Do ETFs reduce the fiduciary liability for fiduciaries?
Yes. Language contained in the American Law Institute’s Restatement of the Law Third, Trusts, which serves as the basis for the Uniform Prudent Investor Act states: “A trustee’s departure from valid passive strategies may actually increase the trustee’s burden of justification and continuous monitoring.” Don Trone, president of the Foundation for Fiduciary Studies stated, “One could argue that the failure to at least consider ETFs could be deemed a breach of fiduciary responsibility.” With the GAO report, congressional hearings, the DOL 408 project and class action suits on revenue sharing with mutual funds, what advantage do ETFs have? (In November 2006, the United States Government Accountability Office (GAO) published a report titled Changes Needed to Provide 401(k) Plan Participants and the DOL Better Information on Fees. The GAO did the study because of concerns about the effects of fees on participants’ retirement savings. The GAO recommended that Congress should amend the Employ
