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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 12/2/11

December 05
00:22 2011

1020805_25983300_Trending_Topics_2011.12.05_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:
Study Shocker: 9 of 10 401k Plans Exposed to Increased Conflict-of-Interest Risk” (Fiduciary News, November 29, 2011). In a much publicized report released by the Investment Company Institute, why did this little nugget of insight receive no airplay? Worse, the study’s use of “all-in” might not be all it’s meant to be, possibly invalidating other results from the same survey. Here’s why.

Compliance – While you were hard at work…:
Congress was thinking of ways to make you work harder. “Thinking,” mind you, not “acting.” Call it one of the many upsides to gridlock.
In memoriam: Retirement legislation of 2011,” (BenefitsPro, November 30, 2011) Quick rundown of all the retirement-related legislation for the past year.

Fiduciary – It’s All About Me, Not You:
Here’s a simple heuristic to explain the importance of the Fiduciary Rule: If I’m a fiduciary, I am legally bound to place your needs first. If I’m not a fiduciary, I am legally bound to place my (or my company’s) needs first. ‘nuf said.
A BD Rep Surveys His Clients: The Fiduciary Issue Crystallized,” (AdvisorOne, November 29, 2011) This about sums it all up.
Timing of SEC’s Fiduciary Rule Debated at CFA Conference,” (AdvisorOne, December 1, 2011) An insider reveals a small group of broker-dealers dependent on variable annuity sales threw a monkey wrench in the whole process.

Fees – Blizzard Warning:
You’ve got to wonder, are plan sponsors secretly hoping fee disclosure gets buried under a pile of paperwork so investors don’t start asking those “awkward” questions.
Comparing 401k Fees in the Age of Disclosure,” (Business Finance Magazine, November 22, 2011) Another review of the ICI’s report in anticipation of the DOL’s new fee disclosure rule. Contains a direct link to the study.
‘All-In’ is not all it’s cracked up to be,” (BenefitsPro, November 30, 2011) Here’s something every fiduciary (and that includes regulators) should know about this popular – but flawed – technique for benchmarking 401k fees.

Investments – Just in Time for the Holiday Gift Giving Season:
We’ve always said the Fiduciary debate represented a mere interlude between the ongoing war of investment philosophies.
401k Sponsors Increasingly Focused on Investments,” (, November 28, 2011) This report contradicts the recently released ICI report (see above FiduciaryNews Lead Story) as it states a whopping 64% of the plans have changed their fund line-up in the past year.
Should You Move Your 401k to ‘Safe’ Investments?” (, November 28, 2011) Great piece by Roger Wohlner that all who fear the stock market roller coaster should read. Bottom-line: Today, “safe” means guaranteed loss of purchasing power. Most people would say that isn’t what they mean by safe.
The Best 401k Investment?” (Wall Street Journal, December 3, 2011)  Compare this article to the one immediately above. Oddly, given their reputation, the Wall Street Journal article fails in comparison to the article. For one, the former paints too broad a brush when it discusses potential risks of GIC-based funds (and it doesn’t even mention principal risk, which is a lot more worrisome than interest rate risk). Second, the Wall Street Journal fails to address the biggest problem with investing in “safe” investments, which was the entire point of the piece.

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.
DOL Sues Defunct Company for Failing to Terminate 401k,” (, November 28, 2011)
DOL Recovers 401k Assets for Former Security Guards,” (, November 23, 2011)
Plan Administrator not Liable for Fiduciary’s Diversion of Assets,” (, November 28, 2011)
Retirement readiness hits crisis level for small business workers,” (BenefitsPro, November 28, 2011)
Changing 401k plans to Boost Saving,” (SmartMoney, November 29, 2011)
Auto-enrollment’s on a roll, Fidelity reports,” (Reuters, November 29, 2011)
How You Can Fix Your 401k Retirement Plan,” (TIME, November 28, 2011)
Fidelity: 401k balances drop 12 pct in 3Q,” (BenefitsPro, November 30, 2011)
Survey finds younger retirement investors just as conservative as older investors,” (Financial Planning, November 28, 2011)
Retirement plan options for the self-employed,” (BenefitsPro, December 1, 2011)
Best 5 Ways for Women to Achieve Retirement Security,” (AdvisorOne, December 1, 2011)

Wisdom from Some of Our Favorite Blogs:
fi360 Blog: Fiduciary Links: The problem with trust
Boston ERISA Law Blog: The Realities of Plan Fees – Or Why They Are Not Excessive Just Because They Exist
ERISA Lawyer Blog: District Court Rules That Employer Contributions, Not Yet Paid To The Plan, Are “Plan Assets” For ERISA Purposes

Hot Tips from Popular Web Resources:
PCSA: 401k and Profit Sharing Plan Response to Current Conditions

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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