NAPA Net - Polling Places 101620

Are Litigation Allegations Having an Impact?

The retirement industry has been confronted with excessive fee litigation of one type or another for more than a decade and a half – and there’s no sign of it letting up. Those cases have put forth certain assumptions (presumptions?) regarding prudent practices. This week, we’d like to know – how, if at all, have those assumptions impacted your practice(s)?

At times it seems that every plan in American with more than $1 billion in assets has fallen short of at least what the plaintiffs’ bar has sought to establish as prudent.

In fairness, without explanation the assertions might very well constitute a problem – and doubtless these plan design issues are part and parcel of many a committee review. On the other hand, the lawsuits seem to put forth the notion that the mere existence of these conditions constitutes a de facto breach.

This week, we’d like to know how many of these factors are part of your current plan design evaluations – and if that’s “new”, or has always been part of your screening.

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* 1. Active versus passive funds

I'm inclined to go with active management, where appropriate.

Choose passive options when they make sense, but not obsessively.

Choose the most appropriate funds, regardless of whether actively or passively managed.

All other things equal, I opt for passive management.

Want to expand on that?

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* 2. With regard to share classes...

I always opt for the lowest price share class.

I opt for the best value for the plan - and sometimes that means a higher cost share class with revenue-sharing offsets.

I'm more focused on net returns than cost alone.

Care to expand on that?

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* 3. When it comes to reviewing providers...

I insist on doing an RFP every 5 years.

I insist on doing an RFP every 3 years.

I only insist on doing an RFP when it seems necessary.

I actually find that doing an RFP every 3 years does as much harm as good.

I never insist on doing an RFP - there are other ways to assess providers/capabilities.

Any additional thoughts/other?

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* 4. As for recordkeeping fees...

My strong preference is per participant, not asset-based.

I'm ok either way, so long as the fee is reasonable.

I prefer asset-based, so that larger balances subsidize the expense for smaller accounts.

I really don't have a personal preference - it's whatever the plan sponsor prefers.

Any additional thoughts/other?

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* 5. What in your practice/approach has changed, if anything, based on litigation trends (check all that apply)?

I'm more inclined to favor passive management alternatives.

I'm more inclined to press for per-participant charges for recordkeeping.

I'm more inclined to pursue conducting RFPs at least every 3 years.

I'm aware of the litigation trends, but my approach(es) really haven't changed in the past 2 years.

I'm more inclined to emphasize the use of lower cost share classes.

want to expand on that?

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* 6. Regardless of cause, GENERALLY speaking - how, if at all, has the attitude of your plan sponsor clients/prospects changed over the past 2 years (check all that apply)?

They're more inclined to favor passive management alternatives.

They're more inclined to press for per-participant charges for recordkeeping.

They're more inclined to pursue conducting RFPs at least every 3 years.

They're aware of the litigation trends, but most haven't changed positions on these things in the past 2 years.

They're more inclined to want to pursue the use of lower cost share classes.

want to expand on that?

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* 7. Other comments about allegations, presumptions, changes in behavior, lack of changes in behaviors, evolving practices, consistent practices, the need for evolving practices, bad assumptions in litigation, or life in general?

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* 8. What is your role working with retirement plans?

Advisor

Provider

TPA

Plan sponsor

Recordkeeper

Wholesaler

Consultant

Other (please specify)

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* 9. What size plans do you PRIMARILY work with?

Under $10 million in assets

$10-$20 million

$20-$50 million

$50-100 million

$100 million - $250 million

$250 million - $500 million

Above $500 million

Other (please specify)

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* 10. Suggestions for future survey questions? Seriously - what would you like to know about/from your fellow NAPA-Net readers? Or what would you like to be asked?

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* 11. All responses are confidential, of course - but just in case you would like a response - or want me to know you responded - or just want to say hi - here's your chance to do so (don't forget your email)!