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Fiduciary News Trending Topics for ERISA Plan Sponsors: Week Ending 9/23/11

September 26
00:22 2011

1020805_25983300_Trending_Topics_2011.09.23_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:
3 Ways 401k Plan Sponsors Can Help Employees Make Better Investment Decisions” (Fiduciary News, September 20, 2011). The research has been around for more than a decade. Why do regulators and the industry continue to ignore it?

Fiduciary – Did You Double-Take Your Double-Take?:
This week was all about the DOL’s surprising move to withdraw its new definition of fiduciary. Monday started with a cold slap on the face for advocates of the fiduciary standard when, seemingly out of the blue, the DOL reneged on its promise to put principles ahead of politics and announced it was withdrawing its proposed new definition of fiduciary. As the big players of the financial industry celebrated their apparent victory and brokers exchanged high fives, investment advisers and other proponents of leveling the playing field via a uniform fiduciary standard sat stunned, angry, and yet, determined. After several days of bitter op-ed pieces in support of the many small businesses hurt by the DOL’s capitulation to big business, the DOL reversed its reversal, promising once again to redefine “fiduciary” to include not only 401k plans, but IRAs as well. We’ll see.
Borzi says investment advice regs coming soon,” (Pensions & Investments, September 12, 2011) While the SEC fiddles, the DOL marches on. Borzi promises something “the next week or two.”
Lack of facts could hurt fight for fiduciary standard,” (InvestmentNews, September 19, 2011) If you repeat a lie enough times, people start thinking it’s a fact. Therefore, we after months of denying last year’s research containing all the pertinent facts, we now see a headline claiming “lack of facts.”
Labor Department to start again on fiduciary rule,” (Pensions & Investments, September 19, 2011) The DOL throws in the towel to special interest and the political elite. Borzi specifically points to congressional pressure.
Don’t expect fiduciary proposal this year: SEC insider,” (InvestmentNews, September 19, 2011) After the DOL’s capitulation, does this surprise anyone?
DOL Pulls Fiduciary Rule Proposal,” (Financial Planning, September 19, 2011) This article came out later in the day and provides more insight into the problem with the proposed rule. While it’s true brokers feared the rule because it would hurt their business model, the all-encompassing nature of the redefinition probably hurt it the most. The article implies if the DOL focuses solely on 401k plans, for example, a new rule might be more palatable.
DOL to Repropose Fiduciary Rule,” (AdvisorOne, September 19, 2011) Similar to the above article with a little more of the juicy details.
Labor Department Will Delay Its Fiduciary Rule,” (Financial Advisor, September 19, 2011) This is a short piece that doesn’t add anything to earlier reports.
Labor Dept. bends on 401k rule, insurers cheer,” (Reuters, September 19, 2011) Oddly, the article focuses more on how the rule – and its expected re-proposal – impacts IRAs than why the insurance companies have cheered the delay.
DOL to repropose fiduciary rule,” (BenefitsPro, September 20, 2011) This is a fairly comprehensive article and adds more details than any previously published piece.
Mass Public Revolt Over Proposal to End Retirement Plan Fleecing,” (Forbes, September 20, 2011) If you’re too depressed reading the above, here’s a light-hearted satire on the entire situation. It’s funny, but true.
Fiduciary Standard Loses 3 Battles, but War’s Not Over Yet,” (AdvisorOne, September 20, 2011) Bob Clark gives us his usually good analysis with this strong conclusion: Any “cost-benefits” analysis that omits the costs to investors will be hopelessly skewed in favor of the industry.
Understand your risk as a fiduciary,” (BenefitsPro, September 21, 2011) With all this talk about vendors assuming a fiduciary duty, we shouldn’t forget the ultimate fiduciary duty rests with the plan sponsor. This article is one of those periodic reminders.
What really killed the DOL’s fiduciary rule?” (BenefitsPro, September 21, 2011) Here’s a piece that breaks down the history and pinpoints the source of the trouble.
Honesty is the best policy — and advice,” (MarketWatch, September 22, 2011) As usual, Chuck Jaffe tells it like it is in easy-to-understand language. He does confuse the fiduciary duty with always going for the lowest cost option (caveat emptor – sometimes you get what you pay for), but he gets the basic idea right – always do what’s in the best interest of the beneficiary.
Academic Research Shows, Disclosure Fails to Protect Investors From Advisors’ Conflicts,” (AdvisorOne, September 22, 2011) Why are we still talking about this? The research asserting is so 2010… Wait! We’re talking about it because some members of the financial services industry continue to advocate disclosure as a means to circumvent the fiduciary standard.
As Brokers Cheer, Advisers Sound Off on DOL 401k Fiduciary Capitulation,” (Fiduciary News, September 22, 2011) Advisers from across the nation help explain why the Fiduciary Standard is American as motherhood, apple pie and Quaker Oatmeal.
Borzi vows to keep IRAs in Labor’s revamped fiduciary proposal,” (InvestmentNews, September 23, 2011) What is it that they say about actions speaking louder than words?

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.
Inside Morningstar’s 401k,” (Morningstar, September 19, 2011)
BrightScope Ranks 401k Plans, and Attracts Critics,” (New York Times, September 16, 2011)
401k savings proposal gets cold shoulder from panel,” (Pensions & Investments, September 15, 2011)
401k plan not on track? Look in the mirror,” (Christian Science Monitor, September 19, 2011)
No retirement but what we make,” (BenefitsPro, September 21, 2011)
The 401k loan: Plugging a leak in retirement plans,” (BenefitsPro, September 22, 2011)

Wisdom from Some of Our Favorite Blogs:
fi360 Blog: Fiduciary Links: Regulatory reform once again the hot topic
The Trust Advisor Blog: New 401k Disclosure Regs Put DOL Cops in Frying Pan on Agency Webcast
ERISA Lawyer Blog: DOL Will Re-Propose Its New Rule On Definition Of Fiduciary

Miss anything? Feel free to add a comment below.

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Christopher Carosa, CTFA

Christopher Carosa, CTFA

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