We just wrapped up our panel discussion on ESG considerations for ERISA fiduciaries. Jason Blackwell of Mercer (left) and Ali Caffery of Envestnet (center) joined me to discuss how advisers can account for ESG factors through the prism of a fiduciary. We started with the confusion over what is meant by ‘ESG,’ why the DOL worries about fiduciaries pursuing objectives unrelated to financial performance, how the brand new DOL guidance preserves the concept of an ESG factor creating alpha opportunities (and why that direct link to investment performance matters from a legal perspective), the different tools and indices that are out there, how ESG can be incorporated into an IPS, how managers can demonstrate their ESG stripes, DOL’s concerns about ESG-themed QDIAs, and shareholder engagement. Blaine Aikin, Executive Chairman of Fi360, is also pictured (far right) and deserves a ton of credit for allowing us to do this panel at such an important event!
FINRA seeks comment on proposed rule amendments that would revise the quantitative suitability obligation under FINRA Rule 2111 (Suitability) to more effectively address instances of excessive trading in customers’ accounts. The proposed rule amendments would remove the element of control that currently must be proved to demonstrate a violation, but would not change the obligations to prove that the transactions were recommended and that the level of trading was excessive and unsuitable in light of the customer’s investment profile.