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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 2/22/13

February 25
00:02 2013

1020805_25983300_Trending_Topics_2013.02.25_stock_xchng_royalty_free_300Welcome 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:
Finance Pros Sound Off on E*Trade Ad Controversy,” (, February 20, 2013). A talking baby is cute, but is this a case of the pot calling the kettle black?

Compliance – You say “tomato” I say “potato”:
It’s late. We’re tired. We just want to sit back and watch a classic movie. Apparently, so was the reporter who wrote this following. Have people really forgotten what profit sharing plans were like before the dawn of the 401k?
DC Plans Moving to DB Model,” (, February 21, 2013) Rarely does a major industry rag let a faux pas like this slip through. The subject of the article is confusing traditional profit sharing plans – which she claims the world is moving to – with pension plans. Profit sharing plans were the entire defined contribution (DC) world before the 401k was invented. Both differ from the defined benefit world of pensions.

Fiduciary – It’s all about Conflicts-of-Interest:
When you get right down to it, there’s one incredible easy definition of “fiduciary.” If someone has a conflict of interest, they can’t be a fiduciary. It’s really that simple. If you want to be a fiduciary, then you must remove the relevant conflict of interest. It doesn’t mean you can’t get paid. It doesn’t mean you can’t get paid a lot. It just means you can’t get paid as a result of a specific investment recommendation.
How the SEC just cost retirement savers $24 billion,” (BenefitsPro, February 19, 2013) It’s the SEC’s inaction that has allowed certain financial service providers to reap pecuniary benefits from this delay. At least according to a recent independent study. Kinda brings this whole “cost benefit analysis” into new light.
The real problem with the E*Trade ad campaign,” (BenefitsPro, February 21, 2013) While most pundits and financial professionals have focused on the fee issues of the E*Trade campaign, this article highlights something more dire: E*Trade has begun to use the language of the fiduciary to describe itself – without ever calling itself a fiduciary. If regulators are about to throw the hammer of the fiduciary standard down on brokers, it’s probably in the brokers’ best interest to leverage the current confusion among consumers regarding as to what “fiduciary” actually means. E*Trade has taken a giant step in this direction.

Fees – Bluto would have loved this:
Did E*Trade just open a can of worms it didn’t want to? And this doesn’t even have anything to do with the fiduciary issue. Life is starting to get exciting.
Financial Services Ads: Look Beyond the Hype,” (, February 20, 2013) There’s a fee fight going on out there among retail brokerage firms. Here’s the problem, what sounds like low fees probably isn’t.

Investments – It’s the Savings, Stupid:
As another investment fad starts to fade into the darkness (unfortunately, its market share is too big to cause it to die), we find once again the real secret to retirement success.
Evolving Target-Date Funds May Require More Guidance,” (Wall Street Journal, February 19, 2013) When a new product enters the marketplace, it only becomes successful when it occupies a specific position in the minds of the consumers. When a product begins to drift from that position usually indicates the time it has started its cyclical decline. Once the “set-it-and-forget-it” “easy-to-read” product, could this evolving complexity signal the beginning of the end of Target Date Funds?
Your mission: Open the 401k floodgate,” (BenefitsPro, February 21, 2013) Here’s another one of those stories that explain why investments are the least thing employees should worry about.

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.
Quality of Life Matters in Retirement Saving,” (, February 19, 2013)
Surveys Show Plan Sponsor Confusion Among Young Workers,” (Institutional Investor, February 19, 2013)
Retirement confidence varies by age, survey finds,” (BenefitsPro, February 20, 2013)
Financial Advisors Expect Most Clients To Postpone Retirements,” (AdvisorOne, February 20, 2013)
Executives May Be Rethinking Retirement,” (, February 21, 2013)
DOL Awards 80M in Stock Plan Suit,” (, February 21, 2013)

Wisdom from Some of Our Favorite Blogs:
The Trust Advisor Blog: Automated Investment Policy Statements Move From Niche To Necessity |
The Chicago Financial Planner: E*Trade’s Fee Commercials – Informative or Misleading? |
fi360 Blog: Fiduciary Links: New fiduciary champion on Senate Banking Committee? |
The Trust Advisor Blog: Help Your Clients Boost Their Odds of Wealth Transfer |
Scholarly Financial Planner: The Secret of Your Success: “Self-Control” |
The Chicago Financial Planner: T. Rowe Price Target Date Funds – A Look Under The Hood |
NAPA Net: The Anti-401k Agenda Continues |
ICI: Extra, Extra, Read All About It: Americans Are Prepared for Retirement |
The Chicago Financial Planner: Friday Finance Links – February 22, 2013 |

Hot Tips from Popular Web Resources:
Pension Pulse: Pension Funds Improving Corporate Governance? |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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