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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 10/19/12

October 22
00:11 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:
The Easiest Way to Reduce Personal Fiduciary Liability for Plan Sponsors and Other Non-Professional Trustees,” (, October 16, 2012). It’s the greatest cause of anxiety among plan sponsors, yet it’s so easy to address.

Compliance – A Mixed Lot:
A little bit of this, a little bit of that, all of it pretty useful in its own special way.
Pensions Disappearing for New Employees at Big Firms: Study,” (Wall Street Journal, October 17, 2012) [Subscription required] Merely confirms what those in the know already knew.
Retirees take some lumps from lump-sum offers,” (InvestmentNews, October 17, 2012) The title here is misleading and only reflects the opinion of the Pension Rights advocacy group as quoted towards the ends of the article. For the most part, though, the piece focuses on the decline of pensions in Fortune 100 companies, the growth of 401k plans and the need for retirees to seek professional advice once they receive their lump sum payouts.
IRS raises contribution limits for DC plans in 2013,” (BenefitsPro, October 18, 2012) Provided with glee for all those wishing to dream about contributing the maximum limit.
How to Prepare for—and Prevent—a DOL Audit,” (AdvisorOne, October 18, 2012) Article contains 12 steps to avoid an audit and six steps to prepare for an audit.

Fiduciary – Politics and Reality:
While speculation mounts as to the disposition of various regulations fiduciary as we approach the election, the reality of fiduciary duties continues unabated. Let’s put those duties to good use.
2 steps to reduce 401k fiduciary responsibility,” (BenefitsPro, October 17, 2012) It’s amazing how much anxiety 401k plan sponsors have over their duty to select investments when it’s so easy to mitigate that liability.
Obama vs. Romney on Regulation: DOL Fiduciary DOA? Yes or No to SRO? Borzi Gets Boot?” (AdvisorOne, October 18, 2012) Oh ironies of irony. This author believes the SEC’s plodding, politically deaf and totally mismanaged effort to create a uniform fiduciary standard will survive the election no matter who’s elected, but that a Romney win spells the end for the much more methodical and well thought-out process of the DOL’s new fiduciary rule.

Fees – But, But, It Wasn’t Supposed to Be This Way:
More gibberish from the chattering class on how to take the world to a better place after the last attempt to take it to a better place forgot to turn left at Albuquerque.
A price-cutting war in your 401k,” (MarketWatch, October 16, 2012) Nothing to read here. It’s all about cutting mutual fund expense ratios, not cutting 401k fees. If you don’t know the difference, read last week’s featured story in Trending Topics.
ERISA Gurus Reish, Campbell Urge DOL to Create 408(b)(2) ‘Corrections Program’,” (AdvisorOne, October 18, 2012) Patterned after similar programs in the past, it allows service providers who, without intention, have fallen out of compliance due to the complexity of complying. Um, how about if the DOL just produces a one-page template that all service providers must provider. ‘nuff said.

Investments – As Easy As ABC:
The more complicated things get, the better the simpler choices appear. Remember, this is what behavior economics is all about. At a certain level, success doesn’t come from the book of Graham and Dodd, but merely, as Woody Allen once said, from being their.
DC plan participants don’t understand risks and allocations,” (Pensions & Investments, October 15, 2012) Simply said, they don’t understand target date funds and they don’t want annuities.
These funds give retirement savers stability,” (MarketWatch, October 16, 2012) Robert Powell does a great job explaining the ins and outs of stable value funds. Very long but very comprehensive and well worth the time to read.

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.
Supreme Court refuses to hear 401k participants’ petitions,” (Pensions & Investments, October 15, 2012)
Supreme Court rejects workers’ 401k stock drop appeals,” (Reuters, October 15, 2012)
More seasonal fine-tuning for 401k plans,” (BenefitsPro, October 15, 2012)
Caution Still Prevails for 401k Participants,” (, October 16, 2012)
The Inadequacy Of Our National Savings,” (Financial Advisor, October 16, 2012)
More Fortune 100 companies offering 401k plans to new hires,” (BenefitsPro, October 17, 2012)

Wisdom from Some of Our Favorite Blogs:
Scholarly Financial Planner: Will the CFP Board Move the Ball Forward, or Stall Progress Toward a True Profession?
The Chicago Financial Planner: Can I Retire?
fi360 Blog: Fiduciary Links: The Slippery Concept of Materiality

Miss anything? Feel free to add a comment below.

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Christopher Carosa, CTFA

Christopher Carosa, CTFA


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