Friday, June 2, 2017

Where has the all the content gone?

I'd like to apologize for the lack of consistent content on this blog to those who read it often.  It's been an extremely busy time for me professionally, but the blog post ideas haven't gone away, they've just been getting posted elsewhere!  About 18 months ago or so, my firm, Unified Trust launched a blog and I've been one of the authors populating the content.  Below you can find a link to the blog and a link specifically to the content authored by myself.  Thanks for being patient.  I will try to post here more frequently.

Best - Jason Grantz

Thursday, February 16, 2017

Move to Block State Run Plans - I can hear the cheers from Industry already!

Greetings all and Happy New Year!  Is Feb. 16th too late in the year to still say that?  Well, since this is my first posting in a few months, I feel good about saying it to any of you who feel good about reading my blog! 

It's been a tumultuous time for everyone over the last few months.  Not to rehash daily news, but the election results and subsequent policy making that's transpired since the new regime has taken office have put the 401(k) world into a confusing state where no one really knows what will or what will not actually transpire regulation-wise.  I've intentionally stayed silent publicly about the whole Department of Labor (DOL) Fiduciary Rule mess because it seems like every day the narrative changes.  That will continue to be my position until we have clarity.

Speaking of the DOL, the latest is that Mr. Puzder is out and a new favorite for the position has emerged, Alex Acosta.  Mr. Acosta is a dean at the Law School of Florida International University and has some public policy experience as an assistant attorney general for the Civil Rights Division under President George W. Bush, is a former U.S. attorney for the Southern District of Florida and previously served on the National Labor Relations Board.  Time will tell where he stands with respect to the 'Conflict of Interest' rule and when/if some version of fiduciary regulations will actually transpire.

In the meantime, something that I was very happy to see just transpired with the other giant threat to the private sector retirement system.  Just yesterday, the House of Representatives (highly Republican tilted) passed TWO separate resolutions that would effectively "roll back" the regulatory Safe Harbor that was put into effect for states in the creation of public sector "mandatory" retirement plans.  You can read about the resolutions here, House Passes Resolutions to Block State-Run Plans.

Not surprisingly, these two resolutions passed with consistent voting along party lines.  The usual suspects of the anti-private sector-401k  movement, Pelosi, Neal and Ghilarducci all had much to say about these resolutions.  My favorite of all of the quotes was from Ms. Ghilarducci (who still thinks that a mandatory 3% contribution to a govt. plan is the answer.....saying this since Carter was president) is this one, “This would be a painful step backwards for the millions who are shut out from the dwindling number of employer-sponsored plans,”

I love that quote.  It just shows how out of touch this person is.  Employer's have free will to create or not create plans and employees have free will to choose to work for or not work for employers who don't offer a workplace retirement plan.  If this system is free and open to all in this regard, how are they being shut out?  Whereas, the safe harbor for state-run plans effectively a.) gives the states a competitive advantage as a sponsor over what can be gotten in the private sector as private sector plans are subject to ERISA and state plans are exempt and b.) create confusion and a prime opportunity for local governmental corruption (I know.....this never happens....).

The other part about that quote I like is just a fundamental disconnect on basic facts.  She says "dwindling number of employer-sponsored plans".  That is plainly incorrect.  The number of employer sponsored plans in the U.S. increases daily, weekly, monthly and annually and has done so for three decades.  What's dwindling are the number of traditional Defined Benefit Pension plans.....which by the way have been replaced by and large by Defined Contribution Plans because DB Plans are financially unsustainable for most employers, almost ALL of the states, cities and municipalities who have them!!!!

Hope this gets done and we get rid of this lopsided opportunity for the states.  Sorry for the rant (not sorry). 

- Jason Grantz, QPA, AIFA

Monday, December 5, 2016

Is the Time at Hand for 'Open Meps' - repost from Unified Trust Blog

Time and timing are funny things.  A good idea may be a good idea, but the timing of that idea can be everything.  Back in 2010 and 2011, it seemed like I couldn’t have a conversation with an advisor or go to an industry conference without hearing about so-called ‘Open Multiple Employer Plans’ or ‘Open MEPs’.  At first, they almost sounded fake to me, as we in the industry have a tendency to create marketing or sales terms.  Of course, I was aware of MEPs, but only in the context of what we’re now calling ‘closed’ or ‘traditional’ MEPs.  The concept behind a MEP was always that the related business’ sharing some kind of a nexus or commonality could essentially join into the same retirement plan.  By banding together, economies of scale had the potential to provide better investments, lower fees and less fiduciary risk-all good benefits.  The nexus was important as it kept this exclusive to related or very similar entities.

There had been  a lot of noise in the market that Open MEPs, where this commonality didn’t exist, were also okay.  This struck me as odd.  Did the rules change when I wasn’t paying attention? I don’t think so.  I’ve come to the conclusion that what did change was that the market decided that the existing rules weren’t clear enough. There was a disconnect between what was written into ERISA on MEPs and what was absent in the Internal Revenue Code about MEPs.  Because of this lack of continuity, some aggressive players in the market went ahead with the Open MEP idea, taking the position that if it isn’t explicitly prohibited, it was therefore permitted.  I remained skeptical and even wrote about it on my personal blog (MEP’s EBSA Speaks and More Opinions).  Then in May of 2012, the Department of Labor issued the TOTH Letter, DOL Advisory Opinion 2012-04A.  With this stroke of the pen (or keyboard), all of the noise in the market quieted down.

Flash forward four years and this concept is again at the forefront of the conversation.  In fact, a version of Open MEPs, now being called Pooled Employer Plans (PEPs) is close to becoming a legal structure.  Prior to the election, I was interviewed on this subject (Multiple Employer Plans Have a Bright Future) and discussed whether or not this idea would have its day.  The creation of these new PEP plans is part of a bill that was marked up by the Senate Finance Committee in September called The Retirement Enhancement Savings Act of 2016.  This bill supports the notion of an Open MEP, now being called a PEP, effectively removing the nexus requirement if certain conditions are met.  Timing is everything and now the question really is, when will this bill get passed?  It has made it through Senate Finance unanimously (a very rare occurrence) and has bipartisan support.  At this point, it seems that the only decisions left to be made are regarding  what broader piece of legislation will this Act be attached to and which president will get the credit for it, Obama or Trump.

Professionally, I find this exciting.  As readers know, Unified Trust Company is a professional ‘named fiduciary’ in our role as Discretionary Corporate Trustee over retirement plans.  Within these new PEP requirements are the appointments of a “pooled plan provider”, a ‘named fiduciary’ to act as the plan administrator and one or more named trustees who “must be  a bank or other financial institution” that would be responsible for contributions and assets.  Unified Trust would be a great fit potentially for some of these roles.  Whether these come to fruition sometime soon or not, the future is looking very bright.

- Jason Grantz

Monday, November 14, 2016

Will he or won't he....put the Kibosh on the DOL Fiduciary Rule - Trump I mean

Of all of the words in the English language that I never thought would appear on my blog, the name; Donald Trump would be at the top of that list.  Yet, here it is!!!   The following is a post where I will discuss my initial thoughts of a republican congress and a Donald Trump presidency as related to the retirement plan industry and retirement policy.  This falls into two categories.  First, will this now party-aligned legislative body pass retirement legislation (almost certainly, yes) AND will this new regime seek to unwind any of the previous regime's legislation and regulation.....again, almost certainly yes. 

Regarding the first part, tax reform is almost a veritable certainty to occur in the first couple of years of the Trump presidency.  With that will occur other tax policy initiatives and some of the one's related to retirement and pension reform have been kicking around for a while.  Will it be the most recent one, The Retirement Enhancement and Savings Act of 2016  or something similar?  My guess is yes.  This calls for a re-imagining of the rules around Multiple Employer Plans (MEPs) into something new called Pooled Employer Plans or PEPs.  This concept is similar to what the industry has been tauting for years as Open MEPs.  Here is a link to the full mark-up from the Senate Finance Committee. RESA 2016 Full Description.

Regarding the new Department of Labor (DOL) Fiduciary Rules.  I've seen/read a lot in the last few days about how this regime is going to squash these rules since they aren't friendly to the financial services industry which is largely aligned with the republican side of the debate.  However, killing a regulation once it's enacted is very difficult to do, it's not like the DOL (assuming new leadership) could just pull it, nor could they subject it to changes without a review and comment period.  This would take us well beyond the upcoming implementation date of April 10. 

So if they were to do this, it would have to be done with an overriding interim regulation or some longer term solution where it gets scrapped as an add-on to a future piece of legislation or just simply delaying implementation of it past April 10th as something to deal with later on.  One thing I find  interesting, is that Trump himself has never spoken about it publicly and his website is silent on the matter altogether.  So whether it is a high priority of the new administration or not remains to be seen, but even if it is a high priority, my expectation is that April will come and go and this new DOL rule will be enforceable at that time BY the private sector. 

For how long after.......time will tell.

- Jason Grantz, QPA, AIFA



Friday, October 21, 2016

Scary Times (not an October pun)

First, I'd like to apologize to those who regularly read this blog for delays between my last and this blog post.  It's been an extremely busy summer and often the first thing that gets pushed to the side when time is short are passion projects.  That said, while this is not a political blog and I'm not a political person, no post in mid-October of this particular election year couldn't ignore the scariness of our current presidential race and the potential ramifications.  

Earlier today, I read a blog post from 401(k), linked here called How a Hillary Win Means Government Run 401ks.  That's a pretty scary title!!  I'm not giving a presidential opinion, but rather opining on the....aghast.....thought of the government taking over and running (er...eliminating) the 401(k).  The ramifications of this are scary as well, complete elimination of an entire industry that's been helping people for over 30 years and despite what they tell you, an even WORSE result.  Despite the negative noise around the private sector system, the 401(k) helps more people financially then ANY other program out there with the exception of Social Security, and everyone acknowledges that Social Security falls far short for most and when supplemented with 401(k) can give people a financial chance.

In the article, it describes how Hillary Clinton is considering Tony James for Secretary of the Treasury.  Tony James is a co-promoter of Guaranteed Retirement Accounts, an idea that's been put forth by Teresa Ghilarducci, the professor of economic policy analysis at the New School for Social Research and a well known enemy of the 401(k) and the 401(k) industry.  She often makes glib disparaging commentary about the 401(k) referring to it as an 'immature child' and the like. 

Her  idea is to mandate a 3% of compensation contribution into a new retirement system run by the government.  This would be in addition to what folks already put into Social Security.  This "new" idea has been around since Carter was president!!!!  If anyone thought that 3% was enough to make retirement inadequacy a thing of the past, they would have passed it through already!!!  We're talking almost 40 years and 6 Presidents!  Don't get me wrong, I think we can all acknowledge that their are problems, coverage is certainly an issue and costs, while already compressing, still have room to go down.  But, most professionals in this space will tell you that a minimum of 10% of compensation is what people need to be saving to ensure financial security in retirement.  That's the FLOOR, so 3%.....REALLY???!!! 

It is alarming that this type of socialist reform is the main idea of the folks advising this future potential president.  However, if Hillary wins the presidency, there's no guarantee that she'll be re-elected and scrapping an entire retirement system in favor of this sort of reform is going to be highly resisted, four years won't be enough time, not to mention, Secretary's of Treasury don't make laws.  So, in my opinion, this won't be what actually occurs, but it is something that we should all be keeping an eye on as these types of ideas from powerful and influential people have a way of sticking around. 

- Jason Grantz

Wednesday, May 25, 2016

Why would ANYONE want to self-trustee a 401(k) Plan?

Very interestingly, a recent lawsuit has made a lot of noise in the retirement plan industry, but not for the reason people think.  This suit doesn’t involve a famous company or a huge service provider or even a large sum of money, rather what makes this case so interesting is that it is, in fact, a very ordinary every day plan.  The case I’m referring to is Damberg v. LaMettry’s Collision a $9-$10 million 401(k) plan who’s trustees (two owners) are being sued by two long term employees for excessive fees.  This is the first case of this nature that is “down market” of notoriety.   

Joe Reese walks through the paces of the implications here in a recent blog post on Unified Trust’s blog, linked here à  

Makes me wonder, why would ANYONE want to self-trustee a 401(k) Plan?

- Jason Grantz

Wednesday, May 11, 2016

The Fiduciary Rule: Intentions vs. Results

I was recently contacted by Christopher Carosa of who was looking for insights on the recently released Department of Labor (DOL) Conflict of Interest Regulations.  I found it particularly interesting that his questions regarding the rule weren’t so much mechanical in nature, meaning how it will work, but rather whether or not the rule will have the desired impact.  More specifically, he wanted to know whether it would actually prevent conflicts of interest or allow conflicts of interest to  persist. 

To see the full  dialogue as well as thoughts from other industry professionals, click here:

Outside of the article, Chris was also interested in how retirement savers can be more aware of potential conflicts of interest.  I identified three questions they could ask their current or potential service provider to hopefully help ensure that conflicts of interest are being properly disclosed or mitigated entirely.
  1. Do you (advisor or service provider) charge fees in a level manner neutral of any investment advice or recommendations you might make?
  2. Do you have any formal or informal arrangements with any investment product or product manufacturer that would create a bias in the advice you give me?
  3. Will you provide a simple summary that clearly defines all fees, services and investment recommendations in a format that is easily comprehendible?
A recommended best practice would be to have the service provider respond to these questions in writing so that it’s fully documented and the service provider can be held accountable.   My firm, Unified Trust has always operated as a fiduciary and taken a no conflict-of-interest approach.  Our strong fiduciary governance process focuses on improving the results and outcomes for our participant clients. 

However, the reality is that we are very different in the industry, and there are service providers in the industry who will continue to do business in a conflicted manner.  They will need to be prepared to be up front about any potentially inappropriate conflicts-of-interest that they might have.

It may be wishful thinking, but wouldn’t it be great if the industry took a different approach to the one taken when the fee disclosure rules came out?  Instead of being opaque and doing the minimum to comply, this time make clarity a priority, be direct with clients and do more than the minimum.