As I've written elsewhere, the life of an investment fiduciary is not a walk in the park. New regulations and rules, financial instrument complexity and roller coaster markets don't make things any easier. Perhaps this is why ERISA litigation numbers are on the rise.

According to "The 401(k) Buffet" by Jack Gordon (Twin Cities Business, June 2010), too many choices may confuse plan participants and run counter to the goal of enhancing retirement security. Cost-cutting measures such as lower matches by employers is another factor that makes it tough for individuals to build their nest eggs.

While 401(k) plan administrative fees are becoming more uniform across the board (which keeps expenses in check), experts attribute this move to fears that unhappy participants will seek redress in a court of law, as has already occurred. Gordon quotes Mark Faulds, a Chicago-based benefits consulting firm executive, as saying that litigation activity is likely to rise and that "Plan sponsors, consultants, and advisors need to take their fiduciary responsibilities and liabilities very seriously." Indeed, the numbers are far from trivial with "more than $59 billion of ERISA settlements from lawsuits and actions brought again plan sponsors" in 2008 and a "40 percent increase in actions against advisors and consultants."

Other issues abound. Not everyone likes auto enrollments. Some question whether certain target date funds appropriately capture longevity or life cycle issues. Lack of transparency, excessive risk-taking, illiquidity, incorrect valuations, improper due diligence and fiduciary duties are present in more than a few legal complaints and subsequent pleadings. In research I conducted several years ago, I found that roughly 1,500 investment-related cases had fiduciary breach as a common allegation.

The financial industry is holding its breath for the U.S. Securities and Exchange Commission to opine on whether (a) broker-dealers should be held to a fiduciary standard when they provide advice and (b) outsourcing investment adviser oversight to a self-regulatory organization ("SRO") is the right way to go. Then there is the U.S. Department of Labor that seeks to expand the definition of fiduciary to include "pension consultants andother plan advisors who do not meet the current regulatory definition."

Life in the fiduciary fast lane is about to get even faster.

Additional Resources:

• "Definition of Fiduciary Regulation (Investment Advice)" - U.S. Department of Labor, October 13, 2010
• "ERISA Fiduciaries Beware: Risk is More Than a Four-Letter Word" by Susan Mangiero, Probate & Property, American Bar Association, 2005 (Note that Fiduciary Leadership, LLC is the new name for BVA, LLC.)
• "Expect SRO For Advisers, Fiduciary Fix For Brokers" by Kristen French, Registered Rep, January 11, 2011
• "SIFMA Supports Comparable Regulatory Oversight of Brokers, Investment Advisers," SIFMA Press Release, January 12, 2011