PLANADVISER - September/October 2019 - 42

occur in other areas of the law. When it
becomes clear that plaintiffs' attorneys
are chasing results without a clear
understanding of the law, you start to
see courts push back. I think there's a
chance that could happen here. "
Fleckner and Prussack suggested
that it appears more advisers are being
dragged into litigation alongside their
smaller-plan clients. They theorized
that smaller employers may lack large
pots of money to pay settlements, so
the litigators charge as many parties
of wrongdoing as possible. Litigators
also presume that,
in these smaller
plans, the advisers' expertise is more
central to the plan's ongoing design
and operation.
Asked for insight about what
advisers and their plan sponsor
clients can do to protect themselves
ahead of the filing of litigation, Prussack
said, " Well before we get to the
The Fundamentals of Retirement
Income Products
Moderator: James A. Lyday, managing
director, Pensionmark Financial Group
LLC. Panelists: Doug McIntosh, vice president,
investments,
Prudential, and Sean
Murray, principal and chief revenue officer,
Retiree Income.
There are three main ways to offer
retirement income products in a retirement
plan, said James Lyday. " [These]
are best efforts, fixed annuities and
other approaches. "
In the case of best efforts, " This is
the work being done by experienced
investment professionals to use a
nonguaranteed product to deliver
income over a set period of time and
still leave something behind to beneficiaries, "
said Doug McIntosh. " Fixed
annuities, be they immediate or
deferred, return guaranteed income
to the owner for the rest of [his] life.
Fiduciaries must be able to show they are
paying consistent attention to the plan.
stage of active litigation, and the
underwriting of putting up millions of
dollars in fiduciary insurance, we try
to determine that they have prudent
processes and procedures in place, "
she said. " For advisers, we examine
closely their fee structures; whether
there have been recent changes to the
compensation model and why those
were made; how they are dealing with
the industry pressures being placed
upon them to change the fees structures;
and more. A big component
of these lawsuits revolves around
revenue sharing, so we take a close
look at that as well. "
Both experts agreed that documented
proof of a prudent process is
paramount in defending against ERISA
fiduciary breach cases. Fiduciaries
will appear in a good light, from trial
judges' perspective, if they can show
their decisions were driven by a recurring
process, featuring regular meetings
and ongoing flow of information.
Fiduciaries must be able to show they
are paying consistent attention to the
plan. -John Manganaro
Should [he] die early, [he] leaves
money behind to the beneficiary.
There's a lot of innovation being done
with deferred annuities.
" Guaranteed withdrawal
benefits
are a hybrid type of annuity that guarantees
payments for the rest of the
owner's life, but [the person] can back
out of the product, " McIntosh continued.
As far as other approaches, these
are innovations that combine all of the
above, he said. " There's a need for guaranteed
income, which is why regulations
are in favor of innovation. "
Lyday noted there are already 30
different types of retirement income
products on the market, with many
of the manufacturers being not just
insurers but also recordkeepers. " Retirement
income solutions are coming to
retirement plans, " he said.
As to pros and cons of in-plan vs.
annuities,
out-of-plan
the
in-plan
annuities " layer the guarantees before
the market risk and are institutionally
priced because of the larger risk pool, "
McIntosh said. " But you need to make
the plan committee understand what
[those products] are, and there is no one
solution. Every plan is different. "
With out-of-plan annuities, " the
retail market price is not as advantageous, "
he added.
Retirement plan advisers also need
to inform their sponsor clients " there
has been fiduciary protection for sponsors
for quite some time, " Lyday said.
" The QDIA [qualified default investment
alternative] regulation of 2007
specifically said that [the QDIA] may
embed a guaranteed income element, "
McIntosh pointed out. " And, in 2008
and 2015, the Department of Labor
[DOL] issued safe harbors for sponsors
to offer annuities. The SECURE [Setting
Every Community Up for Retirement
Enhancement] Act will expand on this
solid safe harbor already in place. So,
you need to know there is a safe harbor
that is fairly comprehensive. "
Advisers should keep in mind,
as well, that people's biggest fear is
outliving their assets, Sean Murray said.
To date, the sole focus of defined contribution
(DC) plans and those who serve
them has been accumulation, Murray
said. " We have developed a withdrawal
methodology, looking at a household's
entire assets, that makes these assets
last seven years longer than they otherwise
would. There is technology available
to help people draw down assets. "
Retirement income is a topic that
advisers will eventually be addressing
en masse, Murray predicted. " This is a
massive issue for many plan sponsors. "
-Lee Barney
Prospecting and Asking for Referrals
Moderator: Jason A. Johnson, senior vice
president - wealth management, retirement
plan consultant, wealth advisor, UBS
Financial Services, Inc. Panelists: David T.
Griffin, director - institutional retirement
plans, Atlanta Retirement Partners/LPL
Financial; David Hinderstein, president,
Strategic Retirement Group Inc.; and David
M. Kulchar, managing director, retirement
plan services, Oswald Financial.
The trio of Davids on the panel
encouraged advisers who have growth
aspirations to not focus on one or two
tactics but to build a strategic framework
for becoming more referable.
Another point they stressed is that
advisers can leverage
technologies
42 | planadviser.com September-October 2019
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