The “F” Word is Getting a Lot of Attention

Staying abreast of all of the information regarding the changing landscape of 401(k) and fiduciary regulations, legislation, and market forces is something that can be challenging, to say the least. Being a big believer in leveraging technology, Google Alerts has been a great tool to help keep me informed for years. For the past 4 years, I have set up Alerts for the following terms:
fiduciary
401k fiduciary
401k investment advice
investment behavior

The system would feed articles and news regarding these topics to me once a week. On average, I would get 2-5 decent articles per month. Fast forwarding to the past 12 months, I have had to change the frequency to daily so not to be buried by information overload. On Monday alone, there were 10 and that has been consistent for the past year.

The point is that the interest in fiduciary responsibilities and best practices in light of the recent market volatility has never received so much attention by the media. The difference between a broker’s suitability standard, and an advisor’s fiduciary standard is being very poignantly discussed in newspapers and on websites around the world due to the attention it is receiving from Congress, regulators, and the associated trade groups. After people lost a significant percentage of their wealth last year, many have stepped back to take a look at who is guiding them along their financial journey. The question is simple: Am I being sold products that are in the best interests of my broker or being advised with my best interests at the forefront. Simply put, am I more comfortable being sold by a broker or advised by a fiduciary?

Additionally, new fiduciary mandates being considered in the House for fee disclosure and independent participant advice in 401(k) plans, called the 401(k) Fair Disclosure and Pension Security Act, are creating a lot of interest. The biggest issue lies with the many conflicts of interest that can exist in the sale of products for 401(k) plans, rather than providing companies and their employees fiduciary advice on what favors the plan and its participants, not the advisor. More to come on these developments.