Can robo advisors truly be 401(k) fiduciaries?

Technology from Vestwell, FiduciaryShield and Betterment’s recently announced Advised 401(k) are making it easier than ever for advisors to offer retirement plans to business-owner clients. By taking on much of the heavy lifting, these tools can make it look easy for any financial planner to moonlight as a retirement plan advisor.

But advisors thinking about entering the retirement plan space as a path to easy money should think twice before jumping in. Deciding to extend your niche market from serving doctors to serving doctors and dentists is one thing. Taking on the mantle of a fiduciary under ERISA is quite another.

The key question is whether a program that purports to give personalized advice to plan participants is using tools that are well-designed for that purpose. In 2015, not long after robo advisors arrived on the scene, the SEC’s Office of Investor Education and Advocacy and FINRA issued a joint investor alert discussing the risks and limitations of automated investment tools. They warned that robo advisors may rely on incorrect assumptions that do not apply to investors’ individual situations.

“Be aware that a tool may ask questions that are over-generalized, ambiguous, misleading, or designed to fit you into the tool’s predetermined options,” the alert stated.

The Massachusetts Securities Division has also expressed concern, stating in 2016 that robos, “cannot fully satisfy their fiduciary obligations” because of their depersonalized nature and inability to provide ongoing due diligence.

As far as I’m aware, no regulatory authority has ever brought an action based on a robo’s failure to meet applicable fiduciary standards, either under ERISA or the Investment Advisers Act of 1940. But advisors should be aware that this issue still lurks unresolved.

Click here to visit www.financial-planning.com and read the full article.

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Coronavirus (COVID-19) Regulatory Resources for Employee Benefit Plans

March 25, 2020

Coronavirus (COVID-19) Regulatory Resources for Employee Benefit Plans

The past week has brought an onslaught of changes for the world, including changes in U.S. federal legislation to address the COVID-19 pandemic.

ComplianceDashboard has compiled a list of resources we feel may aid your everyday. The resources provide access to the following:

  • COVID-19 information for advisers and employers.
  • A summary of the Families First Coronavirus Response Act (FFCRA).
  • A list of state websites where businesses and individuals may access state-specific guidance regarding legislation and government actions.
  • Links to federal agency sites including CMS, DOL, and IRS.
  • A listing (by most recent date of release) of articles from reputable sources re: employer considerations for benefit plans.

Click here to continue reading the full ComplianceDashboard Resource List.

 

 

How Fiduciaries Can Make Small Changes To Ensure Plan Participants Make The Most Of Their 401(k)s

The big mistakes employers make when setting up 401(k) plans

Watch BidMoni Demo FiduciaryShield at FinovateFall 2019

FinovateFall 2019 was held in New York City from September 23-25.  Finovate showcases the top tech innovations and provides a unique insight into the future of the fintech industry.

BidMoni was selected as a product demonstrator for FinovateFall 2019 to demonstrate the many ways FiduciaryShield is changing how advisors engage the 401(k) market.

CEO Stephen Daigle provided a live demonstration of FiduciaryShield within the 7-minute Finovate format.

Click here to view the entire 7 minute demo!

2 Cool Fintech Tools at FinovateFall

2 Cool Fintech Tools at FinovateFall

Startups presented a souped-up platform for retirement plan advisors and a family budgeting tool for financial services firms to use with clients.

Landmark Settlement in the Longest Running Erisa Lawsuit

ABB, Workers Get Early Approval for $55M 401(k) Settlement

Posted April 3, 2019, 1:08 PM
Landmark settlement in the longest running Erisa lawsuit, what were the conclusions:
  • Recordkeeping fees were excessive causing losses to participants (failure to bid and monitor service providers).
  • The plan replaced funds with proprietary, underperforming funds offered by the recordkeeper.
  • Indirect revenue received from funds must be paid back to plan participants.

 

This creates a foundation for breaches and penalties moving forward. Advisors and firms are going to be forced to change their way of doing business.

 

Click here to read the full story.