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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 5/18/12

May 21
01:38 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:
Survey Threatens SIFMA/FSI Fiduciary Positions,” (, May 15, 2012). There’s no turning back. The cat is out of the bag. Regulators or not, the marketplace seems to have already made the decision to adopt the fiduciary standard.

Compliance – Why Ask Why?:
The politicians want money to feed their addiction. Like any irrational user, when they smell the money, nothing will stop them. What’s more, they want you to become addicted, too.
‘The 401k experiment is a failure.’ Or is it?” (BenefitsPro, May 17, 2012) We’re not really sure if the article even addresses the question, other than to cite the source of the quote, but it’s a good read nonetheless.

Fiduciary – What Price Victory?:
Sometimes it seems American’s just don’t have that killer instinct anymore. George Patton must be turning in his grave. If you believe you’re right, how is compromise anything but surrender? Have we learned nothing from the folly of Chamberlain?
Siding with the ‘good guys’ on the fiduciary standard,” (BenefitsPro, May 17, 2012) The article offers three helpful hints to the beleaguered SIFMA, as new surveys show its rank-and-file members don’t agree with its position on the fiduciary standard.
Consider Scott Simon’s Modest Proposal to ‘Solve’ the Fiduciary Issue,” (AdvisorOne, May 17, 2012) The usually spot-on Bob Clark may have misfired on this one, as, the way he’s written it, it’s hard to see how Scott Simon’s proposal is either “modest” or a middle ground. We may have to follow-up with the source on this one.

Investments – Doomed to Repeat History:
We come not to praise our education system, but to bury it. Has the 15-second sound-bite of Sesame Street infected us so badly we no longer have the attention to remember what got us to 2006?
Young workers on 401k offerings: We want sure things,” (InvestmentNews, May 14, 2012) Here’s the key takeaway from the article: “Fully 95% of workers under 30 who don’t have access to a guaranteed income option at work said that they’d like to be able to do so, according to a poll of 2,500 people by The Hartford Financial Services Group Inc.” Let’s ignore the potential bias of the source and just say this: Those that fail to learn from history are doomed to repeat it. Apparently, the respondents failed the history test of the origins of the 2006 Pension Protection Act.
401k retirement income options coming your way,” (CBS News, May 15, 2012) This is another article on the Hartford survey and, quite frankly, does a major disservice to unsophisticated readers (it doesn’t serve sophisticated readers, either, but at least they’ll recognize that). Read it and then compare it to the article below.
Will These Investments Catch On?” (CFO Magazine, May 15, 2012) A good article in light the Hartford survey results, this exposes the problems for 401k plan sponsors who might offer longevity annuities.
Why Are Younger Workers Attracted to Guaranteed Income?” (, May 16, 2012) Author Roger Wohlner hits all the right points in this article. It should be recommending reading for everyone under thirty.
401k Plans Resembling Traditional Pensions,” (TIME Magazine, May 16, 2012) This article cites a Blackrock survey with results similar to the Hartford survey. Essentially, it confirms young people are too naïve to invest for their retirement. After singing hallelujahs, at least the article has the to end with the statement that this is a risky investment for young people.

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.
Research Supports Limits on Borrowing from Retirement Plans,” (New York Times, May 14, 2012)
56% of Americans 18-34 not contributing to retirement plan,” (Employee Benefit Adviser, May 15, 2012)
5 IRA timing rules that can derail your retirement,” (MarketWatch, May 17, 2012)

Wisdom from Some of Our Favorite Blogs:
fi360 Blog: Fiduciary Links:The future on the minds of both advisors and their regulators

Hot Tips from Popular Web Resources:
SunGard Relius: Participant Disclosures: Part 4 – Investment DisclosuresMorningstar: Is Your Target-Date Fund’s Glide Path Unstable?

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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