Ep. 021 Interview Series: Stephen Rosenberg & Doug Lutkus on ERISA Compliance and Tackling Litigation Risk

Business Breaks - All Things Business

DISCLAIMER: Information presented on this program is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Discussions and answers to questions do not involve the rendering of personalized investment advice but are limited to the dissemination of general information. A professional advisor should be consulted before implementing any of the options presented.

INSIGHTS:

It's time to talk about retirement plans and litigation!
In this episode of Business Breaks, we learn about the importance of understanding investment risks and fees, and how to protect yourself and your business from the legal consequences. From the SEC's plain English disclosures to the DOL's translation standards, there's a lot to consider.
We also discussed the crucial role of fiduciaries and the need for participant education. So, whether you're a CFO (full time or fractional), fiduciary or an employee participant, it's time to get informed and reduce your risk.
Listen to the episode for more valuable insights from top experts Steve Rosenberg and Doug Lutkus on reducing the risk of litigation.
#retirementplans #litigation #investing #education #SEC #DOL #fiduciaries #businessbreaks

Investment Disclosures

• SEC standard for disclosures only require them in plain English and not in other languages.
• DOL has a plain language standard for health and welfare plans, allowing disclosures to be translated into any language.
• Investment filers often use financial and legal jargon, making it difficult for readers to understand.
• SEC has a "Ask Questions" tool to simplify information for stocks and mutual funds.
• SEC lists nine pertinent questions to disclose to purchasers for mutual funds.
• Suggestion of creating beginner, intermediate and advanced fact sheets and videos to help educate and inform investors at different levels of understanding.
• Importance of customizing investment programs to avoid potential legal repercussions.

Regulations and Compliance

• Discussion on 404(c) regulations to provide sufficient information to participants for informed investment decisions.
• Interpretive bulletin from Department of Labor complicates matters by not providing a clear definition of "sufficient information."
• Compliance doesn't require offering investment advice or education.
• It is important to know where the investment data is coming from and whether it's being shared.
• Importance of providing understandable and simple terms when communicating complex investment information.

Investor Education and Fiduciary Responsibility

• SEC aims to facilitate access to information needed by investors to make informed investment decisions.
• Plan fiduciaries should rely on SEC guidance when creating participant education.
• Discussion on fees; 41% of participants do not know the fees they are paying.
• CFOs should consider getting fiduciary training to protect themselves and participants.
• Importance of asking ten questions when interviewing an investment advisor.
• Suggestions on how to properly take on a fiduciary responsibility.
• Clients cannot fully abdicate their fiduciary responsibilities and must monitor the advisor's actions.
• Investment companies typically claim to be the best and may not acknowledge faults or overcharging.
• Most employees have little understanding of the fees associated with their 401(k) disclosures and materials.

Protection Against Litigation

• Regulations regarding participant control of investment selections can provide a level of protection to fiduciaries.
• Suggestions on providing more information to participants to prevent lawsuits and provide better leverage for defending against them.
• Recommendation to hire a lawyer to ensure everything is properly laid out.
• Discussion on how to reduce risk and protect businesses from litigation challenges.

Contact Stephen:

Stephen D. Rosenberg | The Wagner Law Group

Contact Doug:

Fiduciary Happy | Happy Participants Happy Fiduciaries

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