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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 6/22/12

June 25
00:04 2012

Welcome to FiduciaryNews.comTrending 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:
Is Proxy Voting a Conflict-of-Interest Trap for the ERISA Fiduciary?” (, June 19, 2012). At what point does acting solely for the benefit of the beneficiary cross the line into acting in behalf of one’s self-interest?

Compliance – Doth They Protest Too Much?:
And we’re not talking about the lady from the DOL, we’re talking about the people who are giving her grief. In the meantime, these same critics may be on to something out in California.
Borzi: Critics ‘overreacting’ to new rules for 401k brokerage accounts,” (InvestmentNews, June 18, 2012) It seems the DOL has been on a kick lately of emphasizing the fiduciary obligations of plan sponsors, and this new rule is just another example of that.
Retirement plan providers band together to stop DB proposal in California,” (InvestmentNews, June 19, 2012) Here’s a wild and crazy idea: Let’s take a public pension system on the verge of bankruptcy and pass a law requiring private employees to be a part of it. Only on the left coast…
The worst offenders: 10 states with huge pension gaps,” (BenefitsPro, June 20, 2012) Or, said another way, “10 states in a worse situation than California.”

Fiduciary – More Talk, Less Action:
At some point, regulators need to make a move. Trouble is, as long as the issue stays a political issue and not a common sense issue, bloviaters would rather hear their voice than make a choice.
IRS Rules on Key Point on 401k Vesting,” (AdvisorOne, June 15, 2012) This has to do with what happens when there’s a break in service.
Dueling fiduciary standards from SEC, DOL ‘not workable,’ says industry expert,” (InvestmentNews, June 18, 2012) Yet the DOL’s Borzi insists otherwise. Could they both be right?
Does shareholder activism breach an ERISA fiduciary’s duties?” (BenefitsPro, June 21, 2012) Another look at the issue in this week’s featured story.

Fees – The Coming Non-Event:
Here’s a good question: If a tree falls in the forest and they make paper out of it, will people read anything about fee disclosure that may be printed on it?
401k fee disclosures merit attention,” (San Francisco Chronicle, June 17, 2012) According to the article, just because they’re disclosed doesn’t mean investors or plan sponsors will understand them.

Investments – Return of the Prodigal Son:
There’s been more written on investing in 401k plans than on regulating them in recent weeks. Is this a bullish sign for regulators or a bearish sign for stocks?
Your Target-Date Fund May Be Riskier Than You Know,” (New York Times, June 15, 2012) The Grey Lady finally gets on board with the trouble with TDFs.
Rewriting the Golden Rules of Retirement Investing,” (CNBC, June 18, 2012) With interest rates at all-time lows, the old rules of asset allocation seem to no longer work. What’s a retirement investor to do.
Diversification Remains Critical to Portfolio Success: J.P. Morgan’s Gatch,” (Financial Planning, June 21, 2012) He’s really talking about diversifying among asset classes. Gatch says although bonds have outperformed stocks over the last decade, he doesn’t see the same thing happening over the next decade.
The Value of Rebalancing,” (Forbes, June 22, 2012) This article is for you asset allocators out there (as opposed to fundamental stock investors). It shows the merits of a disciplined rebalancing philosophy, albeit for only a small period, especially for highly volatile asset classes.

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.
401k Eligibility a Key Factor in Retirement Readiness,” (, June 15, 2012)
401k plan execs ready for new regulations, survey finds,” (Pension & Investments, June 18, 2012)
Target Date Funds And Do-It-Yourselfers Both Beat Brokers’ Advice In 401k,” (Forbes, June 18, 2012)
For 401k advisers, standard come-ons not cutting it anymore,” (InvestmentNews, June 19, 2012)
Plan for retirement at 70, new CRR brief shows,” (Pensions & Investments, June 20, 2012)
In the 401k era, 70 may be the new age to retire,” (Boston Globe, June 21, 2012)
Is Your 401k Up To Par?” (Forbes, June 21, 2012)

Wisdom from Some of Our Favorite Blogs:
fi360 Blog: Fiduciary Links: Results are in from second annual fi360-Advisor survey of investment advisorsfi360 Blog: Practice 4.4: Make fees for investment management consistent

Hot Tips from Popular Web Resources:
State Budget Solutions: The people shouldn’t get to vote on public pensions?
CalWatchDog: State seeking to grab private pensions

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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