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Fiduciary News Trending Topics for ERISA Plan Sponsors: Week Ending 3/25/11

March 28
00:05 2011

1020805_25983300_Trending_Topics_2011.03.25_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:

Two New Studies Suggest 401k Alive, Well and Working!” (Fiduciary News, March 23, 2011). Fidelity and Vanguard each produce independent studies suggesting the average 401k participant’s account has accomplished something neither public employee pensions nor several major college endowments have – despite all having the ability to add new money to their asset pools.

Annuities – A New Dawn Dooms:

To think, just a year ago folks clamored for some sort of “safe” alternative to risky 401k plans. Otherwise intelligence Congressmen, perhaps still lubricated from the insurance lobby cocktail party the night before, inexplicably felt annuities might be the answer. What a difference a year makes.

Firms are omitting annuities in new retirement income products,” (Investment News, March 20, 2011) Several financial service firms have created products with annuity-like income streams without requiring the investor to actually purchase an annuity. With a 45-50 basis point fee, these products appear more attractive versus annuities due to the perceived transparency problems with the insurance-based annuity.
The Only Thing Worse Than a Nearly Empty Nest Egg Is a Ripped-Off One,” (Huffington Post, March 21, 2011) It’s not clear if this (accidentally) falls into the next category, but this is clearly the type of article we need to see more of if we expect Washington to be pushed into understanding the real-life consequences of a world without a fiduciary standard. Here the popular (and some might consider left-leaning) on-line news outlet highlights the sad story of 32 Exxon Mobil employees who fell prey to a broker selling high-fee annuities. Most of you will probably ignore the rather amateurish investment advice the author decided to throw in on the last line.

Fiduciary – Approaching High Noon:

We’ve got to the point where the opposing sides have started calling each other out. That’s good. Let’s get this thing out in the open. It’s too bad the SEC had to lead us to this point. Here’s hoping the DOL can stay above the fray.

Republican Congressional Group Questions Uniform Fiduciary Standard,” (On Wall Street, March 21, 2011) A recap of a letter signed by 14 House Republicans who expose the raw politics of this issue.
ASPPA Reiterates Support for DOL Fiduciary Definition Deliberations,” (, March 18, 2011) In an attempt to clarify its previous statement, the ASPPA merely repeats its previous statement. Perhaps if they said it louder, instead.
DOL Announces Fiduciary Responsibilities Webcasts,” (, March 21, 2011) If you’re reading this now, you’ve already missed them. Still, nice to know the DOL is still trying.
Why Is Congress Asking if We Can Afford to Treat Clients Right?” (Advisor One, March 22, 2011) Uh, oh! The worst way to dispatch with the politics of an issue is to start speaking with straight forward common sense. Bob Clark does it here and takes on the Republicans head-on.
Dalbar Creates New Fiduciary Standard For Advisors,” (Financial Advisor, March 23, 2011) You know a financial service has hit the big time when “non-profit” groups start creating “certifications” for the service. Of course, Dalbar wasn’t first, fi360 came up with the “Accredited Investment Fiduciary” about 5,000 certificants ago.

Pension – Is the Sunshine State Finally Setting?:

Mark Twain once said “There’s lies, damned lies and statistics.” And that was before we even knew about the perils of pensions. How much longer before the entire house of cards comes crumbling down?

Experts say Florida overstates future pension returns,” (St. Petersburg Times, March 21, 2011) Oops! Math can be a terrible thing. It can trick you into believe life is all sunshine and roses. Fortunately, it can just as easily reveal the hidden truth of reality.
Be Certain to Get the Pension You Earned,” (Forbes, March 22, 2011) Wow! Here’s the Big Brother nightmare of all pensioners. Unlike a 401k, when you see your account every quarter, you’re kinda just trusting the folks in HR to remember you. What happens when they don’t? Read this and find out.
Public Workers Rush for Retirement,” (Wall Street Journal, March 23, 2011) Public employees can read the tea leaves and figure now might be the best time to take the money and run.
Public Pension Funds Caught in a Squeeze,” (Wall Street Journal, March 23, 2011) Running two days behind, this national paper lifts the story from the above St. Petersburg Times and adds graphs. If you though math could do you in, wait ‘til you see the graphs.
Nuns Suing over Pension Benefits,” (, March 25, 2011) Oh brother, more Big Brother troubles, this time involving the good Daughters of St. Paul. Be careful. The wooden rulers are coming out next.
Fort Worth Adopts Pension Changes,” (, March 23, 2011) Holy sagebrush! Folks in Fort Worth will now have to wait all the way to 55 before they’re allowed to retire. The previous retirement age was 50. Wonder if that’s where AARP gets its cut-off from?
Kansas Lawmakers Put Forth More Pension Proposals,” (, March 23, 2011) This is what happens when the reality of math shows its dirty face. Kansas previously rejected a 401k-style retirement plan for new workers.

Target Date Funds – Another Restless Night:

You thought TDFs made it by this week with nary a scratch? OK, technically this might have fallen into last week, but, heck, it didn’t show up in the ethereal flow until this week.

Is Your 401k Riskier Than You Think?” (US News and World Report, March 17, 2011) Can a week go by without the mainstream media bashing target date funds? Here, the failed newsmagazine uses its on-line ghost to tell 401k investors three things “experts” tell them to look for in a target date fund.

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.

Is a Roth 401k Right for You?” (Wall Street Journal, March 20, 2011)
Lessons learned from 4 years of 401k volatility,” (Associated Press, March 21, 2011)
Sun Trust Served with 401k Suit,” (, March 21, 2011)
Court Drops Breach of Fiduciary Duty Claim in Stock Drop Suit,” (, March 21, 2011)
Brightscope Hones in on 403b,” (, March 22, 2011)
Senate Hearing Focuses on 401k ‘Securities Lending’ Practice,” (Advisor One, March 17, 2011)
Retirement assets end 2010 just shy of peak,” (Reuters, March 22, 2011)
Towers Watson analysis: Pensions vs. 401k returns,” (Employee Benefit News, March 23, 2011)
Banks butting heads with Vanguard, Fidelity in 401k scrum,” (Investment News, March 23, 2011)
How to Figure Out What You’ll Need to Retire,” (Wall Street Journal, March 23, 2011)
A Roth 401k may be in your future,” (MarketWatch, March 25, 2011)
Employee Demographics Influence Retirement Plan Availability,” (, March 25, 2011)

Wisdom from Some of Our Favorite Blogs:

The 401k Fiduciary Advice Blog: Coming Soon to 401k Statements: Participants’ Account Balance as Monthly Income?
fi360 Blog: Fiduciary Links: Is marketing the fiduciary standard an effective strategy?
Chicago Financial Planner: Selecting the Right Financial Advisor
ERISA Lawyer Blog: Seventh Circuit Rules That Injunctive Relief, But Not Monetary Relief, Is Available For A Breach Of A Fiduciary Duty Claim
Boston ERISA Law Blog: Fiduciary Definitions Change Hand in Hand with the Real World
ERISA Lawyer Blog: Georgia Court Of Appeals Rules That ERISA Does Not Preempt Claims Relating To Benefits That Have Already Been Paid Out
fi360 Blog: A fiduciary approach to risk management
401kBasics: Keep The Course: Commonly Asked Questions-Can I Withdraw Money From my 401k to Buy a Home?

Hot Tips from Popular Web Resources:

Pension Risk Matters: Pension Rate of Return Reality
RetirementRevised: Public support for public sector workers a case of pension envy
FreeERISA: Actuaries Present Briefing on Retirement Risk

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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