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Dalbar: DOL's Proposed ESG Rule Will Hurt Plan Participation, Contributions

"The [DOL] gravely erred in its proposal to limit ESG investing, which will hurt both participation levels and contributions in retirement plans ... Dalbar said in a comment letter.... If the DOL tries choosing the investments employees can select, it ultimately will dictate how many employees participate in a workplace plan and how much they contribute, the company argued."

Dalbar Puts a Sellers' Exemption to Fiduciary Rule on DOL's Desk

"In comment letters to the DOL, Empower Retirement and attorneys at Davis & Harmon are among those calling for a so-called sellers' exemption, which would distinguish one-time sales of investments by brokers and insurance agents from fiduciary advice. In its comment letter, Dalbar goes further, and actually submits a proposed sales professional exemption. At its heart, the proposed exemption ... would prohibit brokers and insurance agents from marketing themselves as fiduciaries, something many fiduciary proponents say the [SEC] should have been doing all along."

Senator Warren Taken to Task for 'Misplaced,' 'Misinformed' and Ultimately Toothless Letter to Fidelity about Bitcoin-Inclusive 401(k) Menus

"The letter, penned by [U.S. Sen. Elizabeth Warren (D-Mass.)] and U.S. Sen. Tina Smith (D-Minn.), questions what risk Fidelity attaches to Bitcoin that it offers to its customers and how Fidelity plans to address those risks.... 'The letter itself is highly misinformed and misleading,' says Louis Harvey, president and CEO of Dalbar Inc. 'The inclusion of an asset class is not dangerous unless the allocation of an investor's assets in that class is excessive.' "

Operators of Phone Centers and Websites May Be Able to Use Limited Fiduciary Protection (PDF)

"Current use of the [Best Interest Contract (BICE)] is far beyond the scope needed for non-fiduciary phone centers or Websites. Such use would be costly and impractical. The alternative is the Limited Fiduciary, which maintains the current services and uses the full protection of the 408(g) exemption for limited services. The insurance coverage is unaffected or costs potentially lowered as are the business risks. The chance of an accidental breach is also greatly reduced. The Limited Fiduciary for existing services can be quickly implemented at a very l ow cost and minimum interruption or re-training."

Assessing Compensation Reasonableness of Retirement Investment Advisers (PDF)

12 pages. "This paper is intended to inform and to limit the damage to advisers who perform at a high level for reasonable compensation. Supporting this initiative to limit the damage to good advisers, is the unanimous 2010 Supreme Court decision that stipulates that reasonable compensation must be based on factors of value described in the Gartenberg Standard.... The Court warned about the use of benchmarks to comp are advisers, limiting such tools to 'arm's length benchmarks' that include only those arrangements derived from arm's length bargaining. The Court ordered that even 'arm's length benchmarks' were unnecessary and only ancillary to the other Gartenberg factors."

The Work Behind BICE Paperwork: What You Will Actually Need to Do (PDF)

22 pages. "Contract terms are easily violated without an infrastructure to enable and to demonstrate compliance.... To win a BICE lawsuit claiming the client's best interests were breached, the Financial Institution or Adviser must be able to show that a recommendation (which may have lost money) was in the client's best interest at the time it was made! ... This paper summarizes the activities necessary to support the commitments, promises and disclosures required for those who choose to enter into a best interest contract."

Best Interest Investment Recommendations (PDF)

"Almost as important as complying with the best interest contract is the need to prove that compliance. The diagnosis that leads to each recommendation is a permanent record of what facts were known at the time of the recommendation and prevents claims of misconduct when future losses occur.... It is ... necessary to define how best interest is determined and then later proven. Practices to comply with best interest contract requirements can then be put in place."

Creating a Successful Best Interest Contract Practice (PDF)

"The financial advisor community must decide whether to meet the new requirements by overlaying current practices or by new practices that embrace and take advantage of the new best interest standard. This brief is intended to inform the decisions and the course of action of distributors, product and service providers and financial advisors affected by the regulatory changes requiring the use of a Best Interest Contract Exemption for ERISA plans and IRAs. The alternative practices, policies and consequences are highlighted for all affected areas"

How Retirement Advisors Really Add Value to 401(k) Plans (PDF)

"The value of the retirement advisor is far greater than marginal investment returns.... The answer lies in how different the 401(k) industry would look if there were no retirement advisors: [1] There would be far fewer plans. Of the over 600,000 plans, 90% to 95% would not exist without the efforts of advisors. [2] Participation rates would be lower. Instead of 87% participation, the no-advisor world would have fewer that 25% of eligible employees participating. [3] Diversified investments would be the exception. Stable value and fixed income investments would dominate. These estimates are not mere speculations but were the facts in the 401(k) marketplace before retirement advisors were active."

The New Fiduciary Paradox (PDF)

"[W]ith 408(b)(2), the Department of Labor was trying to force plan sponsors to engage in the fiduciary process and identify unreasonable fees and compensation. In the event that plan sponsors failed to engage, the expectation was that 404(a)(5) would cause employees to complain thus putting pressure on plan sponsors focus on fees.... Under the new rule, it's the plan sponsor's responsibility to ensure that its [covered service provider] complies with 408(b)(2)! Paradoxically, the hen must ask the fox if the chicks are safe. The new fiduciary paradox lies in the fact that 408(b)(2) requires plan sponsors to ensure that the experts upon which they so often rely to comply with 401(k) requirements, are in fact complying with the new requirements of 408(b)(2)."