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A Fiduciary Blueprint: The Restatement of Trusts, the Prudent Investor Rule, and the DOL's New Fiduciary Rule

"In adapting their practices to the DOL's new fiduciary rule, financial advisers need to focus on the fact that fiduciary liability is generally based on a fiduciary's imprudent conduct in developing their investment recommendations, not the actual performance of the actual investments and strategies. It is reasonable to assume that the courts will continue to rely on the Restatement of Trusts and the Prudent Investor Rule in interpreting imprudent conduct under the DOL's new fiduciary rule."

Modern Portfolio Theory, the Prudent Investor Rule and Fiduciary Investing

"While most financial advisers are aware of the 'total portfolio' approach of MPT and the Rule, they are often unfamiliar with other key tenets of MPT and the Rule. Consequently, many financial advisers are unaware that their practices may be totally inconsistent with MPT and the Rule, leaving them exposed to liability for financial losses sustained by their clients."

Why Prudent Plan Sponsors Will Never Offer Annuities Within Their Plan

"The three primary doctrinal sources of fiduciary duty -- trust law, equity law, and agency law -- are fully consistent with, and in fact require application of, the three economic principles of: [1] commensurate return, [2] breakeven analysis, and [3] breakeven en point relative to participant life expectancy, particularly in the 401(k) context.... Commensurate return is the substantive expression of loyalty and prudence. Breakeven analysis is the analytical method by which commensurate return is tested. Breakeven en point relative to life expectancy is the temporal constraint imposed by fiduciary law when mortality risk and forfeiture are present. A fiduciary who ignores these principles acts inconsistently with all three foundational bodies of fiduciary law, even if formal disclosures are made or statutory safe harbors are invoked."

What Prudent Plan Sponsors Must Understand About the Executive Order and Fiduciary Risk Management

"Prudent plan sponsors would be best served by totally ignoring the President's executive order ... Since neither ERISA not any any laws/regulations require a plan to offer such potentially liability ridden investments, the obvious question from a fiduciary risk management standpoint -- 'Why go there? ... [F]ew plan sponsors have the experience or skill to properly investigate and/or evaluate alternative investments."

Whoomp, There It Is! The New Prudent Fee Fiduciary Standard

"[The] United States District Court for Southern District of New York provided the long-anticipated introduction, or more specifically the judicial verification, of Vanguard's funds' fees as a comparative basis for assessing excessive of fund fees was established. While the case is not binding on other courts, the rationale used by the court is persuasive and will undoubtedly be referenced by plaintiffs' attorneys in both 401(k) and other cases where breach of fiduciary issues involving fee issues are involved.... More importantly, the court's decision provides further support for the relevance of intrinsic costs and returns in analyzing both investment recommendations made by financial advisors and investment options offered by 401(k) plans and other retirement plans." [Leber v. The Citigroup 401(k) Plan Investment Committee, No. 07-CV-9329 (S.D.N.Y. Sept. 30, 2014)]

The Key Factor in Adviser Liability Risk Management

"Investment advisers and other financial advisers who create asset allocation recommendations based solely upon the belief that a client's time horizon is the most important investment factor should go ahead and call their E&O carriers and put them on notice. The argument commonly advanced in favor of time horizon being the most important factor in asset allocation claim [is] that time reduces risk. Various studies have shown that that simply is not true.... Attempting to designate one factor as the most important factor in evaluating a client simply makes no sense."

Financial Advisers Can't Overlook the Prudent Investor Rule

"This article calls attention to the [DOL's] imposition of the 'prudent investor rule' on financial advisers to retirement savers. This article also canvasses the customary role of an investment policy statement in promoting compliance with the prudent investor rule by professional fiduciaries."

Fiduciary Standard vs. Suitability Standard: The 'Gotcha' That Won't Go Away

"While there are those that try to confuse the issues with regard to fiduciary prudence and/or suitability, ... two simple questions help to clarify the issues for both financial/investment advisers and securities attorneys. [1] Is an investment that has consistently failed to produce a positive incremental return for an investor a prudent investment and/or suitable for any investor, given the opportunity costs it produces relative to comparable investment options? [2] Is an investment whose incremental costs have consistently exceeded the investment's incremental returns a prudent investment and/or suitable for any investor, given the financial losses it produces relative to comparable investment options?"

Quantifying Fiduciary Prudence and the Quality of Investment Advice

"A simple cost/benefit analysis would seem to be a part of a prudent process for plan sponsors to use evaluating the fiduciary prudence of investment products in defined contribution plans (DCPs). However, based on the evidence, very few plans seem to use cost/benefit analyses as part of their fiduciary prudence process. Furthermore, even when plans do use cost/benefit analysis, there are often legitimate questions as to whether such analyses were properly conducted."

Robo-Advisers: Best Deck Chairs on the Titanic?

"Many of the current robo-advisers offer automatic rebalancing services, which automatically [adjust] an investor's portfolio allocations to their original percentages once certain thresholds are breached. The rebalancing takes place without regard to factors such as overall economic and/or stock market conditions. And therein lies the potential threat to an investor's financial well-being, and the opportunity for traditional investment advisers to establish their value proposition to investors."