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Balancing Fiduciary Duty With ESG Demand
As desire for sustainable investments increases, retirement plan sponsors are still cautious about offering ESG funds while regulatory guidance is stalled.
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Interest in environmental, social and governance (ESG) investing continues to increase, but how can defined contribution (DC) plan sponsors meet participants’ and their own interests while still abiding by their fiduciary duties under the Employee Retirement Income Security Act (ERISA)?
That balance is so important that the Department of Labor (DOL) issued a strict proposal last year, ordering plan fiduciaries to avoid investing in ESG funds that may offer a lower return or increased risk compared to other, non-ESG funds. The proposal later was the target of intense scrutiny, with many arguing that ESG considerations are financial considerations. In response, the DOL issued a much softer stance as its final rule.
Plan Sponsors Have Fiduciary Duties to Follow During Adviser M&As
They should know the right questions to ask as advisory firm merger and acquisition activity continues to increase.
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Art by Scott Bakal
Advisory firm merger and acquisition (M&A) activity is on the rise without any sign of slowing down. But what are plan sponsors to do if their advisory firm is acquired, or if the firm they partner with keeps acquiring others?
Plan sponsors should first find out whether and how the services their financial adviser provides will be impacted, says George Sepsakos, an ERISA [Employee Retirement Income Security Act] attorney and principal at Groom Law Group. “The first questions that our [plan sponsor] clients typically ask is how the direct experience with the adviser is going to change, and if they need to be concerned with the effects of the relationship,” he says.