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Fiduciary News Trending Topics for ERISA Plan Sponsors: Week Ending 11/18/11

November 21
00:58 2011

1020805_25983300_Trending_Topics_2011.11.18_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. But, note this well, we avoid press releases masquerading as news stories (even though they might be reported by journalists) as well as mass media pabulum that merely mouths investment myths and mistakes.

Fiduciary News Lead Story:

Avoiding Decision Paralysis: How to Create the Ideal 401k Plan Option Menu” (Fiduciary News, November 17, 2011). Life may or may not be a box of chocolates, but what we learn from that box can help plan sponsors and the typical ERISA fiduciary build a better 401k plan. Part three of a three part series.

Compliance – The Price of Convenience:
“One-Stop-Shopping” has long been considered a viable and attractive marketing strategy. It met the customer needs of convenience and allowed marketers to reduce marketing costs. Then marketers discovered customers were willing to pay higher prices in exchange for convenience. While this might be considered a reasonable trade-off in the grocery aisle, it’s a classic way to neglect one’s fiduciary duty.
How to protect your 401k from a Madoff scenario,” (BenefitsPro, November 16, 2011) OK, this might not be as “Compliance” as others, but this is the best category. It’s all about building a safer structure among service providers, and, in the end, isn’t that the ultimate point of compliance as it pertains to the fiduciary?

Fiduciary – A Rose is a Rose:
If you need a rule to act ethically, then, face it, moral turpitude is just not one of those things you can say belongs in your quiver of personality traits. Blame me us, blame the guy who first talked about that ring that made people invisible. And, no, it wasn’t Tolkien, it was Socrates (well, technically, Plato).
Fiduciary in Fact or Just Appearance?” (AdvisorOne, November 15, 2011) This article presents an excellent analogy between independent CPAs and independent advisers (a.k.a. “fiduciaries”).
Considerations for advisors as DOL delays fiduciary definition,” (BenefitsPro, November 16, 2011) Some things for advisors to mull over based on where the author sees the DOL heading.

Fees – Size Matters:
Just in time for the Christmas Season comes a study by Deloitte Consulting at the behest of the Investment Company Institute. Here are the early reviews.
Survey: DC fees affected by account size, participants, equity investments,” (Pensions & Investments, November 16, 2011) Confirming what we already believe. If you want to lower fees, cut the number of options, increase deferrals and add automatic enrollment.
Plan Complexity not a Significant Factor in Fees,” (, November 18, 2011) Another article on the same subject, but it goes a little deeper than the above.

Investments – Remember when “Options” was a dirty word?:
Someday, the regulators will outlaw the term “Target Date,” placing it in the same category as “past performance doesn’t guarantee future results.” Maybe we’ll start seeing “past retirement dates don’t guarantee future retirement dates.” In happier news, we continue to beat up on the idea of company stock in retirement plans (has that working out for ex-employees of Enron, Global Crossing, Color Tile… need I continue?) and we continue to argue about the ideal number of options a plan should offer.
True or False: Target-Date Funds Guarantee Retirement Success?” (, November 9, 2011) Author Roger Wohlner bluntly addresses the major issues of TDFs – the major misconception on the part of investors and the all-too-willingness of the industry to foster this misconception.
Your employer’s stock: How much is too much?” (Reuters, November 11, 2011) BrightScope provided Reuters with a list of the plans with the heaviest concentration of employer stock and Reuters all too eagerly spills its guts, dangling bait for the itinerant class-action attorney.
Do 401k Plans Need Simpler Menus?” (SmartMoney, November 15, 2011) Similar to Fiduciary News story this week (see above).
401k Plans: Watch Out For Speed Bumps,” (, November 15, 2011) Yet another article about simpler menus, but this time with a real example.

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.
Segmenting Workers Under Age 35 Seen as Good Approach for 401k Plans,” (Financial Planning, November 14, 2011)
How Co-Workers Influence Your 401k Choices,” (US News and World Report, November 14, 2011)
Americans Have Specific Amount of Retirement Savings in Mind,” (, November 16, 2011)
More Americans Turning To Banks For Retirement Advice, Surveys Say,” (Financial Advisor, November 16, 2011)
80 May Be The New 65 For Retirement Age, Survey Says,” (Financial Advisor, November 16, 2011)
Thanks to economy, 80 — yes, 80 — is the new 65,” (InvestmentNews, November 16, 2011)
The lonely road to retirement,” (BenefitsPro, November 16, 2011)
Could your company ruin your retirement?” (BenefitsPro, November 16, 2011)
ICI study finds that demographics of workforce are more important than company s size in determining whether or not it sponsors a retirement plan,” (Financial Planning, November 4, 2011)
Retirees’ Confidence Nears Pre-Recession Levels,” (Financial Planning, November 16, 2011)
BNY Mellon employees sue alleging fiduciary breaches in 401k, ESOP,” (Pensions & Investments, November 17, 2011)

Wisdom from Some of Our Favorite Blogs:
fi360 Blog: Fiduciary Links: A call to action on adviser SRO legislation
fi360 Blog: Judicial endorsement of the Moench presumption expands

Hot Tips from Popular Web Resources:
McKenna Long & Aldridge LLP: Approaching Deadline for Defined Contribution Plans
Society for Human Resource Management: Viewpoint: What ‘Fee Disclosure’ Rules Really Mean for Plan Sponsors
American Society of Pension Professionals & Actuaries: 401k Retirement Plans Myths – Debunked

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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