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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 11/23/12

November 26
00:03 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 Choice 401k Investors Must Make Before They Choose,” (, November 20, 2012). It’s the most important element of 401k education and the key to why too many employees fail to meet their retirement objective when they had the clear opportunity to achieve it.

Compliance – Say Hello to the New Boss…:
Welcome to the new normal, it’s the same as the old normal. They say insanity is continually trying the same thing and expecting a different result. Yet when new ideas spring up, why is it that they are shot down and repeatedly replaced by the same old ideas? Changes happens. And those who believe they can stand athwart change are doomed to repeat history.
DOL Fiduciary Regulations May Be Revived,” (Financial Advisor, November 2012) This has become the trending meme among those in the industry. It looks like the DOL will finally finalize the new Fiduciary Rule.
Americans Want Retirement Plan Disclosures on Paper,” (AdvisorOne, November 20, 2012) This might not be a surprise once you learn the survey was conducted by AARP. What might be a surprise is the age of the respondents was 25 and older and even the youngest age group preferred paper by a significant majority.
DOL compliance rules relaxed due to hurricane,” (BenefitsPro, November 21, 2012) This impacts all plan sponsors, participants and service providers involved in all plans regulated by the DOL.

Fiduciary – Did you just hear a noise?:
We always liked Borzi, as she was one of the few regulators who regularly displayed intestinal fortitude. Oh, we had some doubts about that last year, but we, and many others much smarter than us, think she’s about to put the “do” in DOL.
Getting a second wind, DOL likely to breathe harder on ERISA advisers,” (InvestmentNews, November 16, 2012) With the election solidifying Phyllis Borzi’s position, expect to see the DOL follow-through on its proposed new Fiduciary Rule. It’s funny, but the article says providers should be worried that, if they are suddenly thrust into the role of fiduciary, they might want to check to make sure their compensation doesn’t all of the sudden fall under the definition of a “prohibited” transaction. Well, if they are a registered investment Adviser (notice the “er” as opposed to the “or”), this wouldn’t be an issue.

Fees – The Costs of Measurement:
You can measure the tangible, but you can’t the intangible. If you want to know how far something is, you use miles, feet or inches. If you want to know how long something will take, you use hours, minutes or seconds. If you want to measure the cost of something, you use dollars and sense. But what if you want to measure the benefits of something? Likewise, how do you measure opportunity lost? These are the measures that matter most, yet we’re so lazy we stick only to the touchable, leaving the untouchable, well, untouchable.
Why Cost Disclosure Might Actually Work for Clients and Advisors,” (AdvisorOne, November 20, 2012) Bob Clark reports on Knut Rostad’s thoughts on Clark’s tiff with Ron Rhoades. The article also contains an interesting question for all you Latin scholars.
Defining a fair share of 401k costs,” (MarketWatch, November 21, 2012) Warning to all 401k participants with smaller accounts: there’s a move towards per participant pricing among administrative and recordkeeping service providers (but not investment advisers) to better reflect the true costs of the service. Unlike investment advice, where liability increases with asset size, for administrative service providers, liability increases with participant size. This means participants with larger asset holdings will no longer be subsidizing participants with smaller asset holdings.

Investments – Stop Making Sense:
Every once in a while an article appears out of nowhere and reminds us the truth is often the simplest answer.
Why It’s Time to Pool Your Retirement Accounts,” (Physician’s Money Digest, November 20, 2012) One study says 17% of workers have left their money at their old company. A newer study suggests upwards to 30% are now leaving their retirement nest egg in the hands of a former employer. Forget the added costs and liability taken on by the former employer (though they are significant), the article asks whether it’s smart for the investor to do this, especially when pooling several small investment accounts into one large investment account may reap benefits for the investor.

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.
Investors Underestimating Retirement Needs, Survey Says,” (Financial Advisor, November 15, 2012)
Getting Going: Your Paycheck or Your 401k,” (Wall Street Journal, November 16, 2012)
Workers willing to trade PTO, promotions for guaranteed retirement income,” (Employee Benefit News, November 19, 2012)
Poll shows Americans skittish about retirement,” (Employee Benefit Adviser, November 19, 2012)
EBRI: A couple in retirement could need $400,000 just for health care,” (Employee Benefit Adviser, November 19, 2012)
Anticipated rise in health care costs lowers boomers retirement confidence,” (Employee Benefit Adviser, November 19, 2012)
Americans who have $250,000 or more in investable assets feel good, new study finds,” (AdvisorOne, November 20, 2012)
Tapping 401k plans to recover from Sandy,” (MarketWatch, November 20, 2012)
Roth 401k Usage on the Rise,” (, November 20, 2012)
4 Reasons to Be Thankful for Your 401k,” (, November 21, 2012)

Wisdom from Some of Our Favorite Blogs:
fi360 Blog: Fiduciary Links: Considering the Money Market Fight & ‘Fiduciary’ Debate |
The Chicago Financial Planner: Friday Finance Links November 23, 2012 |
Benefits Law Update Blog: 2012 Year End Benefit Plan Compliance Checklist and Reminders for Employers |

Hot Tips from Popular Web Resources:
Benefits Notes: Do I have a Top Hat Plan |
National Center for Policy Analysis: No One Seems Ready for ObamaCare |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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