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DOL Sends a Clear Message by Dropping Defense of Fiduciary Rule

"The DOL finally announced what many had suspected -- they would not pursue their defense of their Retirement Security Rule (Rule}. When one considers the strong litigation advantage the DOL seemingly held as a result of two prominent federal judges having issued two strong opinions supporting both the Rule itself and, more importantly, the process the DOL used in drafting the Rule, [The author strongly believes] the DOL's actions constitute a betrayal of American workers."

The Expanding 'Knew or Should Have Known' Liability Standard in the Era of AI

"The 'knew or should have known' standard emphasizes the need for fiduciaries to be proactive and informed. While AI offers significant advantages in financial decision-making, fiduciaries must exercise caution, ensuring that their use of AI aligns with their duty of loyalty and care. By implementing due diligence, oversight, and expert consultation, fiduciaries can navigate the complexities of AI integration while upholding their fiduciary responsibilities."

Humble Arithmetic, Common Sense, and Fiduciary Responsibility vs. In-Plan Annuities

"ERISA requires a plan sponsor to acts as a prudent person would handle their own affairs. Ask yourself, does a prudent person invest $50,000 knowing ... that they are going to lose $72% of their investment in favor of the annuity company, to essentially subsidize the annuity issuer at the expense of one's intended heirs. [P]rudent plan sponsors will realize that such products are available outside the plan, without potentially exposing the plan to fiduciary liability."

DOL Advisory Opinion 2025-04A: Don't Be Stupid!

"[The] language calling for plan sponsors to become actively involving in making allocation decisions is a definite red flag ... While the Opinion seems to indicate that a plan participant can subsequently revise the percentage chosen by a plan sponsor, the complexity of the product itself and the likelihood of confusion of a plan participant raises numerous fiduciary litigation red flags as to potential litigation."

ERISA 404(A) vs. NAIC Rule 275: Ticking Fiduciary Litigation/Liability Time Bomb for Plan Sponsors

"[T]he Achilles' heel that ERISA plaintiff attorneys should focus on is the obvious inconsistency of the standards between ERISA 404(a) and NAIC rule 275 and the potential fiduciary liability that exists, liability which is going to completely blindside many plan sponsors ... Investment fiduciaries who receive a recommendation to include an annuity, any type of annuity, should always require the annuity salesperson to provide a written, properly prepared breakeven analysis on the annuity being recommended."

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."

'And Their Beneficiaries': Annuities, Commensurate Returns, and Fiduciary Liability

"[T]oo many plan sponsors who are considering or have included in-plan annuities as an investment option within their plan have either overlooked or have not properly assessed the potential fiduciary liability risks presented by the inclusion of the 'and their beneficiaries' language.... There is no legal foundation for the suggestion that plan sponsors have any legal obligation with regard to assisting in the decumulation of a plan account, whether by providing products or advice. In fact, providing advice and/or assistance can be grounds for holding that an otherwise non-fiduciary has crossed the line and is legally recognized as a fiduciary."

Palsgraf, Annuities, Commensurate Return and the Future of Fiduciary Litigation

"The foreseeability of loss, a core principle of Palsgraf, is relevant and probative in fiduciary litigation. The plan sponsor's decision to offer an annuity product that actuarially cannot provide a commensurate return -- and predictably results in a participant financial loss absent exceptional longevity -- is a breach of both the duty of prudence and loyalty. The financial harm to the participant was not a remote or unexpected event, but rather an inherent, foreseeable outcome of the annuity's structure."

Pizarro v. Home Depot and the Future of ERISA Litigation

"SCOTUS needs to officially establish that the burden of proof in ERISA cases shifts to the plan sponsor once the plaintiff plausibly pleads both a fiduciary breach and a resulting loss. Why? Because ... based on forensic analysis, [the author believes] that in the overwhelming majority [of] ERISA cases, plan sponsors will not be able to carry that burden." [Pizarro v. Home Depot, No. 22-13643 (11th Cir. Aug. 2, 2024; cert. pet. filed Dec. 3, 2024; Solicitor General brief requested Apr. 21, 2025)]

Fiduciary Risk Management 101: Mutual Funds

"Companies around the world routinely use cost-benefit to evaluate proposed projects. However, ... the financial services industry and its agents typically do not use cost-benefit analysis in evaluating investment options. Why? Because, more often than not, cost-benefit analysis will reveal that actively managed mutual fund investments are not cost-efficient when compared to comparable passively managed index funds."