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Fiduciary News Trending Topics for ERISA Plan Sponsors: Week Ending 9/17/10

September 20
00:37 2010

Welcome to Fiduciary News Trending Topics. Each Monday, we’ll give you a quick synopsis of the major news events and trends impacting ERISA plan sponsors, 401k fiduciaries and those in the business of supporting these fine folks. If you 1020805_25983300_Trending_Topics_2010.09.17_stock_xchng_royalty_free_300smile when you read these entertaining snippets, well, that’s the idea.

Fiduciary News Lead Story:

One thing learned in compiling trending topics is, well, the trending topics. It’s clear there’s an undertone to the media chatter regarding Target Date Funds. This prompted Fiduciary News to interview several prompted industry leaders which, in turn, led to the publication of this series last week. It also gave us a chance to use a photo of our beloved Buffalo Bills (guess which article that was used in).

Fixing 401ks:

We can build it. We have the technology. We can make it better than it was before.*

* See Target Date Funds.

Building a Better 401k,” (, September 13, 2010) “Psst, hey buddy. Wanna reduce your 401k costs? Why don’tcha try these ETFs and CTFs. They’re cheap!” This article is good on the good stuff, but short on the bad stuff. (“What? You mean you get what you pay for?”)
To Pump Up Your 401k, Lower the Fees,” (New York Times, September 15, 2010) For a fun exercise, read this article and highlight all the misinformation and misleadingly simplified information. They’re trying folks, honest, so be nice.

The Fiduciary Fandango:

Reducing your fiduciary liability isn’t as easy as it seems. Especially when we’re not really sure who is and who isn’t – and what is and what isn’t – a fiduciary.

‘Buyer beware’ is no basis for a fiduciary rule,” (Investment News, September 12, 2010) Title says it all.
Protection from the Storm,” (, September 13, 2010) It might seem all an ERISA fiduciary need do is hire a professional money manager and that’s that. Not so quick! This article exposes 7 outsourcing myths.
Most investors think brokers are fiduciaries, survey says,” (Investment News, September 15, 2010) “This lack of understanding is not because investors are stupid,” said Barbara Roper, the CFA’s director of investor protection. “It’s because the policy itself is stupid.”
Almost All Investors Support a Fiduciary Standard,” (Financial Planning, September 15, 2010) Who wouldn’t want their interests put ahead of all else?
Do employees want investment advice or not?” (Reuters, September 15, 2010) Yes, America eats too much and, yes, please supersize me.
Poll: Advisors, Brokers Should Be Held To Same Standard Of Care,” (Financial Advisor, September 15, 2010) If it looks like a duck, talks like a duck and walks like a duck, shouldn’t it be regulated like a duck?

Kill the Pensions:

When the chickens come home to roost, how many folks will say “we told you so” and how many folks will deny it’s a legal Ponzi scheme? Judging from last week’s avalanche of terror-stricken articles, the media seems like it’s sure fueling the fire of the former.

Pension Funded Status Reaches 10 Year Low,” (, September 14, 2010) Um, isn’t this why companies moved to defined contribution plans some 20-30 years ago.
Panel to Examine Sustainability of Maryland Pension Systems,” (, September 13, 2010) If you thought things were bad in the private sector, just look at the public sector. But wait! Isn’t this why they gave us taxes?
‘Silent Heart Attack’ For Pensions Driven By Yields,” (Financial Advisor, September 15, 2010) The fingerprints on the murder weapon.
‘Death Spiral’ Besets State Pensions,” (Financial Advisor, September 15, 2010) You mean it’s not just Maryland?
A Lesson for Pension Funds,” (New York Times, September 15, 2010) This op-ed piece shows us the new York Times likes legal Ponzi schemes.
Pension fund fees rose on market’s 2009 slump – ICI,” (Reuters, September 16, 2010) OK, this is just pouring salt in the wound. But, hey, why not?


Anybody detect a PR campaign here? To be honest, the irony is simply delicious – as the pension world falls apart (see above), let’s propose an idea that makes 401k plans more like pensions. Ah, the silly season. No, just a two-day hearing in Washington DC hosted by the Treasury and Labor Departments.

Insurers Press U.S. to Let Employers Offer Annuities in Retirement Plans,” (Bloomberg, September 14, 2010) People are outliving their pensions, so the idea is to place their retirement assets in lower-yielding investments. We’re not making this up folks. Read the article.
Vanguard web service compares annuities,” (Investment News, September 14, 2010) It’s a shame when a company with such a storied history of low fees and transparency gets involved with a notoriously foggy product. Bogle must be spinning in his… desk chair.
Biggest Barriers to Lifetime Income Adoption: Fiduciary Liability, Insurer Insolvency,” (Investment Advisor, September 14, 2010) Sober minds douse the flames with liquid reality.
Insurers push for annuities in US retirement plans,” (Reuters, September, 15, 2010) Of course they are! Who else would? What next, is Reuters going to report “beef processors push for more hamburgers in US diets”? It’s not just a bad title, it’s an article with the obvious stated, more of a PR piece than news.
Retirement Income Heats Up as Election Issue,” (Financial Planning, September 15, 2010) Ah, the government is here to help. We can all breath a collectivist sigh of relief.
The Pros and Cons of 401k Annuities,” (Retirement Income Journal, September 15, 2010) Author Kerry Pechter does an excellent job of reporting both sides of the story and names names. He even gives you the bottom-line for plan investors. The truth can set you free.
Retirement leaders push for lifetime-income options in 401ks,” (Investment News, September 15, 2010) Here’s a report on the Washington hearings.
Some 401k Plans Are Adding an Annuity Option,” (New York Times, September 15, 2010) After reading the above two articles, read this one. If you still don’t understand why no one reads (or believed) the New York Times anymore, then maybe you need to retake those journalism classes you loved so much. Just kidding! Those classes are probably why you don’t get it in the first place.

12b-1 Fees:

We can’t let a week go without bashing our favorite conflict-of-interest. OK, this one should have been listed two weeks ago, but we just found out about it now.

A Modest Alternative to the SECs Proposed 12b-1 Solution,” (Advisor Perspectives, September 7, 2010) If you read this, you must read the second page. That’s where the punch line is – and you won’t see it coming if you just read the first page, so, please, whatever you do, read the second page.

Major Plan Sponsor Moves and News:

What are other plan sponsors and fiduciaries doing with their plans? And how are participants responding? The latest in legal proceedings involving plan sponsors and fiduciaries.

Equity to Fixed Income 401k Asset March Continued in August,” (, September 15, 2010) We can’t wait for the Congressional hearings on this in a couple of years.
A Hesitancy to Restore Those 401k Matches,” (New York Times, September 15, 2010) The New York Times blames this on the poor economy. Can you think of other reasons? And – for shame! – the hallowed newsprint can’t believe companies might align matches with “profits.” Share the profits? What a novel idea.
Plan Participants Rolling Away From Providers at Rollover Time,” (Financial Planning, September 16, 2010) Uh, isn’t that what Fidelity’s ad campaign is all about? Must be working.
PSCA Finds Sponsors Focusing on Investments,” (, September 17, 2010) I guess two years after the crash of 2008/2009, they’ve finally got enough guts to open those quarterly statements.

Wisdom from Some of Our Favorite Blogs:

401kBasics: Plan Sponsor Quick Tips: Mark Important Dates!
Chicago Financial Planner: A Financial To Do List For the Remainder of 2010
fi360 Blog: Fiduciary Links: The pros and cons of rebalancing
fi360 Blog: Fiduciary duties may be shared but not abdicated

Hot Tips from Popular Web Resources:

FreeERISA: Burrows Asks DOL to Remove Barriers to Lifetime Income Options
Knowledge@Wharton: Intel Capital’s Keith Larson: Venture Capital and the Impending Pension Crisis

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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