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My 2010 Fiduciary Wish List – Progress to Date


In December I wrote 2010 The Year of the Fiduciary? In this post I put forth three items on my “Fiduciary Wish List” for 2010.

  1. Adoption of a Clear Fiduciary Standard.
  2. Transparency and full uniform disclosure of 401(k) fees and expenses.
  3. Adoption of rules defining acceptable advice arrangements for 401(k) plan participants.

Last week the House passed a Financial Reform bill which empowers the Securities and Exchange Commission to impose the same fiduciary duty on broker-dealers and insurance agents currently met by investment advisers. This is in many ways a victory for those of us advocating a Fiduciary Standard for ALL financial advisors who advise the public, including those who sell financial products.
The fight is far from over, however. The bill still must pass the Senate. Additionally the SEC will spend the next several months studying this provision and how best to enact it. This will include the opportunity for public comment. You can expect the financial services firms and their lobbyists to mount a full-court press on Senators, regulators and anyone else with influence over this matter. It will be interesting to see what, if anything is finally enacted.
To date little has been done to require transparency and full uniform disclosure of 401(k) fees and expenses. In fact the Senate Finance Committee has done its best so far to quash disclosure to 401(k) participants. A few providers are moving towards openness and disclosure, Putnam is notable here. Perhaps they see the handwriting on the wall. Even with this, I would suggest that their disclosure and openness still warrants scrutiny by plan sponsors.
The delays in the adoption of rules defining acceptable advice arrangements for 401(k) plan participants are unconscionable in my opinion. The Pension Protection Act was passed in 2006. The Obama Administration rightly blocked implementation of the advice provisions allowing conflicted advisors (fund companies, commissioned advisors and others who might stand to gain based upon the choices made by plan participants). As a fee-only advisor I fully support the prohibition of conflicted advisors. However the Administration seems to be taking its sweet time in finalizing the regs. Plan participants are confused and surveys show that they want direct advice as to how to best invest their retirement money and about how to plan for retirement.
Six months into 2010, some progress but not enough in my opinion. These issues are serious and they impact the financial well-being of many hard-working Americans. I hope that the House, the Senate, and the SEC see fit to do what is in the best interest of consumers and that they ignore the dollars and influence of the financial services firms and get all of these items passed into law.

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  1. This comment has been removed by the author.

  2. Leon thank you for your comment. Unconflicted 401(k) advice can include advice as to how participants should allocate their accounts as well advice on retirement planning and other areas of financial planning as well.

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