RiXtrema Launches Plan Monitor to Minimize Fiduciary Risk

In an ever-evolving fiduciary landscape, the tool aims to identify in real time issues that may put plan advisers at risk, such as the availability of lower-cost share classes.

RiXtrema, a provider of risk management tools and analysis to the financial advisory community, has added a new Plan Monitor solution to its 401kFiduciaryOptimizer 2.0.

The new feature monitors retirement plans daily for instances that may raise fiduciary risk including the availability of better share classes and lower cost funds identical to plan menu funds.

“Ten years after the initial filing in a Los Angeles federal court, the Supreme Court recently ruled that a fiduciary must monitor ‘at regular intervals’ and make decisions with the same vigor as if it was the decision to first admit a fund into the plan,” explains RiXtrema President Daniel Satchkov. “This further raises the bar in terms of plan fiduciaries’ responsibility to plan participants and our objective is to help facilitate advisers’ and their plan sponsor clients’ ability to make timely decisions in accordance with the mandate of the courts.”

Initially ruled on by the Supreme Court in 2015, the case of Tibble v. Edison established that under trust law, a trustee has a continuing duty to monitor trust investments and remove imprudent ones. This continuing duty exists separate and apart from the trustee’s duty to exercise prudence in selecting investments at the outset. The trustee must systematically consider all the investments of the trust at regular intervals to ensure that they are appropriate.

RiXtrema emphasizes, “Virtually anyone accepting compensation for plans for any sort of financial advice is now an ERISA fiduciary. Significant attorney fee awards have increased incentives to litigate. This means that not only large, but also medium, small and even ‘micro’ plans will be the focus of legal action. Recruiting of plaintiffs for ERISA litigation is now done through billboards and TV ads. ERISA courts expect immediate action when the problem is known and fiduciaries are expected to know their plan.”

Satchkov adds, “The key question that advisers and plan sponsors must ask themselves is: ‘How quickly should I fix my plan?’ The answer from Tibble v. Edison is, right now. Defendants in argued that two to five months were necessary for them to fix the problem with share classes once identified, which doesn’t seem unreasonable. But Judge Wilson’s opinion actually makes it clear that for most plan menu problems, the fix should be done ‘immediately’. We recognized a need in the industry for a whole new set of tools to ensure that problems could be quickly identified and remedied. That is why we created Plan Monitor which will watch your plans continuously.”

To learn more about Plan Monitor and the 401kFiduciaryOptimizer, visit rixtrema.net/401k/index.