made it a point to fully disclose
fee information, and make sure it
is provided in a way that they can
understand and digest. As a result,
we’re hopeful that our clients and
their participants have a more
thorough understanding than what
others might have at this point in
time.
Peterson: “Fiduciary friendly” is a
term that probably started getting
used around here two or three
years ago. We started to look back
at a lot of these decisions and
realized that, if you’re a fiduciary,
you can either be scared of that
responsibility or you can embrace
it. At Securian Retirement, we’ve
always embraced our separate
account fiduciary responsibilities,
but we also recognize that how
we conduct our business impacts
our plan sponsors. If our interests
aren’t aligned with plan fiduciaries’,
we can make their jobs much more
difficult. Over the years, we have
implemented a number of significant
plan practices: full fee disclosure; no
proprietary fund requirement; pass-back of revenue sharing; an annual,
independent third-party investment
array review; our decision not
to bring on target-date funds
that we felt were not particularly
transparent nor particularly well-constructed; being the first provider
to offer an ERISA 3( 38) investment
management service offered via an
external firm—those are decisions
that help plan sponsors avoid
fiduciary trouble. That sometimes
puts us on a less-traveled path
relative to our competition but, when
we get the opportunity to explain
those decisions to advisers and plan
sponsors, it generally becomes clear
that there are very good reasons to
work with Securian Retirement.
Soldan: There may be things that
are permitted from a fiduciary
standpoint today based on an
interpretation of regulations,
but that doesn’t mean that the
regulations won’t change over time,
or be reinterpreted as the industry
becomes more focused on doing the
right things. Look at our revenue-sharing practices—we were on a
revenue-neutral path for almost 20
years before many in the industry
seemed to recognize that that
path is in the best interest of plan
participants.
Ayers: Fiduciary friendliness
starts with the recognition that the
fiduciary has a very tough job, and
our commitment is to make that job
easier. We want our fiduciary clients
to understand those obligations,
and how we help them meet
them—not just on the investment
side, but also on administrative
and compliance issues. Retirement
programs are one of the more
valuable benefits that employers
offer, and we want the program to
do what it’s intended to do and not
be a drain on their resources.
PS: Speaking of resource drains,
how does that approach help plan
sponsors deal with the prospect of
litigation?
Peterson: Many of the participant
law suits that are being filed today
in regard to fees and the fiduciary
responsibilities of plan sponsors
have been centered around the
share class of the retail mutual fund
that’s being utilized. Oftentimes, if
plan sponsors haven’t compared,
say, retail share class with an
institutional share class and then
don’t understand why they’re using
the particular share class that they
are today, it creates this sense of a
breach of fiduciary responsibility. At
Securian Retirement, you don’t have
that issue because we always seek to
use the lowest-net-cost share class.
Soldan: We’re confident enough
in the fairness of how we do that
and the way we approach things
regarding the managing of the
separate accounts we offer that
we indemnify our clients against
not only any losses, but any costs
associated with defending claims
as a result of decisions we’ve made
relative to what our underlying
separate accounts invest in.
Ayers: In our research of the
indemnifications that other
providers offer, we found an inverse
correlation between the length of
the document and the protection for
the plan fiduciary. The longer it is,
the more protection for the provider
rather than the fiduciary.
Soldan: Basically, we’re standing
behind every decision we make
relative to the selection, monitoring,
and replacement of the investment
vehicles that underlie our separate
accounts, and we’re indemnifying
not only that our actions are
prudent, but against legal challenges
to those actions. You don’t have
to be wrong to be sued, so we are
able to say that any of the costs in
fighting a claim or a law suit that
stems from these separate account
activities won’t cost you a penny—
and we put that in writing.
Ayers: It’s easier to run your
business when you have that pure
clarity over whom you serve, and
Securian Retirement is committed to
doing the right thing—even when no
one is looking.
Download a full copy of “Fiduciary Issues Related to the Allocation of Revenue Sharing” white paper
at http://www.securiannews.com/white-paper/fiduciary-issues-related-allocation-revenue-sharing.
