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

September 12
00:14 2011

1020805_25983300_Trending_Topics_2011.09.09_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:
Industry Fights Hard to Exclude IRAs from Fiduciary Standard,” (Fiduciary News, September 7, 2011). Is this the last gasps of a dying business model whose ruins new life seems destined to find rebirth?

Fiduciary – Will Obama’s Political Maelstrom Suck Down the Fiduciary Standard?:
It was not a good summer for President Obama. The fall doesn’t look any better and his election prospects seem bleak. What once appeared a Midas Touch now acts more like the Touch of Death. Can the fiduciary standard, whose roots predate the Obama administration, nonetheless become a victim of association?
Jeopardizing retirement savings,” (The Hill, September 2, 2011) This publication is a political publication and, right now, the politicians don’t like the fiduciary standard.
When Is a Broker Not a Broker? When Their Clients Believe They Are Getting Advice,” (AdviserOne, September 6, 2011) Bob Clark’s homage to former Supreme Court Justice Potter Stewart who, when asked to define pornography, said “I’ll know it when I see it.” All the disclosures and all the legalese can’t hind the fact clients view brokers as advisers. And therein lies the whole issue.
The Bypass Trust Is Obsolete: Now What?” (AdvisorOne, September 9, 2011) Remember when fiduciary meant trust law? Here’s a reminder.
GOP throws more tacks in path of fiduciary rule,” (InvestmentNews, September 9, 2011) Is it possible the horribly misplayed political calculation on the part of the fiduciary standard will bring down the entire ship? By keeping politics out if its analysis and hearings, the DOL is set to adopt a new Fiduciary Rule that brings the fiduciary standard to ERISA plans, despite opposition from both parties. The SEC, on the other hand, exposed the underbelly of the fiduciary standard to political scrutiny. And, right now, with Obama tanking in the polls and the Republicans ascendant, there exists a real chance the Republicans will successfully win this political battle. Perhaps the only way to diffuse it and let the DOL continue on its course outside the political realm is for SEC Chair Mary Shapiro to resign.

Fees – Will Anyone Pay Attention to this Ticking Time Bomb?:
Maybe we don’t need a Fiduciary Standard. Maybe the revelation of expensive conflicts next year will begin to help people understand the true value of choosing a fiduciary.
Why the DOL’s mutual fund disclosure rule will reveal surprising results,” (BenefitsPro, September 8, 2011) This is a comprehensive overview of the coming changes – with real live examples.

Investments – When Will They Ever Learn?:
How many times have we seen headlines speaking to the mindless actions of oh-so-many investor lemmings? Yet, with each headline, we know in our gut the story will all end in tears. Still, the lemmings trudge on, convinced the power of the masses shall undoubtedly prevail. Salesman love these lemmings. The government doesn’t do anything until the water is over the proverbial dam. And we, the stoic fiduciary, stand helpless to aid, alone in our altruistic frustration.
Study finds 401k investors who continued with equities had much greater growth,” (Employee Benefit News, September 8, 2011) Here’s the scoop: Those that didn’t panic and stayed put grew at a 50% rate. Those that freaked out, sold and later bought back only grew at a 25% rate. Another blow for market timers.
Young 401k Members Home In On Target-Date Funds,” (, September 8, 2011) Maybe I’m old, but why wouldn’t these youngsters be choosing all-equity funds with a proven track record instead of TDFs? Is this an outcome of auto-enrollment?

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.
Top 10 International Stock Funds in 401k Plans,” (AdviserOne, September 7, 2011)
Plan Sponsors Beefing Up 401k Plans With Advice, Auto Enrollment: Schwab,” (Financial Planning, September 8, 2011)
Retirement tax proposal could endanger 401k Plans,” (InvestmentNews, September 9, 2011)

Wisdom from Some of Our Favorite Blogs:
Chicago Financial Planner: What Does My Fidelity Freedom Fund Invest In? – An Update
The Trust Advisor Blog: Simon Cowell’s Cryogenic Goals Test Limits of Conventional Trust Planning
fi360 Blog: The Battle over Principle

Hot Tips from Popular Web Resources:
Morningstar: Does Automatic 401k Enrollment Suppress Savings?
DCPI Weekly Exchange: Why Benchmarking Should be Part of Your Service Model
DCPI Weekly Exchange: To Have or Have Not: Investment Policy Statement

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


  1. Christopher Carosa, CTFA
    Christopher Carosa, CTFA Author September 17, 14:22


    Thanks, correction made!

    – Chris

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