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Fiduciary News Trending Topics for ERISA Plan Sponsors: Week Ending 9/16/11

September 19
00:05 2011

1020805_25983300_Trending_Topics_2011.09.16_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:
Time for SEC’s Schapiro to Resign?” (Fiduciary News, September 15, 2011). A play-by-play citing media articles throughout the year showing how SEC Chair Mary Schapiro misplayed her strategy to hold the fiduciary standard hostage in exchange for elevating the SEC’s prominence (and more Congressional money).

Fiduciary – The Politics of it All:
Leave it to Washington to turn a consumer-friendly benefit that helps small businesses grow into poster child for an anti-“Big Government” crusade. It seems when big business (read, political donors) talks, small business (and consumers) suffer. Well, it was fun while it lasted.
DOL’s New Fiduciary Rule Bad News for Savers,” (Washington Times, September 12, 2011) Once again, a major newspaper opines on the rule, echoing “concerns” of lobbyists and politicians. For a counterpoint from the real world, read “Industry Fights Hard to Exclude IRAs from Fiduciary Standard,” (Fiduciary News, September 7, 2011).
Bachus’ SRO Bill: An Opening to Keep Independent Advice Alive?” (AdvisorOne, September 13, 2011) Bob Clark comes up with an intriguing idea here. With all the talk of an SRO to replace the SEC – an issue that derives from Congressional budget battles – Clark suggests the bill, offered by Republicans, may preserve the Fiduciary Standard only because, without it, small businesses (i.e., advisers) would be unduly burdened by government regulation.
US SEC criticized on broker, adviser fiduciary plan,” (Reuters, September 13, 2011) The Republicans are piling on. They’re using the court ruling against the SEC on the proxy process to question the credibility of the SEC regarding the fiduciary standard. We can’t blame the Republicans here, especially since the Democrats have joined their side on this issue. We can only blame the SEC and, specifically, Mary Shapiro’s mishandling of the situation.
Long Legislative Fight Kicks Off with House Hearing On SRO, Fiduciary Standard,” (Registered Rep, September 13, 2011) A long article that covers a lot of things, but it’s pretty good play-by-play from the hearing.
The DOL’s new fiduciary rule: Who will speak up for IRA investors?” (BenefitsPro, September 15, 2011) The title speaks for itself.
Are You Part of ‘One of the Greatest Scams of Our Time?’” (AdvisorOne, September 16, 2011) The author addresses the fallacies inherent in Business Insider, Clusterstock contributor Andrew Haigney piece in which, taking off on the New York Times op-ed by David Swenson, chief investment advisor of Yale University, questions the suitability of the investment adviser concept. Haigney apparently even chastises the fiduciary standard because it’s not defined consistently. If he hates investment advisers so much, what does Haigney think of trust officers?

Fees – Not a Political Issue,… Yet:
While the SEC may have screwed the pooch regarding the fiduciary standard, and this pooch screwing may make the DOL’s intention to redefine fiduciary more problematic, as least politics has not yet entered the upcoming 401k fee disclosure rule. Of course, as soon as the fiduciary standard becomes a warm corpse, you can be sure the usual suspects will target the fee disclosure rule. Why? If fees are disclosed, then it’ll become readily apparent why we need a uniform fiduciary standard.
Fee disclosure rules from DOL are appropriate,” (InvestmentNews, September 11, 2011) Bottom-Line: Bundled service providers (like insurance companies) will need to make a “good faith effort” to offer line-item pricing information for each individual service.
DOL Will Allow for Electronic Disclosure to Participants,” (, September 13, 2011) It’ll be OK to make these disclosures electronically.
Government: 401k fee disclosures may be electronic,” (The Associated Press, September 13, 2011)  AP’s version of the above story.

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.
Former Bush economic advisor floats retirement reform plan,” (BenefitsPro, September 12, 2011)
401k break at risk as policymakers mull retirement shift,” (Reuters, September 13, 2011)
Court: Man not liable for retirement account’s drop in value,” (Arkansas News, September 15, 2011)

Wisdom from Some of Our Favorite Blogs:
fi360 Blog: Draft SRO Bill not in best interests of investors or advisers
fi360 Blog: Fiduciary Links: Who should be afraid of cost-benefit analyses?
ERISA Lawyer Blog: Seventh Circuit Rules That Offering Retail Mutual Funds For Plan Investment Does Not Violate ERISA Fiduciary Duty
Boston ERISA Law Blog: Fee and Expense Disclosure: No Such Thing as a Free Lunch
Boston ERISA Law Blog: The New York Times, Fees, Regulation and Wrap Fees

Hot Tips from Popular Web Resources:
Wolters Kluwer: Directed trustee not liable for allegedly imprudent selection of retail mutual funds as plan investment option

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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