Fiduciary News Trending Topics for ERISA Plan Sponsors: Week Ending 2/11/11
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 smile when you read these entertaining snippets, well, that’s the idea.
Fiduciary News Lead Story:
“Should Plan Sponsors Fear? Is the 401k Merely a Ponzi Scheme?” (Fiduciary News, February 8, 2011). This is the story you’ve been hearing about. It started with a rather inane comment from a small market radio host and went viral in 24 hours. Too ridiculous to be true? The mass media seems to promote this urban legend. Here’s the truth that busts it.
Fiduciary Standard – Positioning Continues:
Who’s the better fiduciary? Who can best regulate a fiduciary? What is a fiduciary, anyway? The debate continues as if the topic was debatable. What’s clear now is “the fiduciary standard” has become a mere pawn in a larger power struggle that has everything to do with funding, politics and prestige. The client? Don’t be so naïve.
“HighTower’s Weissbluth: ‘Choice’ Argument Against Fiduciary ‘Intellectually Dishonest,’” (Advisor One, February 7, 2011) Weissbluth lays it on the line. A must read to fully appreciate the implications of “fiduciary.”
“Sen. Harkin to DOL: Hold Retirement Plan Advisors to Strict Fiduciary Rules,” (Advisor One, February 1, 2011) Read this and see if you can spot the way the Senator’s harsh stance allows the DOL to weasel out.
“FINRA urges firms to gear up for fiduciary duties,” (Reuters, February 8, 2011) “Thank you sir may I have another?” Before you get hung up on the presumptuousness of the headline, read the article. There’s a word that keeps popping up: “disclosure.”
“Wells Fargo’s Carroll: Fiduciary standard will ‘narrow’ investment choices,” (Investment News, February 9, 2011) Weissbluth (above) pre-empted this argument, but, as one famous RIA tweeterer said, “Isn’t that the point?” If removing bad choices “narrows” the choice, then we have a true fiduciary standard.
“What Are the Implications of a Uniform Fiduciary Standard?” (Financial Planning, February 10, 2011) This article best sums up the current reality when the author writes, “What has happened is that constitutes from both sides of the broker-dealer and financial advisor camps are gearing up for what figures to be a protracted series of reports and baton passing between Congress and the SEC.”
“SEC’s Fiduciary, SRO Studies Considered Linked, Experts Say,” (Advisor One, February 11, 2011) Here’s where we start seeing the real pieces of the faux struggle falling together. It’s not about a fiduciary standard to help put the client first, it’s about who’s getting the dollars and the power to regulate an industry everyone loves to regulate.
401k as the Enemy – The Perils of Poor Timing:
Every once in a while – almost as if it’s on some editorial calendar – we see a week with a series of articles calling into question the sanctity of the 401k plan. Is it the root of all evil – or is it just drawn that way?
“Retirement To Change Drastically, Merrill Says,” (Financial Advisor, February 2, 2011) The good news: older more experienced retirees would encourage today’s workers to start investing for retirement in their early 20’s or 30’s. The bad news: Women are much less confident about securing a good retirement than men. This might be, as the article points out, because women expect to do much more than men in their retirement years. Other than that, it’s tough to find any “drastic” change.
“I know 401k plans aren’t perfect, but a Ponzi scheme?” (Employee Benefit News, February 8, 2011) Here’s a pretty honest piece, inspired by last week’s lead story in Fiduciary News, reflecting surprise at the pervasiveness of this myth.
“Mistiming Retirement,” (Financial Advisor, February 2011) Sometimes, things are just an unfortunate accident of birth. And sometimes they’re an unfortunate accident of bad advice. This is an exhaustive piece and good for the wonk-heads in the audience.
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.
“Federal Court Rules in Precedent-Setting ERISA Class Action Complaint,” (The Law Firm of Faegre & Benson LLP, February 4, 2010)
“Make This 401k Problem Go Away,” (Motley Fool, February 4, 2010)
Wisdom from Some of Our Favorite Blogs:
Hot Tips from Popular Web Resources:
The Rosenbaum Law Firm P.C. (via JDSupra): Off The Mark: Target Date Funds, 401k Plans, and Truth in Advertising
The Rosenbaum Law Firm P.C. (via JDSupra): 401k Plan Provisions That Are Bad Ideas
Business Roundtable: BRT Letter on Application of ERISA Fiduciary Rules to Proxy Advisory Firms
Epstein Becker & Green, P.C.: Technology Team Newsletter: Minding Your 401k Plan Duties While Minding the Store
Miss anything? Feel free to add a comment below.