Putting Up Fiduciary Guardrails Can’t Wait
Larry Crocker, chief executive officer of Fiduciary Consulting Group, has a pretty simple message for financial industry professionals still holding out in opposition to the Department of Labor’s (DOL) fiduciary standard reform.
“The history of the ERISA [Employee Retirement Income Security Act] industry has shown that any time there’s real change there is also real opportunity that comes along with it,” he tells PLANADVISER. “I’m not the best technical expert out there on fiduciary liability—but I can tell you just how valuable it is to know the background of ERISA and how, exactly, we got to this point where a major shift in the fiduciary standard is needed. This story goes all the way back to 1975 and the first creation of ERISA—what is going to happen in April.”
Crocker, for his part, knows the history because he runs a business that is entirely dedicated to mapping out and delivering fiduciary plan administration in a 3(16) capacity, along with 402 Named Fiduciary services. In addition, his background prior to founding the fiduciary consulting practice has also provided valuable understanding, he says.
“I got into the business coming out of being a banking officer,” Crocker explains. “I enjoyed serving people and so I thought I wanted to be a fee-based investment adviser—which was pretty unusual back in the early 1990s, I think. I started working with employee benefit clients, doing medical, dental and some retirement plans too.”
Crocker “enjoyed working with qualified retirement plans, and one thing led to another,” which allowed him to really come to an appreciation for how important ERISA is for the qualified retirement plan industry.
“The more I learned about the background of ERISA and the fiduciary standard—I came to believe that our industry was producing too many generalists and too much overlap,” he says. “Bankers were looking to make money selling insurance and investments; investment firms were looking to do mortgages; insurers were starting to offer banking products. Everything wanted to be everyone to everyone.”
In the end plan participants were not being wronged, necessarily, but they were not getting the best service they could get in many circumstances. “Add to this the emerging concerns around investment fees and the push towards improved transparency and the new fiduciary rule makes sense as a next-step for regulators and the industry.”
