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Santa’s 2011 401k Nice and Naughty List

December 13
23:18 2011

Here at we believe in the primacy of tradition. Why else would we support a practice that dates back to the days of Robin Hood and Sherwood Forest? We realize, however, sometimes a void exists that requires the initiation 222492_6057_Santas_List_stock_xchng_royalty_free_300of a new practice – a new tradition, if you will. It is for that reason we now proudly embark on what we hope will fast become a tradition of choice among many of our readers: The Annual 401k Nice and Naughty List.

We must admit we had a little help from our frosty friend at the North Pole on this one. After all, no matter how omnipresent (a.k.a. “24/7”) the internet media world has become, even we don’t know (or want to know) when you’re sleeping or when you’re awake and, Heavens to Murgatroyd, we rarely check anything twice (as those who’ve discovered various errata in our publications can attest!). So, with a dearth of fanfare, but a fair fan of mirth, we present the First Annual 401k Nice and Naughty List:

The Nice List:

These folks really exhibited the fiduciary spirit in 2011. They should expect someone to give them a special something, somewhere, sometime at someplace.

#1) Ted Benna. The “Father of the 401k” recently spoke to Wall Street Journal’s SmartMoney affiliate and blasted away at the monster he had created. Among his insights, he believes today’s 401k plans have too many options. “…this monster is out of control,” says Benna in the article. “We went to three options, them to six, then to seven, then to 15 – it is far beyond what most participants were able to deal with.” Benna’s “not convinced we have added value by getting more complicated.” Kudos to Ted.

#2) Phyllis Borzi. OK, some of you might feel this is a bit controversial given her sudden and unexpected withdrawal of the DOL’s proposed Fiduciary Rule, but, really folks, is there anyone within the regulatory environs who has stood up more to the opponents of what fiduciary is all about?

#3) Bob Clark. His articles have staunchly defended that which defines fiduciary, and with a dash of wit not often seen in the dry annals of financial reporting.

#4) Companies Who Restore (or Increase) Their 401k Match. Reports continue to show this is an increasing trend.

#5) The Readers of Without you, the opportunity to create this new tradition would never have occurred.

The Naughty List:
These folks channeled their inner fiduciary Scrooge in 2011. May they wake up to find their stockings loaded with commissions, 12b-1 charges and layers upon layers of hidden fees.

#1) Mary Shapiro. Does this surprise anyone? Her latest offer of “business-model neutral” only adds icing to the cake. Her actions through the course of the year have been consistent, though, and she has definitely earned her position on this list.

#2) Barney Frank. It was ironically funny to have the two most cited reasons for the collapse in the financial industry be tasked with writing legislation to prevent its reoccurrence. So it wasn’t surprising when the retiring Congressman reversed his position on the Fiduciary Standard. Too bad MF Global blew up before John Corzine had a chance to hire Barney as his second.

#3) Congress. No one ever said Santa wasn’t bipartisan, so it’s only natural to find the whole of Congress on this list. Republicans, who only too gladly used Shapiro’s false gambit to thwart not only the SEC’s fiduciary initiative but also the DOL’s, and the Democrats, who “saw the light” (or the lobbyist checks) and joined their political opposites in a unified front, both came out against the fiduciary standard. Funny, but the only thing they seem to agree on is justifying conflicts of interest.

#4) Bundled Service Providers. Santa just took a peek at the fees some of these vendors are getting in advance of the April 2012 effective date of the DOL’s Fee Disclosure Rule. He wasn’t pleased. He doesn’t think plan sponsors or 401k investors will be pleased, either.

#5) Companies Subject to Class Action Law Suits Who Lost Or Settled Out of Court. For some plan sponsors, the DOL’s Fee Disclosure Rule comes too little, too late. They thought they were buying convenience, but all they bought was a date in court. If only they had learned to ask the right questions when they hired their service providers. But, how would they have known what were the right questions to ask? Why, by faithfully reading of course!

There you have it. And with a Ho! Ho! Ho! And a Ha! Ha! Ha! wishes you a Happy Holiday Season and a Prosperous New York (but not before we publish two more original articles).

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA

1 Comment

  1. Jan Sackley
    Jan Sackley December 15, 07:42


    I completely agree with your list, especially about Ms Borzi and Mr Clark (who I have called the Dennis Miller of financial writing). But in response to your inquiry about the perfect gift for 401k’s, I have a different answer.

    I would ban all employer stock and proprietary funds as investment choices in a 401k. (I have no objection to separate ESOPs, however). In spite of the legislative and regulatory attempts to institute controls to protect employees when proprietary instruments are choices, one cannot escape the fact that in the end, they represent a conflict of interest for the plan sponsor no matter how careful they are to mitigate the conflict. And when the company or financial instrument faces a crisis, sponsors have to scramble to protect the plan’s interests and often that is too little, too late. The most prudent course is to revoke the PTCEs and statutory exemptions that allow employer stock and proprietary funds.

    Have a Merry Christmas and here’s to a great 2012.

    Jan Sackley
    Fiduciary Foresight, LLC

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