FIDUCIARY CONSULTING

GCM_Logo_RGB.jpg
 

IN THE NEWS

 

  Click here to access a PDF of the article

Click here to access a PDF of the article

Employers May Underestimate the Importance of 401(k)s

NAPA Net | Ted Godbout | August 28, 2018

The Transamerica Center for Retirement Studies’ 18th Annual Retirement Survey finds that the vast majority of workers (88%) view a 401(k) or similar plan as an important benefit... The most often cited reasons among employers that are not planning to offer a plan include: Company is not big enough (58%), Concerns about cost (41%), Employees are not interested (22%)... 25% of employers that are not likely to offer a plan say they would consider joining a multiple employer plan (MEP) offered by a reputable vendor who handles many of the fiduciary and administrative duties at a reasonable cost.


  Click here to access a PDF of the article

Click here to access a PDF of the article

DOL Fiduciary Rule Post-Mortem: How Long Will the Taste Linger?

FiduciaryNews.com | Christopher Carosa, CTFA | August 28, 2018

The summer of 2018 saw many changes in the fiduciary world, including the DOL Fiduciary Rule being vacated, as well as the introduction of the SEC's "Best Interest" proposal. The below article includes a three-part series that will cover the historical, as well as the future, implications of the fiduciary standard.


  Click here to access a PDF of the article

Click here to access a PDF of the article

Trump’s executive order instructs Labor to set table for Open MEPs

Benefits Pro | Nick Thornton | August 31, 2018

While more than 90 percent of large employers sponsor a 401(k) plan, data from the Bureau of Labor Statistics estimates that only 48 percent of employers with fewer than 50 employees sponsor a plan. Small employers—and their employees—pay a premium on retirement plans. Plans with less than $1 million in assets pay an average of 142 basis points in investment fees, for instance. By comparison, plans with more than $1 billion in assets pay an average of 37 basis points, according to Morningstar research.


  Click here to access a PDF of the article

Click here to access a PDF of the article

Do the RMD Rules Have an Impact on Future Retirement Savings?

NAPA Net | Ted Godbout | September 5, 2018

Relief on RMDs may be coming. -- A component of President Trump’s retirement security Executive Order is to review (within 180 days) the required minimum distribution (RMD) rules to see if they may be forcing Americans to make unnecessary withdrawals, leaving them with insufficient savings later in life.... Recent research by the Employee Benefit Research Institute (EBRI) shows that the RMD rules are a major factor in IRA withdrawals... The rate of those taking a withdrawal among those ages 71 and older was significantly lower among Roth owners versus traditional IRA owners. While the RMD rules only apply to traditional IRA owners beginning in the year owners turn age 70½, the data shows that only 6.2% of Roth IRA owners ages 71-79 took a withdrawal, compared with 85.4% of traditional IRA owners.


  Click here to access a PDF of the article

Click here to access a PDF of the article

30% of Employees Can't Answer This Simple 401(k) Question

The Motley Fool | Katie Brockman | August 30, 2018

Retirement is on the horizon. You have been putting aside money into your 401(k) for an extended period of time - what's the best next step for your nest egg? According to a new study by the Employee Benefit Research Institute, 3 out of 10 employees don't know how to answer this question. The study also revealed that 5% of respondents said they were planning on cashing out their 401(k) once they retired.

"Unless you absolutely have no other choice, you shouldn't cash out your entire 401(k) when you retire. Not only are you preventing your investments from continuing to grow, but you also have to pay income tax on that amount...That leaves you with a couple other options: Roll your savings over into an IRA, or keep it in your 401(k). There are pros and cons to both options, but either way, it's important to have a plan in place before you need that money."


  Click here to access a PDF of the article

Click here to access a PDF of the article

401(k) truth bomb: Missing participants are bad, but 401(k) cashouts are worse

Benefits Pro | Tom Hawkins | July 26, 2018

One more reason why every plan needs a competent advisor and administrator -- Missing participants are a big headache for plan sponsors, as they’re simultaneously an expense, an administrative burden, a fiduciary risk and a primary driver of plan audits – right up there with delinquent contributions.... Naturally, the DOL’s mandate is to ensure that participants receive the benefits they’ve earned, while the IRS is focused on collecting deferred taxes. That’s why uncashed distribution checks, missed required minimum distributions (RMDs) and the like can trigger plan audits, where sponsors must demonstrate the diligence they’ve applied in locating these participants, while operating in an uncomfortable environment characterized by insufficient guidance and inconsistent enforcement.


  Click here to access a PDF of the article

Click here to access a PDF of the article

The Increasing Growth of Fiduciary Advisors to Plan Sponsors

PlanPILOT | Editorial Team | July 25, 2018

A 2018 survey from the Plan Sponsor Council of America found that 70% of companies retain an independent retirement plan advisor, compared to 66.8% in 2017. "Retirement plan advisors and consultants with a fiduciary duty towards clients offer the most desirable traits for any retirement plan, such as independence, qualified experience and marketplace knowledge." Proper investment advice from a fiduciary advisor can lead to cost savings as well as maximized investment returns for participants. In the constantly evolving regulatory landscape, a fiduciary advisor can protect Plan Sponsors from potentially damaging litigation, and allow them to focus on what's most important: running their business.


  Click here to access a PDF of the article

Click here to access a PDF of the article

Benefits Of Adding 3(38) And 3(16) Fiduciary Protection To Your ERISA 401(k)/403(b) Retirement Plan

Forbes | Amir Eyal | March 5, 2018

3(16) + 3(38) = PEACE OF MIND FOR PLAN SPONSORS -- The 3(16) fiduciary takes complete responsibility for all aspects of plan administration, assuming full discretionary control. Most important, liability is shifted to the 3(16) fiduciary, mitigating risk to employers. The 3(16) is the entity that signs off on the Employee Retirement Income Security Act (ERISA) plan related documents. If there is an error in the plan, no matter how big or small, the 3(16) fiduciary is liable... Instead of appointing a plan adviser, then doing independent research to determine whether or not to accept recommendations, some sponsors elect to save time by appointing a 3(38) fiduciary. Such fiduciaries have the authorization to make investment decisions for the plan so that your organization can focus on achieving its goals.


  Click here to access a PDF of the article

Click here to access a PDF of the article

7 signs of a successful 401(k)

Benefit News | Robert C. Lawton | June 6, 2018

Reasonable costs -- It is OK with the Department of Labor if you pay more for services. You just need to have a reason. Better service, access to more services and a provider who is able to understand your plan’s complexity are all good reasons to pay more. The provider is a friend (or relative) of the CEO, we’ve always worked with them or senior management likes attending their annual conference in Florida in February are not good reasons.


  Click here to access a PDF of the article

Click here to access a PDF of the article

The Mission Impossible Of Being A 401(k) Plan Sponsor

JD Supra | Ary Rosenbaum | July 20, 2018

The problem with plan sponsors is that they really don’t understand what a TPA does, so they usually hire one just based on price or something else that has nothing to do with competent plan administration... Too many financial advisors are fixated on picking investment options for the plan. Picking investment options is a part of being a 401(k) financial advisor, but anyone who can read a Morningstar profile could fill out a basic lineup of mutual funds for a 401(k) plan. A good 401(k) financial advisor understands their role in minimizing a plan sponsor’s fiduciary liability... Luck in running a 401(k) plan doesn’t exist. What you need as a plan sponsor in running a 401(k) plan is vigilance and surrounding yourself with the best team out there.


  Click here to access a PDF of the article

Click here to access a PDF of the article

Benefits Of Adding 3(38) And 3(16) Fiduciary Protection To Your ERISA 401(k)/403(b) Retirement Plan

Forbes | Amir Eyal | March 5, 2018

3(16) + 3(38) = PEACE OF MIND FOR PLAN SPONSORS -- The 3(16) fiduciary takes complete responsibility for all aspects of plan administration, assuming full discretionary control. Most important, liability is shifted to the 3(16) fiduciary, mitigating risk to employers. The 3(16) is the entity that signs off on the Employee Retirement Income Security Act (ERISA) plan related documents. If there is an error in the plan, no matter how big or small, the 3(16) fiduciary is liable... Instead of appointing a plan adviser, then doing independent research to determine whether or not to accept recommendations, some sponsors elect to save time by appointing a 3(38) fiduciary. Such fiduciaries have the authorization to make investment decisions for the plan so that your organization can focus on achieving its goals.


  Click here to access a PDF of the article

Click here to access a PDF of the article

Plan Sponsors Shouldn’t Fear Making Settlor Decisions

Plan Sponsor | Rebecca Moore | July 31, 2018

Good read on settlor versus fiduciary roles in retirement plan sponsorship -- Often it is the same person or committee acting as a settlor looking out for the best interest of the employer and acting as a fiduciary looking out for best interest of the plan and participants. For example, many plans have eligibility requirements, and establishing those requirements is a settlor function, but plan fiduciaries have a responsibility to make sure the requirements are met...  “Companies that purchase fiduciary liability insurance want to ensure that costs to defend settlor cases are covered and that they have the broadest wording for settlor capacity claims.”... Another way to mitigate liability in making settlor decisions is to have two committees, one for settlor functions and another for fiduciary functions.


  Click here to access a PDF of the article

Click here to access a PDF of the article

Adviser: Protect corporate boards from 401(k) claims

Crain's Cleveland Business | Brian J. Lamb | June 30, 2018

As a functional matter, does the board actually exercise discretionary control or authority over plan management, does it exercise discretionary authority or responsibility for plan administration, or does it provide investment advice? If so, regardless of what the applicable documents say, the board will be treated as a "functional" fiduciary to the extent of such control, authority or advice.


  Click here to access a PDF of the article

Click here to access a PDF of the article

Your Duty To Your Employees (Gwen Moritz Editor's Note)

Arkansas Business | Gwen Moritz | August 13, 2018

Sometimes employers choose a plan for reasons that aren’t for the exclusive benefit of plan participants, as federal law requires. This includes quid pro quo arrangements in which owners or executives are rewarded at the expense of employees who are forced to pay more than they should. But the more common kind of fiduciary failure is simple inertia — failing to bid out the business in order to make sure the pricing is still competitive. 


  Click here to access a PDF of the article

Click here to access a PDF of the article

Saving in a 401(k) for the first time? Here’s what you need to know

MarketWatch | Catherine Golladay | August 6, 2018

Informative article for those who have recently or will soon be joining the workforce out of school. Even though saving for your retirement may seem far away, the power of compounding will benefit your future self in retirement. If you are lucky enough to be offered a 401(k) plan at your new workplace, taking advantage of it as soon as possible is critical, and may even come with matching funds from your employer. 

"There is a lot to juggle, financially speaking, when you’re just starting out in the workforce. When you’re facing monthly bills and looming debts, retirement may be the last thing on your mind. But if you can plan for it early and save little by little throughout your entire career, you’ll be that much more likely to retire on your own terms and have the lifestyle you want in your golden years." 


  Click here to access a PDF of the article

Click here to access a PDF of the article

Danger: Don’t Judge A Fund By Its Active/Passive Label

401k Specialist | John Faustino | May 21, 2018

Selecting funds solely because they’re passive, or ignoring funds solely because they’re active ignores the fiduciary “duty of care” requirement. Prudent investment selection processes for fiduciary accounts require the use of data, not just labels.


  Click here to access a PDF of the article

Click here to access a PDF of the article

MY 401(k) PLAN IS FREE RIGHT? RETIREMENT PLAN FEES EXPLAINED

Forbes | David Rae | May 17, 2018

According to the Investor Pulse Survey from TD Ameritrade, 37% of 401k participants mistakenly believe they are paying no fees at all. Zero, Zilch, Nada. All 401(k) plans have fees and there is no free lunch when it comes to saving for retirement.


  Click here to access a PDF of the article

Click here to access a PDF of the article

More Sponsors Search Out Fiduciary Services and Support

Plan Adviser | John Manganaro | June 15, 2018

Both speakers agreed that going with 3(38)-level service frees up much more time for the retirement plan committee to talk about items besides fund choices and investment returns. There can be a greater attention to plan design, plan performance, boosting deferrals, improving communications, etc.


  Click here to access a PDF of the article

Click here to access a PDF of the article

THE RISK OF 3(38) FIDUCIARY FLEXIBILITY

401k Specialist | Richard Friedman | July 19, 2017

You will hear some people (especially salespeople) say that plan sponsors get the same, if not better, protection from a platform level 3(21) fiduciary service as they do the platform level 3(38) fiduciary service. Simply not true; it’s not even close and probably fake news.... All 3(16) fiduciary services are the same. Again, simply not true. Not even close. There is a vast difference in the firm’s offering 3(16) services and those that will serve as the 3(16) Plan Administrator. Furthermore, there is a difference in the few firms that will serve as the Plan Administrator.


  Click here to access a PDF of the article

Click here to access a PDF of the article

Wrong assumptions plan sponsors make

Employee Benefit Adviser | Carol Buckmann | June 15, 2018

A famous quote from an ERISA decision many years ago summed it up: “A pure heart and an empty head are not enough.” The IRS and DOL expect complete compliance, not near compliance or well-intentioned attempts at compliance that miss the mark... Fiduciaries must satisfy a “prudent expert” standard. If you are not an investment expert, you are required to consult someone who is.


  Click here to access a PDF of the article

Click here to access a PDF of the article

Opaque, outdated 401(k) plan disclosures harming investors, advisers

Investment News | Greg Lacurci | June 20, 2018

"This lack of transparency hamstrings advisers trying to act in their clients' best interests, particularly when they try to serve less-well-off clients," ... Financial advisers can't easily compare a 401(k) plan to a rollover option or make recommendations about rebalancing "without detailed plan lineup data," they said. The extra effort required to do an analysis "greatly increases" the cost of financial advice, and higher-quality filings would "help democratize access" to rollover advice, according to the report, "Retirement Plan Transparency: Opaque Data Hinders Best-Interest Advice."


  Click here to access the full PDF

Click here to access the full PDF

Unitized Model Portfolios: A Crucial Next-Step In Retirement Plan Product Innovation

Securian Financial | June 20, 2018

“Okay, target-date funds are a reasonable tool for retirement plans, but they are not necessarily the best Qualified Default Investment Alternative solution as they tend to contain proprietary fund options, many of which they would never hire for use in retirement plans as standalone investments.” So, if you’re an investment advisor with the capability to build your own models, you’re going to conclude that, “I can do it better.”  --  At GCM, we agree!


  Click here to access a PDF of the article

Click here to access a PDF of the article

Advisers urged to resist 'fiduciary fatigue'

InvestmentNews | Jeff Benjamin | June 6, 2018

It's important that financial advisers resist "fiduciary fatigue" and continue to stay engaged in the long-running battle over investment advice reform regulations. "The regulatory landscape will remain uncertain for a period of time, and litigation is increasing, particularly for advisers working on the retirement side." 

Blaine Aikin, executive chairman of Fi360, discusses the current state of the fiduciary rule and encourages advisors to "refocus from regulation to your reputation." 


  Click here to access a PDF of the article

Click here to access a PDF of the article

Are the People Running Your 401(k) Putting Your Interests First?

The Street | Robert Powell | June 6, 2018 

Do you know if your plan's sponsor and fiduciary are acting in your best interest?

At the Plan Sponsor Council of America's recent annual meeting, Blaine Aikin, the executive chairman of Fi360* and CEFEX, outlined the core principles that ERISA Plan Fiduciaries should have to help mitigate risk. This article outlines the main points Aikin made during his speech, which can be used to evaluate your current plan.

*Fi360 helps financial intermediaries use prudent fiduciary practices to profitably gather, grow and protect investors’ assets since 1999. GCM utilizes this platform for research and other in-house processes.


  Click here to access a PDF of the article

Click here to access a PDF of the article

Retirement plan sponsors tread lightly with capital preservation

Investment News | Robert Steyer | May 29, 2018

ERISA lawsuits attacking the offering of money market funds instead of stable value funds allege the latter produce higher returns than the former, especially in recent years of low interest rates. However, DC consultants said stable value might not be appropriate or desirable for some plans... "Make sure you pick a strategy that you are comfortable with and that's appropriate for your participants" ... But sponsors must document why this was the best choice.


  Click here to access a PDF of the article

Click here to access a PDF of the article

Fiduciaries, Protect Yourselves--Hire a Great Adviser

Cohen & Buckmann, P.C. | Carol Buckmann 

This is an important article that all plan sponsors should read and understand.  Many are not aware of the important role that advisers take on when being a fiduciary for a plan.  


  Click here to access a PDF of the article

Click here to access a PDF of the article

The Achilles Heel of All 401(k) Plans: The Payroll Interface

Plan Sponsor | Andrew S. Zito | May 25, 2018

The best analogy I’ve heard for the relationship between payroll and 401(k) plans is that of a busy interstate. Each of your participants is a car that’s entering the highway, changing lanes and exiting. Just like the design of the highway, the way a company designs its payroll-to-plan interface plays an important role in whether there is an accident.


  Click here to access a PDF of the article

Click here to access a PDF of the article

Settlement Reached in Excessive Fee Suit One Day After Lawsuit Is Filed

Plan Sponsor | Rebecca Moore | May 14, 2018

That was fast! -- The first bone of contention the plaintiffs have is that the company offered the “microscopically low-yielding” Vanguard Prime Money Market Fund, rather than a stable value fund that would have provided better returns while preserving capital and liquidity without any greater increase in risk compared to money market investments.


  Click here to access a PDF of the article

Click here to access a PDF of the article

What are the fees on that annuity? Good luck finding them.

Financial Planning | Bryan Borzykowski | May 8, 2018

Naturally, insurance companies don’t want their clients to know about the fees, which is why they’re listed deep into the insurance policy.“They’re buried on, like, page 84, where no one reads it,” Cutter says...It’s always important to read through the policy and find those fees.


  Click here to access a PDF of the article

Click here to access a PDF of the article

Report Lays Out Causes and Consequences of ERISA Lawsuits

Plan Sponsor | Lee Barney | May 1, 2018

As a result of these lawsuits, many retirement plans have gravitated to low-cost passive mutual fund options, which also track very closely to their benchmarks... Plans have also dropped specialty asset class funds, such as industry-specific equity funds, commodities-based funds and narrow-niche fixed income funds, as these potentially charge higher fees and carry highest investment risks.

  Click here to access a PDF of the article

Click here to access a PDF of the article

Increased Savings Rates and Auto Escalation Can Boost Retirement Income

Plan Sponsor | Lee Barney | April 26, 2018

Participants who work with a traditional or online adviser are on track to replace 116% of their income. Those working with any paid adviser, 91%, and those with no adviser, 51%.


  Click here to access a PDF of the article

Click here to access a PDF of the article

5 Signs That You Have a Lousy 401(k) Plan

Investopedia | Roger Wohlner 

Understanding whether your plan is a good one or substandard and pricey is important. This will help participants decide how much to invest and may also prompt them to ask their employer to make some improvements.


  Click here to access a PDF of the article

Click here to access a PDF of the article

6 Great 401(k) Features Everyone Should Know About

The Motley Fool | Maurie Backman | April 4, 2018

One good thing about 401(k)s is that in some cases, you can delay your first RMD past 70-1/2. Specifically, if you're still working at that time and don't own 5% or more of the company employing you, you can hold off on RMDs until you leave that job.


  Click here to access a PDF of the article

Click here to access a PDF of the article

How ‘easy’ target-date funds can endanger your retirement

Market Watch | Mitch Tuchman | March 22, 2018

Target-date funds are not universally cheap. They are not universally accurate in judging personal risk tolerance. And most important, they’re not right for many people because your retirement age could have little to do with your long-term need for growth from stocks.


  Click here to access a PDF of the article

Click here to access a PDF of the article

Benefits Of Adding 3(38) And 3(16) Fiduciary Protection To Your ERISA 401(k)/403(b) Retirement Plan

Forbes | Amir Eyal | March 5, 2018

Instead of appointing a plan adviser, then doing independent research to determine whether or not to accept recommendations, some plan sponsors elect to save time by appointing a 3(38) fiduciary. Such fiduciaries have the authorization to make investment decisions for the plan so that your organization can focus on achieving its goals.

In addition, in a 3(16) fiduciary relationship, the plan sponsor outsources many vital responsibilities to a specialized plan administrator. The 3(16) fiduciary takes complete responsibility for all aspects of plan administration, assuming full discretionary control. Most important, liability is shifted to the 3(16) fiduciary, mitigating risk to employers.


  Click here to access a PDF of the article

Click here to access a PDF of the article

New Study Finds the Smaller Your Business, the Higher Your 401(k) Fees

Entrepreneur | Tom Zgainer | February 9, 2018

The business owner usually engages a broker who seems like a likeable guy/gal. The broker typically wants to make as much as they can get away with. The broker selects a provider (often an insurance company or payroll company) and said provider typically makes money on “revenue-sharing,” which is a fancy way of saying that they get a cut of the mutual fund management fees. This means the funds in the plan are often expensive, and low-cost index funds, which don’t “pay to play,” are suspiciously missing from most plans (despite overwhelming evidence they outperform over time). Another common revenue source is the use of proprietary name-brand funds which often more profitable. And let’s not forget the local third-party administrator who can often get a cut of the action as well.