What do you think of our site upgrade?
Hosting an industry conference? Ask us about including it in this ticker?

Fiduciary News Trending Topics for ERISA Plan Sponsors: Week Ending 2/4/11

February 07
08:33 2011

1020805_25983300_Trending_Topics_2011.02.04_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:

Mass Media Retirement Hype: Hurting 401k Investors and Increasing Plan Sponsor Fiduciary Liability?” (Fiduciary News, February 1, 2011). If the major networks prefer to use former professionals as color announcers for sporting events, why don’t they use specific industry professionals to write these types of stories for the mass media? Instead, inexperienced reporters, perhaps better trained at writing enticing headlines rather than realistic financial plans, ignore the shades of gray to offer overly-simplistic “lessons.” If equally uneducated plan participants believe these articles, will this place undue liability on the shoulders of 401k plan sponsors? By using a recent example, this piece shows the extent of the problem.

Fiduciary Foibles – It was Fun while it lasted:

We’ve now had a full two weeks to: first, get excited; second, question that excitement; and, finally accept the inevitability of nothing.

Adviser rules may not serve investors’ interests,” (MarketWatch, January 30, 2011) Chuck Jaffe is one journalist who usually gets it right and he nails the bottom-line perfectly in this piece when he poses “whether the existing mutual fund payment structures are right for the consumer.” He neatly ties the 12b-1 issue directly into the heart of issue of the fiduciary standard. Unfortunately, this article represents the highpoint of the week.
LPL Supports Uniform Fiduciary Standard,” (Financial Planning, January 31, 2011) Again, the sheep have to wonder when the wolf agrees with the sheep dog. That just can’t be good for the sheep, especially when the wolf talks of the harmony of duel registration and disclosure.
Harmonization of Advisor, Broker Rules Will Cement Need for SRO,” (Advisor One, January 31, 2011) Well, if we’re going to permit duel registration, it’s only natural we have one common regulator (sarcasm off). When advocates for the fiduciary standard like fi360 begin to justify an SRO, be afraid, be very afraid. The camel is sticking its nose under the tent.
Report recommendations may upend wirehouse model,” (Investment News, January 30, 2011) If you’re not quite sure what Chuck Jaffe was talking about, the article lays out perfectly what’s at stake for brokers and why they fear the “standard” fiduciary standard. Be prepared, though. If you’re a long-time practicing fiduciary, you may find yourself whispering “well, d’uh!” as you read.
FINRA Chief: Fiduciary Standard Will Take Time, Finesse,” (On Wall Street, January 31, 2011) Sorry, but you just can’t “finesse” black and white. If we need a testament why FINRA might not be the appropriate SRO, read its President’s own words right here.
The road to ‘broviser’: Harmonization would mean more work for advisers,” (Investment News, January 30, 2011) If we need further proof the SEC’s fiduciary “standard” has nothing to do with the standard currently practiced, it’s in this article, which speaks of advertising and third party solicitations and all things marketing. Makes you wonder if we’re really talking about the same thing.
Why Arguments Like NAIFA’s Against Fiduciary Standard for Brokers May Backfire,” (Advisor One, February 1, 2011) Editor Bob Clark notices this emperor wears no clothes and he believes other people also see this pornography. Is Bob on to something or just naïve?
Fiduciary standard not happening until mid-2012: Ketchum,” (Investment News, February 1, 2011) One wonders if this article leaves readers with a “who died and left you in charge” feeling. The presumptive FINRA leader claims it’ll take time to gear up to regulate the fiduciary standard. Here’s an idea, outlaw duel registration (isn’t there a famous book somewhere that says something about not being able to serve two masters) and keep FINRA regulating the brokers and the SEC regulating the fiduciaries – er – advisers.
Definition of ‘fiduciary’ under scrutiny,” (Investment News, February 2, 2011) Meanwhile, back at the DOL, serious work continues to be done.
Advisors Wait For Next Regulatory Shoe To Drop,” (On Wall Street, February 2, 2011) Read this and remember one of Centurion Ronald Reagan’s famous quotes: “The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help.’”
Let the lobbying begin! Industry groups target Capitol Hill in fiduciary clash,” (Investment News, February 2, 2011) See, this is what Reagan probably meant. Among the lobbyists, you won’t find one client or any of the thousands of tiny firms who act as true fiduciaries. You don’t have to be a cynic to understand this is what it’s all about, but you do have to be a realist.
DOL pension proposal could rock fund firms,” (Investment News, February 3, 2011) Meanwhile, back at the DOL, serious rocks continue to be thrown. One of the most favorite includes the “prices will rise” rock, implying greater costs to now act as a fiduciary. What about those providers already acting as fiduciary? Are they currently charging more than providers not acting as a fiduciary?
ERIC: Fiduciary Redefinition Could Discourage Assistance to Participants,” (, February 3, 2011) See above and Bob Clark’s piece.
SIFMA Asks DoL to Reconsider Fiduciary Definition Change,” (, February 3, 2011) Here’s the gem from this piece: “If the agency will not reconsider its proposed rule, SIFMA requested that it carve out IRAs at this time to determine whether the unique costs and structure of IRAs would support a different fiduciary standard.” As if one’s fiduciary duty changes based on the color of your eyes. They don’t get it, folks. They just don’t get it.
SEC in no great rush to write fiduciary rule, Schapiro says,” (Investment News, February 4, 2011) This is why the whole thing is a lark. It really doesn’t appear the SEC is serious about the fiduciary standard. It seems more interested in using it as a pawn in a looming partisan fight. Where does this leave the proponents of the fiduciary standard? What other alternatives do they have?

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.

TPA Breached Fiduciary Duties by Using Plan Assets to Pay Its Expenses Instead of Claims,” (EBIA Weekly, January 27, 2011)
Getting Going: What’s 401k Advice Really Worth?” (Wall Street Journal, January 29, 2011)
Don’t settle for less than the best in your 401k,” (MarketWatch, January 31, 2011)
Social Security Tax Break Should Go to 401k Plans: The Hartford,” (Advisor One, January 31, 2011)
Why Don’t the Folks in Charge of Your 401k Plan Realize You Can’t Retire?” (Huffington Post, January 31, 2011)
6 Ways to Measure the Success of a 401k Plan,” (, January 31, 2011)
HELP Panel Schedules Retirement Savings Hearing,” (, February 1, 2011)
Investing for Retirement: Six experts discuss the challenges clients close to retirement face in today’s uncertain economic environment,” (Financial Planning, February 1, 2011)
MGM Resumes 401k Match,” (, February 2, 2011)
Changes to target date funds considered,” (Investment News, February 2, 2011)
Report Shows Retirement Plan Participants Increasing Use of Advice,” (, February 2, 2011)
Stern Advice: Making 401k money last a lifetime,” (Reuters, February 2, 2011)
Taylor Amicus Brief, supporting plaintiff-appellant,” (Department of Labor, February 3, 2011)

Wisdom from Some of Our Favorite Blogs:

401kBasics: Plan Sponsor Quick Tips: Common Plan Mistakes – Monitoring Elective Deferral Limitsfi360 Blog: Fiduciary Links: Fiduciary study speculation continuesfi360 Blog: “Reg Harm”Roger Wohlner: Choosing Beneficiaries for Your 401k Plan

Hot Tips from Popular Web Resources: The Focus on the Fiduciary is Increasing
401kWire: 401k’s 2011 Hundred Most Influential
FreeErisa: Help for Retirement Plan Sponsors Facing New Participant Fee Disclosure Rules
Ballard Spahr: Protecting Employees: Asset Purchasers Now Liable For Delinquent ERISA Payments
SunGard Relius: Participant Fee Disclosure Regulations – Part IX: ERISA §404(c) Changes
Goodwin Procter: Seventh Circuit Vacates Class Certification in Two 401k Excessive Fee Cases and Affirms Dismissal in a Consolidated 401k Stock Drop Case

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


No Comments Yet!

There are no comments at the moment, do you want to add one?

Write a comment

Only registered users can comment. Login is sponsored by…

Order Your 401k Fiduciary Solutions book today!

Vote in our Poll


The materials at this web site are maintained for the sole purpose of providing general information about fiduciary law, tax accounting and investments and do not under any circumstances constitute legal, accounting or investment advice. You should not act or refrain from acting based on these materials without first obtaining the advice of an appropriate professional. Please carefully read the terms and conditions for using this site. This website contains links to third-party websites. We are not responsible for, and make no representations or endorsements with respect to, third-party websites, or with respect to any information, products or services that may be provided by or through such websites.