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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 10/5/12

October 08
00:28 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. Lead Story:
What’s a Fair Fee to Pay a Fiduciary,” (, October 2, 2012). When it comes to fees, abide these 3 rules of thumb.

Compliance – The Knock on the Door:
There’s the part in great drama when the much anticipated knock on the door finally comes. What evil lies on the other side of that door the audience can only anticipate. And so that know comes now to pension plans and, in an unrelated development, so too to 401k plan sponsors.
Chicago pension funds warn that asset well is running dry,” (Pensions & Investments, October 1, 2012) Does this surprise anyone. Would it surprise anyone to see more headlines like this?
Solving the public pension plan funding crisis,” (Pensions & Investments, October 1, 2012) The author explains we cannot simply invest our way out of this crisis. He warns the only way out is to cut benefits.
California offers to run pensions for small employers,” (InvestmentNews, October 1, 2012) Since they are doing such a great job running pensions for public employees…
DOL, SEC Enforcement Roundup: 401k Trustees Sentenced for Embezzlement,” (AdvisorOne, October 5, 2012) The regulators said they would start cracking down on 401k plan sponsors and they weren’t kidding.

Fiduciary – Let’s Go Straight to the Video:
Seldom does a good old-fashioned impromptu debate get captured on film, but we’ve got one this week. And, no, it has nothing to do with an empty chair.
Weissbluth Responds to Rostad’s Blog on ‘Zero Conflicts of Interest’,” (AdvisorOne, October 1, 2012) This is a video. Knut Rostad asks Weissbluth point blank on the zero conflicts of interest. Weissbluth is saying the business needs to decide whether it’s a fiduciary or a broker. He doesn’t quite come out and say we shouldn’t have dual registrants, but it sounds like that’s what he’s saying. He does go on to repeat his idea of “technical” conflicts of interest, so it’s not clear if he really answered Knut’s question.
The Future for Fiduciary Advisers,” (, October 1, 2012) Just woke up from a two year nap? This article ought to get you all caught up.

Fees – Towards a More Perfect World:
For all those Panglossians out there, hope prevails.
401k fee disclosure provides much information, little recourse,” (Chicago Sun-Times, October 1, 2012) If you can stomach the usual talk about the cost of 1% of fees and the gratuitous nod to index funds, the article ends with a good idea. One hopes the DOL fans of take note and read the last few paragraphs of this story.
408(b)-2 Fallout: So we know our fees. Now what?” (BenefitsPro, October 4, 2012) Does fee disclosure matter if it can’t be used? The article offers the DOL three ways to improve the practical effectiveness of 408(b)-2.

Investments – Clothes? We don’t need no stinkin’ clothes!:
Pity the poor 401k plan investor who must invest in what the 401k plans sponsor allows. Pity the poor 401k plan sponsor who must limit his choice to those recommended by the 401k adviser. Pity the 401k adviser, who can’t see the nakedness of the emperor.
Rob Arnott: The glide path illusion,” (InvestmentNews, October 2, 2012) Favorite comment following the article: “Target date funds are like religion – you won’t know if you have the right one until you’re dead. So, do you feel lucky?”

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 Participants Seek Retirement Readiness Help,” (, October 2, 2012)
The Best Laid (Retirement) Plans,” (On Wall Street, October 2, 2012)
401k Participants Crave More Education,” (BenefitsPro, October 3, 2012)
Bogle Warns Boomers on Coming Retirement Train Wreck,” (AdvisorOne, October 4, 2012)

Wisdom from Some of Our Favorite Blogs:
fi360 Blog: Fiduciary Links: Proposed cost-benefit analysis bill would require screening when considering new rulesThe Pension Protection Act Blog: Tax Consequences of 401k Plan DisqualificationBoston ERISA Law Blog: The Impact of Appraisals on the Potential Liability of ESOP FiduciariesERISA Lawyer Blog: DOL Issues Report On Plan Audit Process Recommending That The Limited Scope Audit Exemption Be RepealedERISA Lawyer Blog: Seventh Circuit Rules That An Informal Complaint About A Violation of Fiduciary Duties Under ERISA Can Be Protected By ERISA’s Anti-Retaliation Provision In Section 510

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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