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Fiduciary News Trending Topics for ERISA Plan Sponsors: Week Ending 8/5/11

August 08
00:34 2011

1020805_25983300_Trending_Topics_2011.08.05_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. If you think we’re missing something important, then please let us know.

Fiduciary News Lead Story:
Market Regulation: Boon or Bane to 401k Plan Sponsors & Investors?” (Fiduciary News, August 2, 2011). What famous logical fallacy might explain how Washington dooms 401k fiduciaries and their investors?

Fiduciary – What would Plato do?:
With little or no specifics coming from the regulators, commentators are left to interpret the echoes on the cave wall as the lobbyists tighten the screws.
Labor Proposal Pains Wall Street,” (Wall Street Journal, July 28, 2011) Here it is in plain black and white. The DOL seems to be holding its own against the lobbyists and fighting for the little guy. From the article: “‘The regulation is broken,’ Phyllis Borzi, an assistant Labor secretary, said in an interview. ‘We have a responsibility to protect beneficiaries and participants.’”
A Tale of Two Regulators: What DOL Can Teach the SEC,” (Advisor One, August 2, 2011) Incredible feeling of Déjà vu all over again (see July 1 teaser for Fiduciary News Weekly Trending Topics here)? Still Bob Clark overs his take on why the DOL seems more concerned with protecting consumers while the SEC seems more concerned about protecting its political flank.

Investments – Math can be such an inconvenient truth:
Who has more credibility – a financial salesmen or a Washington politician? Sooner or later, the simple elegance of math will rule, but maybe not before the baby is thrown out with the bathwater.
Are progressives mindlessly putting 401k Plans at risk?” (BenefitsPro, August 4, 2011) To attack Wall Street is to attack Main Street. Politicians (and their mass media underlings) seem to forget this. Apparently, so do social activists.
Morningstar study says Target-Date Funds aren’t always as predictable as marketed,” (Chicago Tribune, August 4, 2011) Get set to forget “set it and forget it.” A new study shows TDFs don’t perform as advertised. Might this be the final nail in the coffin to the often mis-applied asset allocation techniques wrought forth by Modern Portfolio Theory.

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.
China Considers 401k Style Retirement Plan,” (Advisor One, July 29, 2011)
Default fears drove 401k investors from stocks,” (Associated Press, August 2, 2011)
A silver lining for auto-enrollment,” (BenefitsPro, August 4, 2011)
401k Participants’ Trading Skyrockets During Debt Drama,” (Investment News, August 4, 2011)

Wisdom from Some of Our Favorite Blogs:
fi360 Blog: Fiduciary Links: In support of DOL’s fiduciary rule
401kBasics: Plan Sponsor Quick Tips: Form 5500 Follow Up!
Chicago Financial Planner: The Fiduciary Standard – It’s All about Expectations

Hot Tips from Popular Web Resources:
McGuireWoods LLP: DOL Delays Effective Date of Fee Disclosure Rules
Lexology: DOL proposes expanded definition of “fiduciary” and releases other new rules, increasing exposure of financial advisors

Miss anything? Feel free to add a comment below.

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Christopher Carosa, CTFA

Christopher Carosa, CTFA


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