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Fiduciary News Trending Topics for ERISA Plan Sponsors: Week Ending 1/21/11

January 24
01:17 2011

1020805_25983300_Trending_Topics_2011.01.21_stock_xchng_royalty_free_300Welcome 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 smile when you read these entertaining snippets, well, that’s the idea.

Fiduciary News Lead Story:

Does New Study Seal the Deal for Fiduciary Standard – or Just Warn Plan Sponsors?” (Fiduciary News, January 19, 2011). Now, we’re not saying we predicted anything and we’re not saying the SEC reads our articles, but… This one paper almost accidentally seals the deal for the fiduciary standard, exposes the conflict-of-interest created by 12b-1 fees and, dare we say, touches the forbidden third rail of all investment research…

Fiduciary – Before the Decision:

In the days and even hours leading up to the SEC’s Fiduciary report, both sides gave it one more try. Trying to sway public opinion one last time allowed us to see the best – and the worst – of the various parties.

SEC should require fiduciary standard,” (Investment News, January 16, 2011) This editorial lays it all on the line, advocating both the Fiduciary Standard and the use of FINRA to oversee advisers. While the editors present the argument for the Fiduciary Standard in a well-articulated fashion using empirical data and recognized market conditions, the FINRA argument seems a stretch and falls flat.
Inside Information on SEC’s Likely Fiduciary Move,” (Advisor One, January 18, 2011) Here’s a report based on an interview with a former SEC staffer who tries to read the tea leaves of the past two years and marry it with this past fall’s election results. Did she get it right? Well, maybe half right.
New Definition of Fiduciary a Litigation Nightmare,” (, January 19, 2011) With all the talk of the SEC this week, the fact the DOL threw their lot in the fiduciary stakes could not go overlooked. While this piece might have become out-dated when the SEC issued its actual report last Friday, it’s interesting to see who’s behind this piece.
Fiduciary Expansion Proposal Could Hurt ESOPs Commenters,” (, January 19, 2011) This article presents a very interesting question – one we hope the DOL considers very deliberately. The purposes of ERISA plans and the purposes of ESOPs may conflict with each other. For some reason, the article thinks this is not a fiduciary issue right now. Ahem, (sound of throat clearing), plan sponsors are already fiduciaries, we’re not waiting for the SEC or DOL to expand any definition to change that fact.
Finra’s Ketchum Says Brokers Likely to Face Fiduciary Standard,” (Bloomberg, January 19, 2011) There’s an article here but the headline says everything you’ll get from reading the story.

Fiduciary – After the Decision:

Although dated Friday, January 21, 2011, Fiduciary News didn’t receive the e-mail from the SEC Public Statements Update area until 10:02am Saturday, January 22, 2011. This prompted a rare Saturday flurry of news reports. Surprisingly most of these articles were able to track down the usual contacts despite the weekend.

SEC Recommends Uniform Fiduciary Standard,” (Financial Planning, January 22, 2011) In this story, we see a reiteration of what appeared in the SEC public statement and a note the report passed on party lines.
Battle lines drawn after SEC backs fiduciary standard,” (Investment News, January 22, 2011) This article is a fairly comprehensive piece that hints at some of the kinks in the armor of the study. It also includes after-the-fact interviews from industry insiders. As the headline indicates, the story concludes the SEC report represents merely the opening salvo in a war between two very different ways of looking at the world.
SEC Recommends Uniform Fiduciary Standard,” (On Wall Street, January 22, 2011) This is from the same news feed as the Financial Planning article listed above.
SEC Recommends Common Standard for Brokers, Advisers,” (Businessweek, January 22, 2011) This article focuses on the impact to retail investors. It also gives the impression the brokers won this one.
SEC Tells Congress It Will Proceed With Uniform Fiduciary Standard for Brokers, Advisors,” (Advisor One, January 22, 2011) The reporter of this article quotes the same Consumer Federation of America director and makes it appear the advisers won.
SEC urges new fiduciary rule for brokers and advisers,” (Reuters, January 22, 2011) Reuters talks to yet another group of experts and leaves you with the feeling the brokers won.

SRO – the Trade-Off?:

If the “uniform fiduciary standard” was the SEC’s gift of soma for the adviser masses (although the jury is still out as to whether the advisers won), then the feeble “passing-of-the-buck” recommendation to have advisers regulated by an SRO instead of the SEC may be the adviser industry’s price for selling its soul.

Is split SEC vote behind delay of SRO report?” (Investment News, January 19, 2011) This one’s actually very interesting reading knowing what we know now. It turns out to have been very instructive.
SEC Recommends Three Options for Investment Adviser Oversight,” (Businessweek, January 20, 2011) This is a deeper look at the strained vote, which included at least one SEC commissioner who was a former FINRA official. Kinda makes you wonder.
SEC Says ‘Not It’ to Advisor Oversight,” (Financial Planning, January 20, 2011) After reading this article, you might think the SEC didn’t say “Not it” as much as it said “You gotta pay me to play me.”
In SRO Report to Congress, SEC Offers Lawmakers Options for Advisor Oversight,” (Advisor One, January 20, 2011) Another must read article as it explains many of the machinations that went into both this report and the Fiduciary Standard decision. This piece might be the closest to what’s really happening as it positions the SRO report not as a recommendation, but more of the first phase of a negotiation with Congress.
SEC to advisers: Pay new fees or face more exams,” (Investment News, January 20, 2011) This article takes Congress out of the equation and, instead, prefers to place the report in between warring factions within the industry.
SEC Dumps Advisor Oversight Issue On Congress,” (Financial Advisor, January 20, 2011)

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.

How retirement is being reinvented worldwide,” (Christian Science Monitor, January 16, 2011)
Retirees View Retirement Accounts as Last Resort Income Source,” (, January 14, 2011)
Industry groups say target date proposal slightly off the mark,” (Investment News, January 18, 2011)
Don’t Lose Retirement Savings to 401k Fees,” (DailyFinance, January 19, 2011)
Client Service Matters to 401k Plan Sponsors,” (Financial Planning, January 21, 2011)

Wisdom from Some of Our Favorite Blogs:

401kBasics: Plan Sponsor Quick Tips: Common Plan Mistakes – Has Plan satisfied the 401k nondiscrimination tests
fi360 Blog: Fiduciary Links: SRO, fiduciary, and financial planning studies due this week
fi360 Blog: GAO financial planner study released; comments from fi360
401kBasics: Keep The Course: The Magic Age of 59.5!
fi360 Blog: fi360 Comments on the SEC’s SRO report

Hot Tips from Popular Web Resources:

The ERISA Industry Committee: ERIC Comments on Proposed Target Date Fund and QDIA Disclosure Requirements
The Rosenbaum Law Firm P.C.: The Value Of A Good ERISA Fiduciary
SunGard Relius: Participant Fee Disclosure Regulations – Part VIII: Methods of Delivery and Effective Date
Good Risk Governance Pays: New Study Showcases ERISA Litigation Trends

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA

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