The third and final day of the 2017 PLANADVISER National Conference in Orlando opened with a frank discussion about how difficult it is to educate plan sponsors on the varying responsibilities they carry as Employee Retirement Income Security Act (ERISA) fiduciaries.
As laid out by Heidi LeMieur, director of client relations for the Retirement Learning Center, changes made to the fiduciary rule by the now-long-gone Obama administration were very significant and are still poorly understood by many plan sponsors. Further complicating the situation is that the Trump administration and the Republican-controlled Congress have pledged to make their own changes to the ongoing reforms.
Along with fellow panelist Steve Niehoff, chief operating officer (COO) at the Pension Resource Institute, LeMieur suggested that most plan sponsors have an understanding that there has been a shift in the fiduciary landscape, but the finer points of the reforms elude them.
“For example, we know that even before the recent changes, sponsors did not fully understand the different levels of fiduciary service, from 3(38) to 3(21) to 3(16),” Niehoff said. “They especially don’t really understand that there is diversity even within these three categories in terms of exactly what the provider is pledging to do by taking on a given fiduciary status. For that reason, it is important to step back and make sure the sponsor understands its full set of responsibilities.”
LeMieur reminded advisers that the lack of fiduciary awareness is both a challenge and an opportunity facing the industry: “As an adviser, this can be a big opportunity, working across all the different areas of the plan and ensuring the sponsor understands its various duties. If you are a good fiduciary educator, you can become even more indispensable to the plan sponsor than you already are.”
Niehoff further observed how “more so than ever, we have clients asking what it means to be a fiduciary.”
“They want to hire you because they are not expert in this subject and they need guidance,” he explained. “At the end of the day, they want to know, ‘What is it you can do for me in this part of my business?’ That’s an important point, because for many plan sponsors, the retirement plan is just that—a small part of what they have to worry about on a daily basis.”