PLANADVISER - January/February 2020 - 36
servicing strategies
Sharing Ownership
Advisers help sponsors limit participant use of company stock
T
hrough the start of the 21st century, retirement plan
sponsors viewed company stock as an inexpensive
means of adding an asset to the retirement benefits
package and rewarding employees for the company's performance.
But that has been changing steadily over the past
decade-and-a-half.
Congress used the Pension Protection Act of 2006 (PPA) to
encourage employers to give plan participants more options
in their defined contribution (DC) plan and to lessen the reliance
on company shares. Then, in 2014, the U.S. Supreme
Court ruling in Fifth Third Bancorp v. Dudenhoeffer removed a
legal protection known as the presumption of prudence standard,
which forced plan sponsors to become more aware of
the legal liability they assume for the assets in their plan.
According to the Employee Benefit Research Institute
(EBRI), plan participants started shying away from investing
in their employer's shares at least as early as 2001 with the
Enron accounting scandal, when that company's bankruptcy
left employees with shares that were worthless.
Stock Drop Legal Suits
Prior to the Supreme Court ruling in Dudenhoeffer, the courts
had typically aided plan sponsors when they were targeted
by disgruntled employees or retirees after company stock
suffered a sharp drop. The presumption of prudence standard
was based on the view that, if management and directors
offered company stock as part of a retirement plan,
doing so reflected their belief that the stock was at least as
sound an option as the investment alternatives offered.
" That case changed everything, " says Jennifer Doss,
director of institutional solutions for CAPTRUST in Raleigh,
North Carolina. In recent years, she has had to advise plan
sponsors that are much more interested in learning about
their responsibilities as fiduciaries for the retirement plan.
Doss adds that some companies are going so far as to
remove company stock as an option for new contributions
to the plan, so as to limit the likelihood that employees or
retirees will file a complaint should the stock drop in price.
" There's a shift away from putting too much of an
36 | planadviser.com January-February 2020
Art by Lily Snowden-Fine
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PLANADVISER - January/February 2020
Table of Contents for the Digital Edition of PLANADVISER - January/February 2020
Ever Vigilant
Advisers Shine Light on CSR at Work
2020 PLANADVISER Micro Plan Survey
Building Better Engagement
Sharing Ownership
In Touch
Make It Last
Men as Advocates
MEPs and PEPs
Aset Allocation Models
PLANADVISER - January/February 2020 - Cover1
PLANADVISER - January/February 2020 - Cover2
PLANADVISER - January/February 2020 - 1
PLANADVISER - January/February 2020 - 2
PLANADVISER - January/February 2020 - 3
PLANADVISER - January/February 2020 - 4
PLANADVISER - January/February 2020 - 5
PLANADVISER - January/February 2020 - 6
PLANADVISER - January/February 2020 - 7
PLANADVISER - January/February 2020 - 8
PLANADVISER - January/February 2020 - 9
PLANADVISER - January/February 2020 - 10
PLANADVISER - January/February 2020 - 11
PLANADVISER - January/February 2020 - 12
PLANADVISER - January/February 2020 - 13
PLANADVISER - January/February 2020 - 14
PLANADVISER - January/February 2020 - 15
PLANADVISER - January/February 2020 - Ever Vigilant
PLANADVISER - January/February 2020 - 17
PLANADVISER - January/February 2020 - 18
PLANADVISER - January/February 2020 - 19
PLANADVISER - January/February 2020 - Advisers Shine Light on CSR at Work
PLANADVISER - January/February 2020 - 21
PLANADVISER - January/February 2020 - 22
PLANADVISER - January/February 2020 - 23
PLANADVISER - January/February 2020 - 2020 PLANADVISER Micro Plan Survey
PLANADVISER - January/February 2020 - 25
PLANADVISER - January/February 2020 - 26
PLANADVISER - January/February 2020 - 27
PLANADVISER - January/February 2020 - 28
PLANADVISER - January/February 2020 - 29
PLANADVISER - January/February 2020 - 30
PLANADVISER - January/February 2020 - 31
PLANADVISER - January/February 2020 - Building Better Engagement
PLANADVISER - January/February 2020 - 33
PLANADVISER - January/February 2020 - 34
PLANADVISER - January/February 2020 - 35
PLANADVISER - January/February 2020 - Sharing Ownership
PLANADVISER - January/February 2020 - 37
PLANADVISER - January/February 2020 - In Touch
PLANADVISER - January/February 2020 - 39
PLANADVISER - January/February 2020 - Make It Last
PLANADVISER - January/February 2020 - 41
PLANADVISER - January/February 2020 - 42
PLANADVISER - January/February 2020 - 43
PLANADVISER - January/February 2020 - Men as Advocates
PLANADVISER - January/February 2020 - 45
PLANADVISER - January/February 2020 - MEPs and PEPs
PLANADVISER - January/February 2020 - Aset Allocation Models
PLANADVISER - January/February 2020 - 48
PLANADVISER - January/February 2020 - Cover3
PLANADVISER - January/February 2020 - Cover4
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