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.
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The following article was featured on Financial Advisor Magazine.
AUGUST 19, 2019
1. How did you personally become involved in fintech and what do you do on any given day?
Like many entrepreneurs, I found myself facing a challenge in my business. There are so many opportunities to grow a successful financial advisory practice today. Advisors are inundated with product offerings, and with growing regulatory scrutiny it is increasingly difficult to operate efficiently. I wanted to create something that would improve both the workflows of fiduciary advisors and the outcomes of retirement plan participants.
As co-CEO I wear many hats and am very fortunate to have a strong experienced team surrounding me. We are constantly improving our technology—setting that agenda and vision is critical. I manage all of the recordkeeper relationships on our platform and my co-CEO and partner, Michael Steffan, has been focused on growing our footprint with advisors.
2. What does your firm do/offer within the fintech sector?
FiduciaryShield is an end-to-end fiduciary technology serving 401(k) advisors. 401(k) Prospector is a feature that identifies fiduciary risk factors on more than 800,000 plans. Advisors can geolocate plans, search by employer, search for service providers and even identify plan decision makers and connect with them via LinkedIn.
Advisors can request proposals from more than 20 recordkeepers through FiduciaryShield. Advisors are able to download and analyze proposals with a simple and transparent interface. Automated plan monitoring reports are issued quarterly to help advisors and plan sponsors meet their ongoing requirement to monitor plan fees. All proposals, reports, forms and important documents are stored securely to help plan fiduciaries meet their obligations under ERISA.
3. How do you feel consumers (or if more relevant for your firm – businesses) are adapting to the facet of fintech that your company operates within?
A recent survey by the National Association of Retirement Plan Participants revealed that only 16% of participants trust financial advisors. The top driver of trust is fee transparency. Pairing transparency with a process that drives better fee results is a no brainer. Employers and advisors utilizing FiduciaryShield are very pleased with the simplicity in which critical fiduciary data is presented and how easy it is to make an informed decision.
In the months that have passed since the death of the revised DOL Fiduciary Rule I can’t help but feel there was one key element seemingly lost in the discussion - why the changes were being considered in the first place.
Back in 2015 The White House Council of Economic Advisors released a report detailing evidence that conflicted investment advice costs investors, on average, 1 percentage point lower annual returns on their retirement savings or $17 billion per year.
Yet, here we are, barreling towards 2019 and those facts remain unchanged.
So, as concerned (and frankly fed up) citizens we decided to do something about it.
Our team has been working hard to create a platform that allows employers to request competitive retirement plan bids directly from top retirement plan providers.
No conflicted advice. No pay to play. No hidden fees.
FiduciaryShield delivers a layer of transparency to a process that has seemed to be made intentionally complex by many service providers. Employers can easily compare their current plan’s features and fees to the proposed plans’ features and fees side by side and make an informed decision, conflict of interest free.
Choosing a retirement plan that puts more of your employees’ money to work for them has never been easier. 401(k) plans were created for the sole benefit of hard-working Americans saving their hard-earned dollars towards a future retirement. It’s about time we got back to that.