FPA Conference 2024

Last week I had the incredible honor of landing my first “paid” speaking gig.

So, I want to give a great big shout out and say thank you to the Financial Planning Association (FPA) for allowing me to share my passion of ERISA law with many of your members.

Yes, you read that right.

I am very passionate about ERISA law. Specifically, the intersection of ERISA law and the financial professional working with their clients.

We all have clients who ask us how they should be investing their 401(k) plan at work.

Many advisers don’t know that answering that question may make you an ERISA Fiduciary, which then means there are some very specific things you need to do as proscribed by ERISA and the Department of Labor (DOL).

And if you don’t do what ERISA and the DOL require, you may have to pay back all of your clients’  losses, your fees charged, an excise tax and anything else the courts decide.

And yes, I said that courts.

The dirty secret in our industry is that working with ERISA accounts and participants is about the only thing you can do in our industry that gives your clients direct access to the court system.

And to make matters worse, they also can change a single lawsuit into a “class action” lawsuit.

So, most of the largest institutions do everything they can to make sure their financial professionals DO NOT become “ERISA Fiduciaries” (which is different than being an “SEC Fiduciary”).

And this is why I am passionate about ERISA law!

This is why I am an ERISA Nerd!

I want to share my passion with as many advisers as I can and let them know that you don’t have to fear the DOL. You don’t have to worry about risking your personal assets (as those are what will be used if you lose a lawsuit / there is no “piercing of the veil” to get access to your personal assets in an ERISA case).

I want to let every financial adviser know, you just have to do what ERISA law and the DOL say you have to.

Check the boxes!

Do it properly!

And that is what I talked about at the FPA Conference last week in Columbus Ohio.

And I wholeheartedly thank the FPA for allowing me to share my passion and knowledge with your members.

I met a lot of good people at that conference and caught up with friends at the conference.

And I think I may have converted a few to become a little bit more of an ERISA nerd than they would like to admit!

Stay confident my friends and make it an awesome day!

Fidelity vs pontera

Last night I was chilling in my pool around 8pm after playing a couple of hours of pickleball (I live in Florida, don’t judge! - lol)

I opened a Sam Adams (Octoberfest) and picked up my cell phone.

I was surprised by the number of emails I received forwarding me the “breaking news” from Financial Advisor IQ. The title of the article was, “Fidelity to Block Credential Sharing on 401(k) accounts; Pontera Rallies FA Troops”. (Click the picture below to read the full article).

I was not shocked by Fidelity’s decision and here is why. . .

In addition to being an “ERISA Nerd”, I am the co-founder of Plan Confidence Corp.

Plan Confidence is a fintech firm that does the research, advice, documentation and (seamlessly) delivers a financial firm’s advice to their “held away” participants; all while ensuring their ERISA compliance.

Over the past several years, there have been a couple of technology companies allowing the ability for advisers to place trades for “held away” accounts, by “duping” the custodians to believe the client logged in.

We have embraced this technology at Plan Confidence and even enhanced our software to deliver “Trade Files” to advisers with the click of a button.

This was done intentionally, so financial advisers could easily implement their advice into Pontera, thus creating a paper trail from ERISA compliant advice through implementation.  The combination of our software plus Pontera saved adviser’s a ton of time when (compliantly) working with “held away” accounts.

Fidelity, Vanguard, Schwab, etc have very smart people working for them.

They knew about Pontera and advisers wanting to help their clients better manage their 401(k) accounts. Pontera made this easy for advisers to do.

So, why would Fidelity have an issue with this? 

Because the way Pontera “dupes” the custodians.

Pontera captures the participant’s Username, login and (amends) the two factor authentication (2FA).

The adviser programs Pontera, never having access to the custodian or the participant’s credentials and Pontera “communicates” the trades to the custodian. When they “communicate” this information, they are logging in with the participant’s Username, password and 2FA.

So, Pontera is good at letting adviser’s trade their clients “held away” accounts and avoid SEC custody issues.

However, the adviser’s client is also Fidelity’s client!

And Fidelity has responsibilities to that client as well. And having them share their credentials puts Fidelity in the awkward position of tacitly allowing a third party to access a 401(k) account that Fidelity needs (legally) to protect.

So, Fidelity made the announcement they are not going to allow third party credential sharing anymore. I know Fidelity’s announcement may change the way many advisers work with “held away” accounts after 10/2/2024.

Please be assured that I have personally reached Fidelity to gather more information and see if they have an API that can implement your trades without the need for credential sharing.

I think it is imperative that I speak with the other three companies that are on the Kitces Fintech Map in the “held away assets” category (which was just recently added). 

I’ve already talked to Absolute Capital and I’ve reached out Pontera and Future Capital to get their opinions, so I can stay at the forefront of advisers (compliantly) working with their “held away” accounts.

As soon as I know more, I will let you know more.

Until then, stay confident my friends!

-The ERISA Nerd

To read the full article, click the picture below: