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Birth of an Industry Leads to Need for Specialization by Investment Advisors

"With the introduction to the 'F' word by fi360 in the early 2000's, followed by the Pension Protection Act of 2006, the additional provider and participant disclosures last year, and now the proposed amendment to the definition of an ERISA fiduciary, the competency threshold for selling retirement plans should no longer begin and end with the ability to select and monitor investments."

Fiduciary Hedge Clauses, Mary Jo White, and the Pending Rule

"In its own inexplicable wisdom, Congress chose to narrow the parameters of the fiduciary duty under the Dodd-Frank reform act by limiting investment advice to retail customers, and curtailing the duty once advice is dispensed. The prognosis for preserving the traditional fiduciary standard isn't much better at the SEC, unless the putative new SEC Chairman, Mary Jo White, proves to be a wild card."

Answering Questions on Advisor Conflicts of Interest and Risk Governance

"In the case of dually-registered advisors, is disclosure of conflicts of interest a fiduciary requirement? Or is it enough to simply switch between the 'two hats'? ... Do structured investment products always run the risk of conflicts of interest? ... How is the trading desk as a profit center reconciled with the fiduciary duty to manage cost on behalf of the client?"

Solving a Retirement Crisis: It's as Simple as 123(4) for California's Public-Private Plan

"In California and elsewhere the retirement planning industry is beginning to wake up to a new 'defined benefit' plan for low- to middle-income workers or, as a legislative aide, Greg Hayes, describes it, an 'IRA in an insurance wrap.' The concept, if California S.B. 1234 overcomes not-insignificant financial and legal hurdles, promises to upend conventional thinking over the utility of 401(k)-type plans for the private-sector workforce. It also may create a shift in thinking about fiduciary responsibilities of the employers that sponsor plans."

Challenges Facing Advisors in Retirement Planning

"The statistics concerning how respondents view their own ability to save for retirement may signal potential problems down the road. Another contributing factor is the possibility that the government reduces the amount that can be contributed into a tax-deferred retirement plan ... There is a troubling precedent for this set by the major overhaul in 1986, which is blamed for limiting tax-deferred savings and causing pension plans to be terminated.... Congress should be cautious when instituting reforms that impact retirement savings, lest they try to solve one problem by making another problem, the retirement readiness of American workers, worse."

The U.S. Public Pension Crisis as Exemplified by Pennsylvania

"Pennsylvania has approximately 3,200 public pension plans, which represents about 25% of all such plans in the United States. Compared with other municipal pension plans nationally, Pennsylvania's are quite small ... with about two-thirds of them covering 10 or less workers, and an estimated 1/3 of those plans covering three or fewer municipal workers. Having so few workers covered by PA municipal plans results in much higher plan expenses at about three times the administrative costs of plans covering 500 or more workers."

Determination Will Win the Fiduciary Race

"When anyone is in the business of providing investment advice, [the authors] believe they should be willing to assume a fiduciary role and be legally bound to putting the client's interest first. [The authors] have and continue to support a regulation that would extend the fiduciary standard to all who provide investment advice to retail investors and an expanded DOL fiduciary definition.... While those would both be faster fixes, both have been stalled repeatedly ... [The authors] continue to see slow, steady progress forward."

Disclosing Conflicts of Interest by Investment Advisers: The Slippery Concept of Materiality

"While everyone seems to admit that all investment advisors have some conflicts of interest, only the 'material' conflicts need to be disclosed ... The problem here ... is that materiality is not only in the eye of the beholder, but it's when the beholder is looking backwards. When it counts, everyone tries to determine whether the missing disclosure was material after it has caused a loss."

How Will November Elections Affect the Fiduciary Debate?

"Although it took a financial panic to bring the fiduciary standard to the attention of Congress, the once backwater debate has been thrust front and center and shows no signs of ending.... Having opened the box by asserting legislative authority with the passage of ERISA, albeit with considerable deference to court interpretation at the time, Congress will continue to be urged by powerful interest groups to oppose or water down a new fiduciary standard."

Showing Investors the Value of Professional Planning

"It is alarming that approximately 23% of Americans do not believe they will have a comfortable retirement and that 2 in 5 adults rank their knowledge of personal finance at a grade of C or below. [A]s was shown in recent research ... investors who are able to make better financial planning decisions do, in fact, achieve better outcomes."