“The fiduciary standard as currently written only applies to retirement advisors and investors, but it should apply to all advisors and investors, so I want a big expansion of the definition of fiduciary duty,” Vanguard founder John Bogle tells 401(k) Specialist magazine.
Bogle joins the “father of the 401(k)” Ted Benna, as well Blaine Aikin, Jason Roberts, Brian Graff, Don Trone, Bill Chetney, Jerome Schlichter, Skip Schweiss and many more in speaking exclusively to 401(k) Specialist over the recent DOL’s fiduciary rule fallout. Qualified 401(k) advisors can subscribe here. Views expressed by the all-star lineup range from pleased to problematic, optimistic to apprehensive.
“I’ve known DOL Assistant Secretary Phyllis Borzi for a long time, and she’s serious about cleaning up 401(k)s,” says Benna, who first identified 401(k)s in the tax code 40 years ago. “For all the heat she’s taken, I commend her. There are some people who deserve to get sued.”
While fiduciary bulldog Don Trone advocates for the “gold standard” of fiduciary responsibility for the 401(k) industry, the CEO of consulting firm 3ethos argues that the latest DOL release isn’t it.
“It’s an insult to our intelligence,” Trone tells 401(k) Specialist, his voice rising. “The length indicates that the people who wrote it don’t know what they’re talking about …at the end of the day, it doesn’t protect those who need the most protection. The minimum to make the rule effective is $360,000, which eliminates 98 percent of IRA rollovers.
Not all are so upset with the final result, and fi360’s Blaine Aikin, a long-time supporter of the rule as currently written, is downright pleased with how it was released.
“In a nutshell, I think the DOL proved true to their word,” says Aikin, CEO of the firm that sponsors the Accredited Investment Fiduciary (AIF) and Accredited Investment Fiduciary Analyst (AIFA) designations programs, as well as the CFP Board’s 2016 chair-elect. “They certainly made many practical improvements that removed impediments to various business models being able to deal with the rule more effectively.”
And even a man who’s profited handsomely from capitalizing on plan sponsor fiduciary fails got in on the action. Jerome Schlichter, managing partner of Schlichter, Bogard & Denton, is the attorney who represented plaintiffs in successfully arguing Tibble v. Edison before the Supreme Court. He’s recently sued Fidelity Investments, Lockheed Martin, Chevron, Ameriprise Financial, Caterpillar and many more. He’s got the industry on edge, but nonetheless tells 401(k) Specialist what advisors must do to avoid becoming a tort-lawyer target.
“Plan advisors and sponsors can’t go through the motions,” Schlichter tells the magazine one day after settling for $57 million in a class action suit against Boeing. “They shouldn’t be setting regular quarterly meetings at 4:30pm on Friday when everybody’s looking at their watch to get out of there. No weekend document dumps. And large plans or even medium-size plans should not be paying retail fees—period.”
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With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
