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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 12/21/12

December 24
00:04 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:
Most Widely Read Stories in 2012 – Honorable Mention,” (, December 18, 2012). Did 401k plan sponsors, service providers and even industry regulators underestimate the potential of these issues last year?

Compliance – Santa’s Got a Brand New Bag:
And you might not like what’s in it. Or, if we’re really lucky, then there won’t be any (changes) in it. Time will tell. In the meantime, the industry gears up for the fight and small business owners are contemplating the end.
401k Rule Proposal Could Be a Light in the Tunnel,” (New York Times, December 16, 2012) This pertains to allowing folks to get their retirement assets out more quickly from plans whose underlying plan sponsor has declared bankruptcy.
Survey: Changes in tax rules could cut 401k plan sponsorship,” (Pensions & Investments, December 17, 2012) Almost half of those plan sponsors responding to a recent survey would consider cutting their 401k plan if threatened tax changes occur. Actions have consequences.
Advocates for retirement tax incentives gird for 2013 battle,” (InvestmentNews, December 17, 2012) Just what we want to look forward to next year.

Fiduciary – The Year Without a Santa Claus:
What could be worse than the TV special by that name? How about another year without a fiduciary standard? No. What’s worse are the inane faux-arguments being made by supposedly intelligent people.
Is Kitces Right on When a CFP’s Fiduciary Duty Should Apply?” (AdvisorOne, December 18, 2012) Are they in or are they out? Since we don’t have a uniform fiduciary standard, only their hairdresser knows for sure.
PBS exposes the financial industry’s hidden truth,” (BenefitsPro, December 20, 2012) Could it be all our problems stem from the same era as that of the source of the 2008 credit crisis? Read and decide for yourself.

Fees – Santa Claus is Comin’ to Town:
You better watch out! He’s checking his (fee disclosure) list twice, and he’d normally be able to find out whose naughty or nice, but with the details buried in dozens of pages of tiny print and all with paragraph long URLs “for more information,” it looks like he’ll be working late this year.
How Low Can Fund Fees Go?” (Wall Street Journal, December 16, 2012) Although this article does focus on the tax consequences of switching fund, it does have the merit of taking us inside the “fee wars” among various index fund products. It comes down to this. Unlike actively managed funds, index funds are commodities, and the only thing commodities can do to differentiate themselves is by lowering their price. Makes one wonder: Is it possible index fund prices will fall so low they will price themselves out of existence?

Investments – I Saw Bogle Kissing Santa Claus:
Target Date Funds – It’s the gift that keeps on giving. To the financial industry, if not to investors. If there’s any doubt why PBS thinks Wall Street only “makes products,” (see “PBS exposes the financial industry’s hidden truth” above, this is why.
Target dates take aim,” (InvestmentNews, December 17, 2012) Now they’re taking aim for real estate.

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 plans: Is participation more important than deferral rates?” (BenefitsPro, December 14, 2012)
The problem with the $600,000 retirement check,” (BenefitsPro, December 14, 2012)
Transition from Pensions to 401k Plans Won’t Lead to Poverty,” (Financial Planning, December 17, 2012)
The New 401k,” (Human Resource Executive Online, December 17, 2012)
DC participants want employers to help them save more,” (BenefitsPro, December 18, 2012)
401k Participation Rises Despite Economic Woes: BofA Merrill Lynch,” (On Wall Street, December 18, 2012)
Plan sponsors ready to help participants, just not now,” (BenefitsPro, December 20, 2012)

Wisdom from Some of Our Favorite Blogs:
The Chicago Financial Planner: Lousy 401k Plan? – Strategies to Make the Best of It |
fi360 Blog: Fiduciary Links: Answering your questions on conflicts of interest and risk governance |
The Chicago Financial Planner: Friday Finance Links December 21, 2012 – End of The World Edition |
fi360 Blog: Proxy Advisors and Your Fiduciary Responsibility |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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