Axa Equitable, Wilshire Associates form fiduciary dynamic duo

Axa Equitable Life Insurance Co. has paired up with Wilshire Associates Inc. to give small and midsize retirement plans access to fiduciary services.
The insurer makes its move as the Labor Department rolls out tougher rules to eliminate conflicts of interest in retirement plans, including a regulation that would expand the definition of “fiduciary” and a fee disclosure rule that would require brokers and advisers to reveal whether they were acting as fiduciaries.
By outsourcing fiduciary duties, insurers such as Axa — which work mostly with small to midsize plans — are able to help their brokers keep their plan sponsor clients amid the upcoming regulatory shakeup.
“With the Department of Labor poised to provide new plan fiduciary regulations later this year, now is the time for us to begin supporting a broader range of plan sponsors,” said Jaime Ohl, president of Wilshire Funds Management Group.
Axa and Wilshire are offering the new services as part of the insurer’s Retirement Gateway group variable annuity.
As part of the arrangement, Wilshire will provide smaller plans with investment manager recommendations and investment policy guidance, as well as monitoring and reporting services.
Plan sponsors can opt to make Wilshire act as a 3(21) fiduciary under the Employee Retirement Income Security Act of 1974. In that capacity, the firm can recommend investment options for model lineups and allow plan sponsors to choose between preset menus or elect to create something more customized. Wilshire agrees to act as a co-fiduciary — with the plan sponsor — under ERISA law if clients follow its guidelines and meet the law’s diversification requirements.
Alternatively, Wilshire can take on even greater duty by acting as a 3(38) fiduciary under ERISA. In doing so, the plan sponsor gives Wilshire the responsibility of making the investment decisions, including selecting options based on its judgment of the investment managers. In this case, Wilshire agrees to be the plan’s fiduciary.
By pairing up with Wilshire, Axa joins the likes of New York Life Insurance Co., which this year allowed agents affiliated with its Eagle Strategies LLC registered investment adviser to outsource investment management duties to Morningstar Investment Services Inc. and other managers.
The cost of the 3(21) service is built into the Retirement Gateway product, but plan sponsors who choose the 3(38) service will pay $500 for covered assets of up to $1 million. For covered assets over $1 million, the cost is 5 basis points.
Others that have rolled out advice programs include Securian Financial Group Inc., which allows reps who use Securian Retirement as a service provider to hand off fiduciary responsibility to 401(k) Advisors LLC.