In the Golden Age of Boxing, there was one world champion. Whether it was Joe Louis or Rocky Marciano as the heavyweight kingpin or Sugar Ray Robinson as middleweight crown holder, you knew who was champion. There was one sanctioning organization called the National Boxing Association (NBA), so there was one champion for each weight class. The NBA became the World Boxing Association (WBA). Then the World Boxing Council (WBC) was formed with its own champions. Years later, the International Boxing Federation (IBF) and the World Boxing Organization (WBO) had their own champions as well. Apparently there is also the IBU, IBA, and WBF. It's starting to become an alphabet soup of boxing champions. I'm sure plan sponsors feel the same way of plan sponsors offering their services as independent ERISA fiduciaries. Most plan sponsors don't know the difference between an ERISA §3(16), ERISA §3(21), and ERISA §3(38) fiduciary, it becomes a number soup of its own, So this article is going to break down what a fiduciary is and what these fiduciary number actually means.  

To read the article, please click here.

When I was a freshman at Stony Brook, there was a shooting on campus as a rap concert when this rapper Special Ed didn't want to perform after arriving at 2 am for a show that was supposed to start at midnight. The problem was that Stony Brook University police officers weren't armed. They would have to wait for Suffolk County police officers to show up at the campus entrance.

So the University President John Marburger decided that it was the time after this concert to figure out whether campus police officers should be final armed. It took Marburger two years to decide to arm the police.

For someone who was just involved in student politics, I didn't understand what took so long. I wasn't old enough to understand the political implications that required Marburger to finally make a decision and the reasons why it took him so long. There is such much back and forth on how decisions are made and a good chunk of the time, money talks.

The Department of Labor (DOL) just announced that they were delaying the implementation of a new fiduciary rule for retirement plans and individual retirement accounts. They claim it will be released in 2015.  How many years it will take to be finally implemented, they didn't say.

What is taking so long? A lot of pressure and a lot of money. The pressure is coming from Congress and Wall Street groups that don't want brokers to be treated as fiduciaries. The money is coming from Wall Street groups to the coffers of Congressmen who don't want the DOL to implement a rule. Heck, Wall Street groups are even creating dubious reports that plan sponsors will ditch their retirement plans if the fiduciary rule is changed. They said the same thing about fee disclosure and we saw how that didn't happen.

It's politics and the DOL has to walk a tightrope between competing interests to develop a rule that will serve as a compromise that neither side will be happy about, but those folks don't have the political pressure that the DOL has been weathering for years with the new fiduciary rule and fee disclosure regulations.

While reasonable people can easily make decisions, there is nothing reasonable when it comes to anything coming out of Washington D.C.

One of my favorite genres is the Western.  While I prefer the works of Sergio Leone and Clint Eastwood to those of John Ford and John Wayne, I have always been a big fan of these films. I always like the idea that the good guys wore white hats and the bad guys wore the black hats.

Of course, my favorite Western, Unforgiven, shakes all that up because the people wearing the white hats aren't necessarily that good (Gene Hackman's Little Bill) and the people wearing the black hats aren't necessarily that bad (Clint Eastwood's Will Munny).

When I talk to advisors and third party administrators who do terrific jobs at fully, transparent fees, I always state: "that since we all wear white hats, we all should stick together."

The problem is that with fee disclosure, there are a lot of folks wearing what I call gray hats. Gray hats meaning that these were former black hatters either trying to reform the way they handle the retirement plan business or those pretending that they are one of the good guys.

That may mean providers that were always hiding fees or were just too expensive offering "fiduciary services" like a fiduciary warranty or the use of an ERISA 3(38) service through a third party.  Perhaps these providers have seen the error of their way and are now going to be good retirement plan industry "citizens", and maybe they haven't and this is some marketing gimmick. How will plan sponsors know the difference?

We live in a Google world, which means things are certainly more transparent. So if a financial advisor writes an article on an RIA website telling advisors how to get their clients out of fiduciary trouble, Google will let you know that this fellow doesn't have a sterling reputation and he was accused of some of the things he was warning against which landed plan sponsors in fiduciary trouble.  I believe that people and plan providers have it within themselves to change and improve their services and business model, but it must be judged by deeds and not by words or articles or fancy pamphlets.

If I'm a plan sponsor, I need to do my due diligence on the providers I'm considering. However, would I be better off with providers who practices full transparency before it was fashionable and required, or to do I hire a provider that had a poor reputation in this industry who is trying to change their ways and not try to acknowledge their past? Despite Unforgiven, I feel safer with the folks in white hats.