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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 4/27/12

April 30
01:28 2012

Welcome to 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.

FiduciaryNews Lead Story:
Have 401k Plan Sponsors Framed Employees?” (, April 27, 2012). This article is a quick overview (with links to other articles) of what’s leading 401k participants to make poor investment decisions and how to fix the problem. Also, the end contains a special treat for readers.


Compliance – “Hi! I’m from the government…”:
“… and I’m here to help.” There. Scared yet?
Virginia Assembly OKs hybrid retirement plan, contribution hikes,” (Pensions & Investments, April 19, 2012) Ironically, just as the federal government is seeking to slaughter the golden goose of retirement in exchange of more Ponzi, the smarter states are taking action to prevent their pension bills from exploding their treasuries.
Congress Eyes 401k Plans Again,” (Wall Street Journal, April 20, 2012) A good overview of why what’s happening is happening. It ends with this eerie reality: In order to “save” money today, Congress will strip future reviews. In other words, this is just another borrowing scheme.
Your Tax-Free Nest Egg May Not Be Tax-Free After All,” (Investor’s Business Daily, April 23, 2012) We don’t know if this is based on old news or not, but it’s so typical of Washington.
Senators Cardin and Portman join forces again to spearhead new retirement movement,” (Employee Benefit News, April 24, 2012) In contrast to the above articles, this bipartisan duo is actually looking at ways to encourage more retirement savings. They even correctly report the exaggerated demise of the 401k (kiddingly called the “201k”) over the last decade falls flat in face of the fact 401k assets have grown from $11 billion in $17 billion in 2011. The only thing they get wrong is the “cost” of fiduciary advice to small businesses.
Time for a new 401k model?” (Investment News, April 25, 2012) A Treasury Official cites “401k 2.0” (without, despite specifically mentioning the “self-managed” part of it, attribution to the article by the same name that described the same thing) before heading straight for proposing a “401k 3.0” and it’s all good stuff from there.


Fiduciary – Simmering, Simmering…:
… do you ever get the impression the lid is about to blow?
Fiduciary Duty Concept Release Likely by Summer: Ex-SEC Exec,” (AdvisorOne, April 23, 2012) Apparently this former official believes there’s too much political infighting at the SEC for this issue to reach closure. In the meantime, the SEC appears to be gearing up to raise some revenue by beefing up its enforcement division.
Cost-benefit cudgel could spell the end for DOL’s fiduciary proposal,” (InvestmentNews, April 24, 2012) If you repeat a lie long enough, are people really just dumb enough to believe it?
Why being a fiduciary can be a good career move,” (BenefitsPro, April 24, 2012) This article is chock full of statistics that ought to make fiduciaries – and especially their clients – feel quite happy.
Institute Takes Issue With SIFMA on Proposed Uniform Fiduciary Rule,” (On Wall Street, April 25, 2012) Knut Rostad leads the charge as the Institute for Fiduciary Studies comes after SIFMA with “a strongly worded” letter revealing an emperor with no clothes.
Key Findings of AdvisorOne-fi360 Fiduciary Survey of Advisors,” (AdvisorOne, April 26, 2012) Good rundown of some of the more interesting results.
Can Brokers Really Avoid a Fiduciary Duty Without Hurting Their Business?” (AdvisorOne, April 26, 2012) Another excellent article by Bob Clark that asks the obvious question in an obvious way. One can hear only the sound of crickets in return.

Fees – She’ll be Comin’ Round the Mountain…:
…right about July 1st.
Upcoming disclosure prompts participant fee education,” (BenefitsPro, April 23, 2012) A good but perhaps too simplistic overview of typical 401k plan fees. The article needs more context.

Investments – Don’t Look Now:
If you do look, you may not like what you see.:
Treasury, IRS propose new lifetime-income options for qualified plans,” (Employee Benefit News, April 23, 2012) In case you forgot about this…
The Best of Both Worlds: Active and Passive Investing,” (AdvisorOne, April 24, 2012) A lone voice echoes the sentiments of previously published articles, although in this case the author cites a recent academic study.
Is Human Nature Hurting Your 401k?” (, April 25, 2012) Roger Wohlner gives a quick overview of the major behavioral finance issues facing 401k investors.
How to solve the biggest problem facing 401k plans,” (BenefitsPro, April 25, 2012) The problem is lack of savings, and it’s caused by too many investment options. This article offers a solution on how to make choice less intimidating without removing choice altogether.
Target-Date Funds Dominate 401k Plans,” (AdvisorOne, April 25, 2012) With the de facto government endorsement and a huge marketing program, is anyone surprised? We’re just wondering when do the trials start?

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.
Most Younger Investors Find Post-Retirement Work Appealing,” (AdvisorOne, April 23, 2012)

Wisdom from Some of Our Favorite Blogs:
fi360 Blog: Fiduciary Links: How advisors should approach long-term care issuesfi360 Blog: 2012 fi360 Conference Day 1: Announcements, Justin Fox keynote, and moreR. Dean Piccirillo: Retirement Plan Fee Disclosure: Changing The Game For Retirement Plan Sponsors – What You Need To Know

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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