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NAGDCA Conference 2019 Summary of Conference Sessions Page 5 of 8

THE DIGITAL FIDUCIARY – ONLINE BEHAVIOR & RETIREMENT SUCCESS
Dr. Shlomo Benartzi is a professor and co-chair of the Behavioral Decision-Making Group at UCLA Anderson
School of Management in Los Angeles, California. He is also the Senior Academic Advisor for the Voya
Behavioral Finance Institute for Innovation.

The fiduciary rules were developed years ago, long before the internet – the old ways of fiduciary responsibility
have not changed, however, the ways that plan sponsors deliver information to plan participants have changed
significantly with provider websites and decisions made from smartphones now being the primary means to
communicate. Improved digital designs can significantly help participants with fast decision making and boost
savings rates.

He suggests seven (7) action items for plan sponsors and advisors:
1. Create a Digital Policy Statement
2. Incorporate digital design knowledge on the plan committee
3. Test, test, retest
4. Evidence based innovation
5. Follow the science
6. Make the right thing easy
7. Think of 21 century risks
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Dr. Benartzi closed with a discussion on how to interpret ERISA with a quote from Michael Hadley at Davis &
Harman, “Appropriate for a fiduciary to take into account whether the digital design of a plan’s service provider’s
electronic portal properly seeks to encourage and facilitate good decision-making by plan participants and
beneficiaries.”

FIDUCIARY DILIGENCE, BEST PRACTICES, LAWSUITS AND LESSON LEARNED
While most governmental plans are not subject to ERISA, most choose to follow ERISA as best practices.
Fiduciaries should manage plans as prudent experts and must avoid conflicts of interests. One best practice
relates to fee transparency at both the plan level and the participant level. Comprehension of fees is essential
for good governance and helps mitigate risks associated with plans. Additional fiduciary best practices are:
• Review of enabling statutes, adopted rules, regulations, applicable codes and laws. Understand
legislative, regulatory and litigation rules to help minimize risk exposures
• Recognition that different record-keepers, and even the same record-keeper, can offer different options
and pricing
• Understanding of how mutual fund investment wrappers can differ for the same fund
• Knowledge of which part of a vendor’s business relates to their in-house products being marketed to
plan participants
• Avoid implied endorsement
• Follow the money (who is getting paid directly or indirectly) to avoid conflicts of interest
• Review record keeper contracts, and know how wording can be revised

Conflicts of interest may exist in DC plans. Examples may include:
• Opaque vendors (as opposed to transparent) tend to offer lesser or on par cost plans – however there
may be ancillary products that benefit the opaque vendor
• Plan sponsors should own all retirement plan data and should review contract language to ensure data
is totally owned by plan sponsor