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Fiduciary News Trending Topics for ERISA Plan Sponsors: Week Ending 9/30/11

October 03
00:01 2011

1020805_25983300_Trending_Topics_2011.09.30_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 More Ways 401k Plan Sponsors Can Help Employees Make Better Investment Decisions” (Fiduciary News, September 27, 2011). On the heels of last week’s review of a study first published in 1999, now comes new research suggesting yet a better way to communicate critical investment information.

Compliance – “Get your hands off me you…”:
Why do Charleton Heston’s first words to his ape overlords come to mind when one reads this story.
401k Tax Changes May Be On Fast Track,” (TheStreet, September 23, 2011) It looks like there’s a real chance the government will agree to reduce its deficit by reducing the amount of money workers can defer tax-free into retirement plans. It therefore looks like there’s a real chance the government will agree to “fix” today’s crisis by creating a future (retirement) crisis. How about this idea: Hands off current private retirement plan rules without solving everyone’s favorite Ponzi Scheme – er, Social Security – first?

Fiduciary – “Promises, Promises”:
Since we’re on the subject of 1968 entertainment, why not a bit of Burt Bacharach and Hal David.
DOL: IRA advice will be included in new proposal,” (InvestmentNews, September 25, 2011) Borzi comes out strong, but we’ve seen this before. Best quote in the article comes from a pro-industry lobbyist opposed to the fiduciary rule: “You can’t apply the no-conflicts ERISA model to the IRA world. There’s not a long line of fee-only advisers ready to step into the breach.” Is that true?
SEC must forge ahead in fiduciary battle,” (InvestmentNews, February 25, 2011) The editors seem conflicted in this op-ed piece. On one hand they applaud the delay in adopting the fiduciary standard, on the other hand, they want to see it adopted.
Fiduciary timetable pushed back into 2012,” (InvestmentNews, February 26, 2011) Does anyone else find it odd that the “Consumer Federation of America” is taking the side of the industry of this debate and not consumers?
Understand your risk as a fiduciary,” (BenefitsPro, September 27, 2011) If you’re a 401k plan sponsor, you need to read this.
Why 401k investors consistently make bad decisions,” (BenefitsPro, September 29, 2011) If you’re involved in 401k investments in any way, you need to read this.

Investments – “Hey Jude…”:
Stuck in our 1968 motif, let’s finish with a Lennon and McCartney song about taking a bad thing and making it better. Here’s to hope. Sometimes it’s all we have.
Getting Going: Make Target-Date Funds Better Now,” (Wall Street Journal, September 24, 2011) The article says they’re too expensive and too many options with too many similar investments. Oddly, the article doesn’t seem to care that these things, for the most part, don’t have a sufficiently long track record to determine anything about them.
401k study: Help can improve performance by 3 pct.,” (BenefitsPro, September 26, 2011) On the face of this it looks amazing – until you realize the study was sponsored by a firm that sells “help” to 401k investors. This is not an academic study.
Regulators warn about self-directed IRAs,” (InvestmentNews, September 26, 2011) This is more about the risks IRA investors expose themselves to when they use their IRAs to invest in alternative investments. The likelihood of fraud increases.
How to Make Target-Date Funds Better,” (SmartMoney, September 26, 2011) As the sub-head teases: “They’re becoming a dominant force in your 401k. So why aren’t they as good as they should be?” If you’re a diligent reader of all the stories in Trending Topics, you’ll quickly discover this is the layman’s version of the Wall Street Journal story at the top of this week’s “Investments” category.

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.
Study: Boomers Making More 401k Investing Mistakes Than Younger Folks,” (Forbes, September 26, 2011)

Wisdom from Some of Our Favorite Blogs:
fi360 Blog: Fiduciary Links: A fiduciary approach to alternative investments

Miss anything? Feel free to add a comment below.

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Christopher Carosa, CTFA

Christopher Carosa, CTFA

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