The DOL Rolls Over, Fiduciary Rule Effectively Dead

The Department of Labor (DOL) said it’s not going to pursue enforcement actions against investment advice fiduciaries “who are working diligently and in good faith to comply” with requirements of the fiduciary rule that was recently overturned by a federal appeals court decision. This is after the DOL rolled over and played dead by not appealing the Fifth Circuit decision that struck down the fiduciary rule.

In my opinion, this is a black eye for the DOL who for years talked about implementing a new fiduciary rule. The President Obama led DOL took their time to develop their rule, but they made one huge error.  They let the effective date for most of the rule to take effect after the Obama administration left, which allowed the Trump administration (who didn’t like the rule) to find a way to kill it, which they did.

While there are brokers who are so happy with the end of the rule, there is no time for celebration. How many millions were spent in legal fees to comply with the new rule? How many plan sponsors and SEP-IRA sponsors who received notices that their broker was no longer going to work on the plan? What about the next administration and a possible new rule that will either work with the SEC or will be more restrictive than the one that was just effectively killed?

In the end, in 20+ years in this business, this DOL handling of the fiduciary rule is one of the costliest messes this industry has ever received.

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A Plan Sponsor Needs A Retirement Plan “Dentist”

My latest article for can be found here.

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Retirement Plan Advisors Advantage

My newsletter for retirement plan providers can be found here.

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Free Advice In Dealing With A TPA’s Business Challenges

My latest article on can be found here.

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Yesterday’s plan participants in today’s world

When I first started in the 401(k) business, investment selection by participants was still being predominantly done by paper and phone. The first websites I encountered dealing with 401(k) plans gave the participant their account balance and that was pretty much it. Looking at what some of these large bundled providers and independent third-party administrators have done with their websites is absolutely amazing. The only problem is that despite the technology, there will always be a group of plan participants that still want to do things with a pen and paper.

No matter the technological gains made in the business that makes running 401(k) plans easier, there will always be a population of participants that will never access it because of their age or their issues with using the web. Whatever the reason, plan providers need to still get their message out to participants that will never access the website. Keep in mind that notices still need to be readily available, as well as statements. It would be great if we can go paperless, but there is enough of a population that still needs paper.

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That 401(k) Conference is all about value

That 401(k) Conference is that 401(k) financial advisor conference that came out from my idea about what I like and don’t like from conferences that I have spoken at and attended.

I’ve been to so many events big and small and what I like about is the information that they provide 401(k) financial advisors to help them improve their practice. I think any opportunity for advisors to network with other plan providers is always good.

What I don’t like is that cost is such a factor. While it’s costly to run a convention or a conference, charging thousands to attendees and a lot more to those who wish to present as a speaker or run an exhibit can be a costly headache because no advisor or plan provider can afford to attend every conference out there. I’m also not crazy about conferences where it always seems to me that it’s the same 5 people speaking and some represent some of the providers out there that cause issues for plan sponsors out there.

So when I came up with an idea of a conference, I wanted to offer a memorable experience to those who attend and those who sponsor. That’s why the events will be at a major league or NFL stadium with a stadium tour and a meet and greet with former sports great.

For $100 at CitiField (Thursday, June 7th), an advisor gets breakfast, lunch, a stadium tour, and a meet and greet with Doc Gooden. For the plan provider, they can sponsor the event for as little as $500 and as little as $1500.

We still have spots for advisors in New York and we’re signing up sponsors for the Chicago Wrigley Field event on Thursday, September 13th.

Sign up for New York at

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The Devil Is In The Detail For The Plan Sponsor

My latest article for can be found here.

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The Fiduciary That Buys The Groceries

When the great Bill Parcells was the head coach of the New England Patriots, he got into a tiff with owner Robert Kraft because Parcells wanted more of a say in the personnel decision-making process. Parcells famously said: “They want you to cook the dinner; at least they ought to let you shop for some of the groceries. Okay?”

It sort of reminded me of my old law firm, where I was asked to feed people (by getting new clients) and I had someone who doesn’t cook (the Advertising Committee of one) tell me which ingredients I could use. It also reminds me of my synagogue where I served as Vice President in organizing events (read my latest book for details) but had no say in how the place was run. Do you see a pattern?

I admit it; I am more comfortable when I have control over things. When I have control, I succeed or fail based on my decisions instead of a bureaucracy that is less interested in my success and more interested in playing political games.

As someone who likes being in control, it should be no surprise that I like the proliferation of ERISA §3(38) fiduciaries and I think registered investment advisors (RIAs) who are interested in the retirement plan business should have the goal of offering it to some of their clients.

Once again, the use of ERISA §3(38) fiduciaries is a great fit for some plan sponsors who have none of the time or interest in keeping up their end in the fiduciary process of selecting plan investments and educating plan participants. The ERISA §3(38) fiduciary is a great solution for these type of plan sponsors because the fiduciary is defined as an “investment manager” under ERISA and assumes almost all of the liability (hiring a bad fiduciary is a breach of the plan sponsor’s fiduciary duty) of handling the investment decision making process.

I think advisors (as long as they are surrounded by a good team including a good ERISA attorney (cough, cough) )should consider entering that space so that this solution could be offered as one of their services.

While some RIAs consider the liability aspect of it, the increased liability will always be offset by engaging in good processes (recording decisions, offering educating, memorialized investment choices in an investment policy statement) and by picking the right type of plan investments (most of these investment managers are using passive funds such as exchange-traded funds, Dimensional Fund (DFA) and Vanguard index funds).

I always say that if you can’t do it right, don’t do it all. ERISA §3(38) fiduciaries should be for those RIAs that are serious about their trade as retirement plan financial advisors and should not be for those who don’t understand their roles as financial advisors for retirement plans. If you are serious about entering the space, speak to an ERISA attorney or speak to current ERISA §3(38) fiduciaries whopartner with RIAs who don’t want to be in the space like James Holland at Millennium.

In addition, I will be making an announcement in the coming year on how I will be providing a bigger role for RIAs who want to be in this field.

As an ERISA §3(38) fiduciary, you get to buy the groceries and cook, the only thing to avoid is burning the meal.

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When it comes to theft, the fiduciary vs. settlor function debate is meaningless

A friend of mine called me up a few weeks back and was telling me a story how he had a debate with Jeff Richie from Vantage Benefits at a conference a few years back. Richie claimed he had some writing from the Department of Labor that says that a plan sponsor who hires an independent fiduciary cedes that fiduciary function that they delegate. One of the arguments for hiring an independent fiduciary in a §3(16) or §3(38) setting is that these fiduciaries will assume discretionary control and the liability that goes with it. Through all the marketing you see and hear, it’s claimed that the plan sponsor is not going to be on the hook as a fiduciary.

While hiring an independent fiduciary is likely a settlor function, the plan sponsor doesn’t shed all their liability because they will still retain liability as a plan settlor. The point here is that if the allegations against Vantage are true and they stole millions from clients, what does it matter if a plan sponsor is not liable as a fiduciary because they’re still liable for hiring the fiduciary that stole in the first place? Hiring an independent fiduciary will protect a plan sponsor in most instances, but when hiring an incompetent or corrupt fiduciary, it doesn’t really matter. One of the reasons that plan sponsors are suing Vantage is because it’s pro-active method of covering their rear end since they’re on the hook for hiring a fiduciary that stole plan assets.

In the scheme of things, what difference does it make if a plan sponsor is being sued for hiring a stealing fiduciary? At the end of the day, the plan sponsor is liable for hiring a fiduciary who stole.

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Graff Calls For DOL E-Delivery Change and I Love It

I used to love paper until I had a 5-foot flood in the downstairs of my home during Hurricane Sandy. When you have a file cabinet with files sitting outside your house with files that you hope dry over 6 months, you learn to hate paper.

So that’s why I love what my friends at the American Retirement Association are calling for in their new initiative.

ARA CEO Brian Graff announced plans at the latest NAPA 401(k) Summit, to push for the elimination of the expensive and outdated ERISA requirement to disclose information to 401(k) participants in paper form.

The current rule of the Department of Labor’s ERISA regulations in information delivery is providing paper disclosures — including the Summary Plan Description (SPD) and Summary of Annual Report (SAR) — to plan participants.

There is a current safe harbor permitting electronic delivery to certain types of participants with online access. To utilize the current safe harbor,  plan sponsors using electronic delivery must solicit participants’ consent to e-delivery, track their responses, store their e-mail addresses and monitor delivery of the disclosures, which is why paper delivery is still king.

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