Fiduciary is a VERB!

Clapperboard designed by Scott Lewis from the thenounproject.com

Clapperboard designed by Scott Lewis from the thenounproject.com

"Action is the foundational key to all success." - Pablo Picasso

Back in 2008 when I wrote Fixing the 401(k), serving as an ERISA 3(21) or 3(38) was still a differentiator for an advisory firm.  Most plan sponsors were still hiring and working with non-fiduciary brokers and consultants and conversations about fiduciary governance, sound process and best practices were unique.  

Back then it was easy to tell a different story although its uniqueness often made it difficult for plan sponsors to truly grasp.  I distinctly remember one prospective client saying to me "you keep talking about all this process stuff that I don't really understand or care about but everyone else I'm talking to is telling me about products - can't you just recommend which product I should use?"  Needless to say I never felt like that guy "got it" and we never got the business.

Fast forward to today and plan sponsors have certainly gotten smarter and more knowledgeable about what to look for when hiring a 401(k) advisor - the rise of the "specialist" is well documented. 

One of the most common questions plan sponsors are now asking advisors is whether they will acknowledge fiduciary responsibility.  While this is certainly an important question, too many plan sponsors simply "check the box" with the answer.  Nowadays, being a fiduciary is no longer a differentiator or competitive advantage, nor does it signify whether the advisor (or firm) is truly a specialist.  Acknowledging fiduciary responsibility is both easy (simply spell it out in your advisory agreement) and a requirement to even get an invite to the dance when competing for legitimate 401(k) opportunities.

I believe plan sponsors, to prudently fulfill their duties when hiring an advisor, need to dig deeper and ask better questions.  That's because being a fiduciary is not simply a noun (who you are).  Instead (and more importantly), being a fiduciary is a verb - it's what you DO that actually matters.  Rather than simply asking prospective advisors if they are willing to accept fiduciary responsibility for their advice, plan sponsors would be well-served to ask questions to determine what qualifies the potential advisor to be the most capable fiduciary to their plan and their participants.  Here's a few questions you can ask your current (or prospective) advisor to get you started:

  1. How long have you and your team served as a fiduciary to corporate retirement plans?
  2. How many corporate retirement plans do you and your team personally serve in a fiduciary capacity?
  3. What is the total amount of corporate retirement plan assets you and your team currently advise in a fiduciary capacity?
  4. Do you serve as a fiduciary to just some of the plans you work with or all of the plans?  If not all, why?
  5. Will you serve as a fiduciary at both the plan-level and participant-level?
  6. What types of training have you received in fiduciary practices and principles?
  7. What are examples of thought leadership (e.g. books, white papers, speaking engagements, etc.) that you or members of your team have created that demonstrate expertise in fiduciary matters?
  8. What are examples of proprietary tools or resources that you or members of your team have created that will help us manage the fiduciary governance process?

 

Rotisserie Chicken and 401(k) Plans

Rotisserie Chicken and 401(k) Plans

With four kids in my house under the age of 9 it can be hard to get any sleep.  To pass the time, I have become a connoisseur of late night infomercials.  

One of my all-time favorites is Ron Popeil's "Pro" model rotisserie chicken oven - you know, the one where if you simply "follow all the instructional material you just set it and forget it."  Wouldn't life be easier if managing a 401(k) plan was as easy as cooking rotisserie chicken?  Sadly, the "set it and forget it" approach does not correlate well with being a prudent and responsible fiduciary.  

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The Fixing the 401(k) Blog Is Back!

The Fixing the 401(k) Blog Is Back!

Have you ever stopped doing something you really enjoyed because other things became a higher priority?  And then you wake up one day and say to yourself "You know, I really should start (insert thing) again now that I have more time."

Well, a few months back I realized how much I missed blogging about 401(k) issues, especially with so many changes that have taken place over the past several years...

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Mourning the Passing of My Dad, Phil Itzoe

I wanted to acknowledge the passing of my dad, Phil Itzoe, last Wednesday, February 10.  My dad was a truly amazing guy and one of the finest men I ever knew.  He spent a total of 45 seasons with the Baltimore Orioles, coordinating the team's travel plans for the last 41.  His last season was 2008 and at the time he had (and I believe still has) the longest tenure of any traveling secretary in the four major sports leagues.  

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Josh Itzoe Featured on the Cover of Maryland Investor Magazine

I was pleased to be featured on the cover of the November/December issue of Maryland Investor Magazine. The magazine is a relatively new publication created by Bill Slaughter and Stephanie Pietry and is dedicated to informing HNW Marylanders about investment, legal and tax issues while providing a lifestyle element as well.

The article is written in Q&A fashion and takes an in-depth look at understanding the Fixing the 401(k) approach.  Here's the article and be sure to check out the Maryland Investor Magazine website.

Josh Itzoe and BrightScope Quoted in November issue of SmartMoney Magazine

I was pleased to be quoted along with Mike Alfred from Brightscope in November's issue of SmartMoney Magazine.   Janet Paskin interviewed Mike and I for her article entitled "Meet the People Who Run Your 401(k)". Interestingly, there were some plan fiduciaries who were actually quoted in the article as well (although I'm not so sure their employees will take comfort in their comments.) 

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