA and CFP credentials.

For more information and to register, visit the webinars page on fi360.com.

>>>>In last week’s Fiduciary Links, we highlighted an article in InvestmentNews that pointed out the potential for conflicts in fee-based advisory services. The Wall Street Journal’s Financial Adviser blog followed that up with a partial rebuttal arguing that anytime money is changing hands, there are going to be imperfections. However, that doesn’t mean that the evolution to fee-based business models isn’t a huge improvement. The conflicts cited in the original IN piece are less significant, more manageable and, again, represent a significant improvement in advisory services that are good for the investor.

Now on to the rest of the best links from the past week:

Fiduciary Links: Thanksgiving edition!

It must be time for the holidays, because it was a slow week for links. Nonetheless, we want to highlight a couple of articles in particular to show how thankful we are this week for the good work of some of our designees:

• AIF Designee Andy Rice wrote a piece for AdvisorOne that looks at the problems with "advisors" who wear two hats or otherwise make it difficult for the consumer to spot a true fiduciary. Andy is a former winner of our article competition and has continued writing on fiduciary matters since then. If you are an AIF or AIFA designee who is interested in entering your work into the 2012 competition, please contact us for more information.
• RIABiz ran a conversation between Steven Winks and AIF designee Mike DiCenso on whether or not retirement assets require a fiduciary standard of care all the time. Mike has spoken at multiple fi360 Conferences in the past. If you are interested in speaking at our 2012 conference, you've already missed the official deadline, but we continue to entertain all submissions until all agenda slots are filled, so go ahead and submit your ideas.

Of course, we're always interested in learning more about what our members are up to. So if you've got an article, blog, recognition or anything else you think we'd like to know about, make sure you let us know.

Now on to the rest of the best links from the past week:

Fiduciary Links: A call to action on adviser SRO legislation

>>>>The House Financial Services Committee is expected to vote in the near future on a legislative proposal that would give FINRA the authority to establish a self-regulatory organization to regulate registered investment advisers. Fi360 believes that an SRO for investment advisers would likely dilute the current robust fiduciary standard under the Investment Advisers Act of 1940 and similar state laws, and raise the cost of doing business.

Fi360 opposes the bill and calls on others to contact members of the Committee, requesting them to vote 'no' on the bill.

For more information, instructions on how to lend your voice to the issue, and a list of Financial Services Committee members, read the legislative alert we sent to our members last week.

>>>>One more reminder that proposals to speak at the 2012 fi360 Conference, April 25-27 in Chicago, are due this week. The official deadline is Tuesday, but all proposals submitted this week will be considered.

>>>>The Boston ERISA Law Blog, with a nod to the Reuters article that posed the question, says that any more than a little employer stock is too much for a DC plan participant, especially given the recent endorsement of the Moench presumption that limits fiduciary risk for declines in company stock value.

>>>>Finally, our social media buddy Roger Wohlner was quoted in Registered Rep last week on how target date funds might leave a lot to be desired, but they aren't all bad. In the end, as with all investment options, context and careful consideration are necessary to decide if a TDF is right for the investor.

Now on to the rest of the best links from the past week:

Fiduciary Links: Managing fees a big concern for service providers

>>>>In his October Fiduciary Corner column, Blaine looked at how upcoming 408(b)(2) disclosure requirements combined with the increased enforcement efforts related to the DOL Consultant/Adviser Project are creating increased urgency for service providers to consider the potential consequences of decisions related to the structure, amount and distribution of fees associated with their products and services.

There is >evidence that DOL is stepping up their enforcement under this program and the 408(b)(2) disclosures will only make examinations more efficient. Being found in violation of the law carries with it more than just the consequences of DOL punishment, but of litigation, negative PR, and disruption to the organization, not only for the service providers themselves, but potentially for ERISA plan clients as well.

You can read Blaine’s full article at InvestmentNews.com. In addition, here are links to sources mentioned in the article, as well as some additional resources for further reading:

• The Drinker Biddle newsletter
• DOL description of the Consultant/Adviser Project (located about halfway down the page)
• About upcoming 408(b)(2) disclosure regulations
• A recent webinar on 408(b)(2) we hosted with Drinker Biddle ERISA attorney Fred Reish>>>

>>>>We would also like to remind everyone that the deadline to submit a speaker proposal form for the fi360 2012 Conference is November 15. We are currently in the process of building the 2012 Conference agenda, and a portion of our agenda is gathered using an open proposal process. If you are interested in speaking at the 2012 Conference please fill out our speaker proposal form.

You can visit our 2012 Conference page for additional information about the conference, including registration, hotel information, the agenda, and more. Also, please don't hesitate to send us any additonal questions you might have. Early-bird registration is open now until November 30, so register today to save $100.  

Now on to the rest of the best links from the past week:

Fiduciary Links: Borzi insists re-proposed fiduciary rule will have teeth

>>>In comments made at the ASPPA annual conference last week, EBSA head Phyllis discussed what to expect when DOL re-proposes the rule amending the definition of fiduciary under ERISA. Borzi said, “What we’re trying to do in this regulation is focus on updated, modernizing and protecting people’s retirement security.” Borzi indicated that the re-proposal will include guidance on individual retirement accounts, revenue-sharing agreements, differentiating investor education from advice, and the "seller's exception."

A recent DrinkerBiddle article on a noticible uptick in DOL investigations of broker-dealers and RIAs suggests that the DOL is studying up on brokerage relationships in preparation for the rule. A Reuters article from last week quotes DrinkerBiddle attorney Fred Reish and Pension Resources Institute CEO Jason Roberts on how the DOL investigations relate to the fiduciary rule re-proposal and its enforcement.  

>>>A press release by the DOL  announced that they had coordinated with the SEC to clarify that disclosures required by DOL rule 404a-5 would also comply with the SEC's disclosure rule 482.

While on the subject of 404a-5, it is worth checking out the Fiduciary Advisor blog'ss breakdown of the participant fee disclosure rule and the practical consequences once it goes into effect.

Now on to the rest of the best links from the past week:

Fiduciary Links: Occupy Wall Street makes sense to long-time lobbyist

>>>> “While the term ‘fiduciary’ is not well understood by the American public or investors, the word ‘trust’ is universally understood.  And even though the messages emanating from this disorganized throng of protesters have not yet offered any articulate policy solutions to an equally dysfunctional Congress, it should be a wake-up call for policymakers to listen less to the special interest groups and more to the Silent Majority.”

In our latest post for Forbes, Duane draws on his extensive lobbying experience to make the argument that Occupy Wall Street at least deserves your attention. With consumer advocacy taking a decided back seat to industry lobbyists and fiduciary protections for investors unable to make a clean pass through the agency tasked with protecting investors, the protests reflect the general distrust of Washington and Wall Street’s ability to solve the problems that the public also attributes to them, Duane argues.

>>>> DOL today released another “final” version of a PPA-related investment advice exemptions rule. For those counting, that’s three times the rule has gone final. You can find links to the 2007 and 2010 versions, as well as fi360’s comments to those versions, on our advocacy page.

>>>> Emily Lambert of Forbes takes a pretty good look at the problems of having FINRA regulate advisors. Among them, FINRA simultaneously wants the privileges afforded to a government entity, while not having to submit to the checks and balances. Neither of which equates to being good for investors.

Now on to the rest of the best links from the past week:

Fiduciary Links: The 2012 fi360 Conference is coming to Chicago!

    

We are happy to announce that registration is now open for the 2012 fi360 Conference to be held in Chicago. The event will take place April 25-27, 2012 at the Sheraton Chicago Hotel and Towers.

This will be our eight annual conference and our first one in the Windy City. In fact, it is somewhat of a departure for us, as we have primarily been in resort hotels and Southern locations to this point. We're very much looking forward to hosting an event in one of the great U.S. cities that is home to so many of our members and financial services professionals and institutions.

If you've never been to our conference before, it is a fantastic experience featuring two full days of fiduciary-focused content on the various business models and client types, different investment vehicles, updates on regulation and oversight, and a diverse range of perspectives. Whether you are a long-time fi360 member, are new to adherent to the fiduciary culture, or are just now trying to learn more for the first time, the event has something for you. In addition to the educational focus, the event also features plenty of networking and social interaction as well as continuing education opportunities.  

We are currently in the process of building the 2012 conference agenda. A large portion of our agenda is dedicated to an open proposal process, where fi360 members and other professionals can submit their ideas for sessions in their areas of expertise and experience. If you are interested in speaking at the 2012 Conference please fill out a speaker proposal form.

Also this year, we'll be introducing a "Master's" track of sessions targeted to professionals who already have a strong fiduciary background and/or have attended fi360 Conferences in the past. This selection of sessions will be based in part by recommendations from a committee of some of our long-time members and past attendees. We'll be releasing more information on the agenda as details become available.

Visit our 2012 Conference page for information on pricing, member discounts, the hotel, and a look at additional conference week events.  In addition, you can browse the agendas of past conferences to get a sense of what to expect. As always, don't hesitate to send us any questions you might have about the event. Early Bird registration is open now until the end of November, so register early to save $100.

Now on to the rest of the best links from the past week: