The Phoenix May Be Rising…

Ok, as an admitted geek of comic books as a kid, I have LOVED the fact that these stories I grew up with and visualized are now some of the biggest box office hits in the world.  The next one coming out this week is the Dark Phoenix.  While I could be referencing the cool story of the Phoenix from a Marvel perspective and what this could mean to the X-Men franchise, alas no one pays me to have an opinion on movies.  So, the Phoenix I am speaking of is the Fiduciary Rule.

The story of the Phoenix is one of being born, started to take life, was weakened, then killed… only to rise again. This may be a similar fate to the fiduciary rule.  Born, millions spent on implementation by various carriers, then it is postponed right as it is to become law, then essentially killed.  However, there was a lot less fanfare when the SEC picked up the failed DOL project and said they were going to revisit.  But quietly, the concept that had the industry spinning in 2016 may be back with an SEC twist.

Scheduled to take effect in September of 2019, the SEC intends to apply the “Best Interest Proposal” which is currently being threatened by Republican senators, including Ted Cruz. In essence, this holds non-fiduciary advisors to arguably the most important fiduciary tenant, that all decisions be made in the best interest of the client. Currently, most plan advisors are not fiduciaries and are only subject to the lower suitability standard. While the new rule does not require you to be a fiduciary to collect fees from the plan as the DOL tried, it will increase the liability for non-fiduciary advisors and advance the discussion with sponsors.

While I still have a beer bet saying there is a delay, here are some fiduciary thoughts as we look towards September.

SEC “Best Interest Proposal” is the legislation that seems to have taken life again, look for yourself what the new rule states and ask yourself how it impacts your plan and the plans you touch.

I love what I do, but there are frustrations.  Having worked for two 50,000 employee companies, the constant struggle on resources, hiring and where/how to grow are a big part of the challenges of running a small company.  I have been doing it for 14 years now, and while there are tweaks, core challenges are consistent.  One is that when you are focusing on small to mid-size companies you lose more clients due to acquisition, mergers, and other business transitional issues vs. the larger plan market.  That is what it is, but losing a client because it helps them get a better rate on their bank line of credit or some other ancillary business need is more than frustrating, it is wrong.  It happens, but it is a fiduciary breech that is gaining more and more attention. Please click here to read more.

Not to be outdone… Yup, even after all the Phoenix references to the DOL’s Fiduciary Review and highlighting that the SEC proposal may bring it back to life, the DOL said wait a minute that is our rule. The Department just recently announced that they intend to submit a revised version of their much-debated Fiduciary Rule Standard by December of this year.  We went from this transforming the industry in 2016, to then being dead and now within months we may have major proposals moving forward by both the SEC and DOL?  Makes you wonder why so many are fighting it. Click this link for more information.


Did You Know?

As we prepare for yet another political election in the coming year, I hear little real discussion on social security.  Did you know that Social Security trustees announced on 4/22/19 that the trust fund backing the payment of Social Security benefits (OASI retirement benefits) would be zero in 2034? A zero “trust fund” does not mean the payment of Social Security benefits would also go to zero, but rather would drop to 77% of their originally promised levels through the year 2095. When the trustees released their report in 2009 (i.e., 10 years ago), the Social Security Trust Fund was projected to be depleted in 2039 (source: Social Security Trustees 2019 Report).  How can baby boomers, or really any American not be pushing real discourse on this issue now?

Last week RSG held its first Fiduciary Summit event with tremendous success. Be sure to contact us if you missed it but would like information on the key topics:

  • Navigating and understanding different plan perspectives/touchpoints
  • Plan Governance and Best Practices
  • Financial Wellness and Why it Matters
  • Target Date Fund Benchmarking