The DOL May Be Making Your Life a Bit Easier.

At a recent National Association of Plan Advisors conference attended by RSA, Dan Aronowitz, EBSA Assistant Secretary, outlined a proposed rule on investment selection that boils down to one key idea:

You’re judged on your process, not your results.

What this means:
When companies offer a retirement plan like a 401(k), they’re responsible for helping choose and monitor the investment options in the plan. That responsibility comes with legal risk. A lot of small companies worry because:

• They don’t have large HR or legal departments 
• They rely heavily on advisors
• They’re afraid they could get sued if an investment performs poorly 

So instead of asking:
“Did this investment end up being perfect?”

The focus becomes:
“Did you do your homework before choosing it?” 

That includes:

• Comparing investment choices 
• Reviewing fees 
• Checking performance regularly 
• Documenting why decisions were made 

The big picture:
A retirement plan sponsor is not expected to predict the future perfectly. They’re expected to act carefully, thoughtfully, and consistently.

Why this matters:
Some lawsuits happen years later after investments underperform. People look back and say:
“You should never have picked that fund.”

The proposed rule could help protect plan sponsors from that kind of hindsight criticism if they can show they followed a solid process at the time.

Bottom line:
 If you have a solid process and can show it, you’re in a much stronger position. That’s a shift many small plans have been waiting for.