401(k) Specialist Issue 1 - 2024 - 37

401(k) FIDUCIARY FOCUS
ciaries' would be better served by teaching a framework they can use every day-to lead
a team, department, division, C-suite, board, or committee-as opposed to a fiduciary
framework they may only use once a quarter.
* The framework is simple and in plain English-it does not include regulatory language,
legalese, or industry jargon. Neuroscience also informs us that complexity often is an inhibitor
to the formation of trust.
Herein is another reason why behavioral governance is a superior alternative to fiduciary-it's
more effective than fiduciary in building trust.
To illustrate, let's examine the role of the typical retirement advisor. At the risk of oversimplifying,
retirement advisors seem to be focused on either serving plan participants or plan sponsors.
To extract the greatest benefit from
financial wellness and behavioral finance
programs, we need to focus on building
trust which can only be achieved by
aligning the bottom-up and top-down
approaches.
In short, what every profession has in
common is a framework for integrating core
values and behaviors with a governance
process in order to build trust and improve
decision-making outcomes.
Fiduciary best practices developed over
the last 35 years were intended to define
a professional standard. Unfortunately,
self-serving interests have destroyed the original
objectives of the fiduciary movement.
Instead of 'fiduciary' being the cornerstone
of our profession, it's clear that a
framework that integrates leadership, stewardship,
and governance is the superior alternative.
We will still need to comply with
fiduciary standards, but it will be our role as
leaders and stewards that will dramatically
improve decision-making outcomes.
The public " gets " the role of a leader and
Those focusing on plan participants take a bottom-up approach. They've realized that
enrollment kits and participation education programs are not sufficient in preparing workers
for retirement. The response has been the creation and adoption of financial wellness programs
and behavioral finance techniques, such as auto enrollment and auto escalation.
Unfortunately, these programs have yet to reach their full potential: the primary reason...
the lack of trust between the plan sponsor and participants. For more than 15 years sociologists
have reported that most workers don't trust the company they work for... and if they
don't trust the company, they're not going to trust the company's benefits.
Consider the following: poor leadership and stewardship
on the part of an employer often results in...
* Higher employee turnover which frequently leads to
the withdrawal of plan assets and leakage (plan assets
are not reinvested in another qualified plan or IRA).
* Higher health care costs and absenteeism because of
stress.
* Lower productivity and profitability, which results in fewer
opportunities for profit sharing or employer matches.
Those focusing on plan sponsors are taking a top-down
approach. They've realized that traditional fiduciary training
programs have not been effective in engaging plan
sponsors, which results in:
* No one taking ownership of the plan participant experience
(of financial wellness programs).
* Misplaced expectations that if a benefit is offered,
employees will fully participate.
* A pervasive attitude that 'good enough' is 'enough.'
ISSUE 1 2024 | 401kSpecialist.com
37
steward... the public will always struggle with
understanding the value of a fiduciary.
Don Trone is regarded as the 'Father of Fiduciary'.
He is the CEO and co-founder of 3ethos, the CEO
and one of the co-founders of the Center for Board
Certified Fiduciaries, and was the principal founder
and former CEO of fi360.

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401(k) Specialist Issue 1 - 2024

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