PLANSPONSOR - October-November 2022 - 37

INVESTMENTS | OPINION
fee sanctioned against Mr. Schlichter for
making an argument that didn't hold water.
How can plan sponsors respond?
Campbell: You're right-they'll sue you
for whatever reason they can concoct.
The correct plan sponsor response to this
threat is to be doing things the right way,
remembering the key words of " process "
and " documentation. " What I think we've
seen with plan sponsors is that if you have
a good, thorough, prudent, well-documented
fiduciary process, your odds of
coming out of litigation either winning
the case or settling for a smaller amount
of money earlier in the process are much
better. Generally, the courts have not
wanted to punish a plan sponsor
that
was trying to do things correctly and
maybe made a foot fault. I'm not trying to
diminish the risk, because the courts have
certainly found against plan fiduciaries
who did not administer their plans properly,
but a plan sponsor that's trying to do
the right thing seems to get a little " unofficial "
benefit of the doubt.
Again, that's not legal analysis per se,
but it's what seems to have been an influence
in many of these cases. But to get
either the unofficial benefit of the doubt,
or to get the official legal deference to fiduciary
decision-making that the Supreme
Court in the Hughes case called " due
regard to the range of reasonable judgments
a fiduciary may make, " you have to
have that prudent process.
This informal observation is not true
for fiduciary service providers. If you have
a profit motive or an exempted conflict,
you're not getting that same benefit of
the doubt. Service providers need to have
dotted their i's and crossed their t's on
process even more than the plan sponsors
that are being sued in these cases.
PS: There's been a significant turnover of
new fiduciaries and committee members
in this labor market. Is this worrisome?
Campbell: This is a really good time
to remind folks that they need an
onboarding process. They need some
fiduciary training on a recurring basis
" Generally, the courts have not
wanted to punish a plan sponsor
that was trying to do things correctly
and maybe made a foot fault. "
because most of these people coming on
probably have no idea what they're getting
into, and they might blindly follow the
more experienced members in circumstances
where the committee might
benefit from a broader discussion. It's
always a good time to be proactive on your
fiduciary training, but I think now it is
clearly needed, given that turnover.
PS: Have you seen the defensive provisions
in plan documents trying to at least slow
down some of the ambulance chasing?
Campbell: There's always a push and
pull between the plaintiff's bar and the
defense-efforts to mitigate some of
those litigation risks or to adjust to recent
court decisions, et cetera. So yes, plan
sponsors should have an evolving document
that responds to those changes. But,
given the wide range of plans, this doesn't
need to be a priority for all plan sponsors.
The example I love to use is [the
fictitious] Bob's Bicycle Shop with 10
employees. Bob's Bicycle Shop is not necessarily
the entity where we need to worry
about spending extra time drafting its plan
document with an eye to emerging litigation
risk. It's really those larger plan sponsors
that are at more risk, or it's the service
providers who are aggregating that risk
themselves. But to answer your question
directly, yes, we are always working with
those types of clients to consider modifying
language to address emerging issues.
In regard to litigation risks, we're
looking down the road, trying to address
things such as cybersecurity and data
issues. This is a growing area of concern
with many moving parts. Who is responsible
when there is a data breach or when
funds in an account are stolen? What if
the participant's action, such as carelessness
with passwords, caused the loss?
This is not just a litigation issue, but an
ongoing fiduciary and business operations
issue for everyone involved.
PS: Do you bring up investment policy
statements or fiduciary outsourcing in
committee training?
Campbell: Absolutely. I think a wellwritten
investment policy statement is very
helpful. Even though it's not required by
ERISA, it documents the prudent process
fiduciaries use to make their investment
decisions. However, there are two key
issues here that we see causing problems
time and time again-is it " well-written "
and did you follow it? Well-written, to
me, means there are a lot of " mays " and
not a lot of " shalls. " In other words, the
IPS describes the process, but it doesn't
dictate the outcomes. Plan fiduciaries
should retain the discretion to decide how
to address an underperforming fund, for
example, not be told by the IPS when they
must divest it. The other issue is that if you
have a written process, you need to follow
it, or you need to amend the process. -PS
Brad Campbell is a partner in Faegre Drinker's Washington,
D.C., office. He is a nationally recognized figure in employersponsored
retirement plans who leverages his past
experience as U.S. assistant secretary of labor. Before that he
held other senior government positions with the Department
of Labor and Securities and Exchange Commission. He
has testified before various congressional committees over
fiduciary and best-interest regulations.
PLANSPONSOR.COM October - November 2022 37
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PLANSPONSOR - October-November 2022

Table of Contents for the Digital Edition of PLANSPONSOR - October-November 2022

INSIGHTS
INDUSTRY ANALYSIS
RULES & REGULATIONS
UPFRONT
Deep Dive
Managing Volatility
New Solutions
Participant ESG Demands
Good Practices
FIDUCIARY FORUM
INSIDE ANGLE
PLAN PROFILE
PLANSPONSOR - October-November 2022 - Cover1
PLANSPONSOR - October-November 2022 - Cover2
PLANSPONSOR - October-November 2022 - 1
PLANSPONSOR - October-November 2022 - INSIGHTS
PLANSPONSOR - October-November 2022 - 3
PLANSPONSOR - October-November 2022 - RULES & REGULATIONS
PLANSPONSOR - October-November 2022 - 5
PLANSPONSOR - October-November 2022 - 6
PLANSPONSOR - October-November 2022 - 7
PLANSPONSOR - October-November 2022 - 8
PLANSPONSOR - October-November 2022 - 9
PLANSPONSOR - October-November 2022 - UPFRONT
PLANSPONSOR - October-November 2022 - 11
PLANSPONSOR - October-November 2022 - 12
PLANSPONSOR - October-November 2022 - 13
PLANSPONSOR - October-November 2022 - 14
PLANSPONSOR - October-November 2022 - 15
PLANSPONSOR - October-November 2022 - Deep Dive
PLANSPONSOR - October-November 2022 - 17
PLANSPONSOR - October-November 2022 - 18
PLANSPONSOR - October-November 2022 - 19
PLANSPONSOR - October-November 2022 - 20
PLANSPONSOR - October-November 2022 - 21
PLANSPONSOR - October-November 2022 - 22
PLANSPONSOR - October-November 2022 - 23
PLANSPONSOR - October-November 2022 - 24
PLANSPONSOR - October-November 2022 - 25
PLANSPONSOR - October-November 2022 - Managing Volatility
PLANSPONSOR - October-November 2022 - 27
PLANSPONSOR - October-November 2022 - 28
PLANSPONSOR - October-November 2022 - 29
PLANSPONSOR - October-November 2022 - New Solutions
PLANSPONSOR - October-November 2022 - 31
PLANSPONSOR - October-November 2022 - 32
PLANSPONSOR - October-November 2022 - 33
PLANSPONSOR - October-November 2022 - Participant ESG Demands
PLANSPONSOR - October-November 2022 - 35
PLANSPONSOR - October-November 2022 - Good Practices
PLANSPONSOR - October-November 2022 - 37
PLANSPONSOR - October-November 2022 - FIDUCIARY FORUM
PLANSPONSOR - October-November 2022 - INSIDE ANGLE
PLANSPONSOR - October-November 2022 - PLAN PROFILE
PLANSPONSOR - October-November 2022 - Cover3
PLANSPONSOR - October-November 2022 - Cover4
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