At the NAPA Conference in Nashville, Tenn.
At the NAPA conference in Nashville this week, we asked noted ERISA attorney David Levine from the Groom Law group what companies that sponsor a defined contribution (DC) plan should be doing right now about the DOL’s new fiduciary rule.
Only a week old, the fiduciary rule is a main topic of discussion at the NAPA Conference. Because the rule affects DC plan advisors and service providers, Levine commented that plan sponsors should sit and wait to see what happens. Though April 2017 is just a year away, it’s really the provider and advisor community that are starting to prepare on how to handle new roles and disclosure requirements for not only DC plans but also IRA rollovers. After which, they will come back to their clients and let them know how the relationship will change and what affect that will have on plan sponsors.
Which raises an interesting question. Should plan sponsors rely on the recommendations of their advisors and providers about how their relationship will change under the new rule? Though it’s dangerous to ask a lawyer whether people need lawyers, Levine thought that it would be prudent for companies to get the opinion of outside ERISA counsel about the DOL rule and how they should be protecting themselves.
Because if an advisor, for example, is not willing to sign on as a co-fiduciary, which many brokers and planners in the small market can’t or won’t, but they actually cross the line and provide services that make them a fiduciary, the plan sponsor may be liable. As an ERISA fiduciary, plan sponsors are charged with managing their plan as a prudent expert which means they usually hire experts like advisors to help. And if that expert is not qualified or is not properly discharging their duties, plan sponsors are responsible which also applies to auditors, record keepers and money managers with the relationships changing for many of these vendors under the DOL’s new rule.
