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Fiduciary News Trending Topics for ERISA Plan Sponsors: Week Ending 11/4/11

November 07
00:24 2011

1020805_25983300_Trending_Topics_2011.11.04_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:
How Plan Sponsors Can Help 401k Investors Avoid Overdiversification” (Fiduciary News, November 7, 2011). This article outlines two easy actions to take right now to give 401k investors a better chance to achieve their retirement goals.

Fees – Lest we forget:
We’ll be seeing more of this in the coming months.
The 411 on 401k Plans,” (Financial Planning, November 11, 2011) This is a warning about fees and how some “muckraking” firms will present fees come April 2012. Be prepared to deal with a lot of misleading representations that rely too heavily on mutual fund expense ratios (which are already represented in fund performance numbers) and direct expects, which are not represented in fund performance numbers.

Investments – Keep rolling along:
While all’s quiet on the fiduciary front, investment stories keep popping up. This is what we have to look forward to once the fiduciary business finally gets settled.
Retirees Come Up Short With ‘Target-Date’ Funds,” (Wall Street Journal, October 31, 2011) This is all about 401k plan sponsors mis-categorizing TDFs as “income” funds when they’re really not. Just another brick in the wall of “WTF” when it comes to TDF.
How to invest so your money lasts in retirement,” (MarketWatch, November 1, 2011) Although this article shows the success/failure rate of various withdrawal retirement rates using different asset allocations, the story nearly ignores the big news – the data shows long-term investors are better off investing in diversified equity (i.e., active) portfolios rather than index portfolios.
The dark side of behavioral finance,” (BenefitsPro, November 3, 2011) We all know behavioral studies can be used to help investors make better decisions. Were you aware those same techniques could be used for less than honorable purposes?
SEC’s Rominger: Agency Studying Mutual Fund Shareholder Reports, Financial Literacy,” (AdvisorOne, November 3, 2011) Will the SEC use this opportunity to stop their required “Snapshot-in-Time” performance reporting requirement?
Ibbotson: Target-date fund assets decline in 3rd quarter,” (Pensions & Investments, November 3, 2011) The pace of investing into TDFs is slowing and did not make up for the decline in investment returns.

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.
ICI: Age and income affect workplace retirement savings,” (Pensions & Investments, November 1, 2011)
401k matches restored by 75 percent of companies,” (BenefitsPro, November 2, 2011)
Retirement Adviser Who Touted Fiduciary Duty Under Investigation,” (Businessweek, November 3, 2011)
Employers transition back to matching 401k funds,” (Employee Benefit News, November 3, 2011)
States tackle pension reform,” (BenefitsPro, November 3, 2011)
BofA 401k Data Shows New Loan Lows, Hardship Withdrawal Highs,” (On Wall Street, November 4, 2011)
Retirement crisis closes in on baby boomers,” (Reuters, November 3, 2011)

Wisdom from Some of Our Favorite Blogs:
ERISA Lawyer Blog: DOL Seeks, And Receives, A No Action Letter From SEC Regarding New Participant Fee Disclosure Rules
fi360 Blog: Fiduciary Links: Borzi insists re-proposed fiduciary rule will have teeth
Boston ERISA Law Blog: The Devil is in the Details: Failure to Provide Forms Can Be a Fiduciary Breach
fi360 Blog: Do you always read what you sign?

Miss anything? Feel free to add a comment below.

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Christopher Carosa, CTFA

Christopher Carosa, CTFA

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