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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 4/26/13

April 29
00:06 2013

1020805_25983300_Trending_Topics_2013.04.29_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:
Has SEC Unfairly Rigged Its Fiduciary Questionnaire?” (, April 23, 2013). The SEC is asking “how do we constrain fiduciary” instead of the other way around.

Compliance – In Case You Haven’t Figured It Out…:
It’s not about retirement. It’s not about helping and encouraging people to take control of and be responsible for their own lives. It’s about taking the individual rights away from the average citizen and creating just another class of victims. It’s about creating yet one more constituency of dependent voters. It’s power, people, not about power to the people. The question is: Will the people notice before it’s too late?
Is A $3 Million IRA Sufficient For Retirement?” (Forbes, April 21, 2013) Math can be an unforgiving mistress, and like other mistresses, it can often be the antidote of political hubris. The President claims $3 million can buy a $200K annual annuity, but this author discovers the number is no more than $150K. Worse, he explains (again) the fallacy of annuities; hence, the fallacy of the President’s proposed budget. We’ll leave you what this thought: Thirty years ago, if you were told the government would limit the salaries of citizens to $150K, what country would you think we were talking about?
Pension group pushes Congress to kill proposed retirement savings cap,” (BenefitsPro, April 22, 2013) If the above didn’t convince you, this article will. It takes a different tack. According to the data presented in this piece, the President’s proposed budget most hurts those earning $150K or less. Ouch!
Retirement cap proposal draws fire,” (BenefitsPro, April 24, 2013) This can be a sign that the proposal is really that bad or just an artifact of a lame duck term for the president. Or both.
Stop Wasting Your Employees’ Money,” (Inc, April 24, 2013) This article quotes exclusively a particular lawyer’s opinion. Funny, when a non-lawyer practices law, it’s considered illegal. When a lawyer offers tax accounting and investment advice, all that happens is we understand why lawyers shouldn’t offer tax accounting and investment advice.

Fiduciary – Is It the End of “Fiduciary” as We Know It?:
Former Senator Daniel Patrick Moynihan once said our nation faced a problem because we were “defining deviancy down” to the point where it just didn’t matter anymore. Are we about to embark on an SEC-led path to defining fiduciary down?
Could SEC’s fidicuary plan spell the end of fiduciary duty?” (, April 23, 2013) Our friend Knut Rostad is interviewed here espousing the same sentiments as this week’s lead story. In a nutshell, the SEC’s Fiduciary Questionnaire is fatally flawed by assumption that assumes away any pretense for fiduciary duty. This is a war that will only get hotter.

Fees – The Truth Can Set You Free:
Sure, there are bad fees, but, the truth is, not all fees are bad. Once we recognize that, we can move on to what really matters: focusing in on and rooting out all bad fees.
The Facts on Fees and 401k Plans,” (Investment Company Institute, April 23, 2013) Normally we put this in the web-site category but we haven’t seen anything written on fees in such a long time we thought we’d put this up here. Having said this, this is a defensive article and part of the problem of reporting on fees. It focuses on the fees that are easy to count – the mutual fund expense ratio. The real problem with 401k fees are the ones you can’t easily count – all the revenue sharing, 12b-1 fees, etc… that come from conflicts of interest.
Mutual Funds Cheaper for 401k Participants,” (Financial Planning, April 25, 2013) Wow. After all the hype about fees in the Frontline show, if retail investors pay more than 401k investors, how does anyone make money? Oh, we forget. Investing is not a zero sum game like, say, gambling. It’s possible for several win-win scenarios to occur simultaneous – high fees or not.

Investments – Bonds Away!:
As long as we’ve locked been in a stasis of non-recovery, bond investors have been relatively shielded. Trouble, eventually the economy cycles back, even when Washington does all it can to make it an uphill move.
Surviving the 401k ‘bondocalypse,’” (BenefitsPro, April 22, 2013) Someday, and we hope this day isn’t that far away, the American economy will return to the economy we grew up with. And when it does, look for interest rates to return to what they were when we grew up. And that’s bad news for bond investors.
Bond Rally Could be Ending,” (, April 26, 2013) More bad news on bonds.

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.
FRA Launches ERISA Litigation Blog,” (, April 22, 2013)
Fidelity Accused of Self Dealing in New Lawsuit,” (, April 22, 2013)
What Are Your Real Retirement Costs?” (, April 23, 2013)
Doctor Pleads Guilty to 401k Embezzlement,” (, April 24, 2013)
PBS special slams 401k Plans,” (Employee Benefit Adviser, April 24, 2013)
401k, IRA plans helped rich rebound from ’08 crash,” (MarketWatch, April 24, 2013)
Investors Optimistic—Except for Retirees,” (Wall Street Journal, April 24, 2013)
Why 401k Plans Have Failed,” (Forbes, April 24, 2013)
Documentary Critics Inaccurate Portrayal of Fees,” (, April 24, 2013)
PBS ‘Retirement Gamble’ Documentary Draws Mixed Industry Response,” (AdvisorOne, April, 25, 2013)
Brokers slammed in PBS documentary,” (InvestmentNews, April 25, 2013)
PBS special slams 401k plans,” (Employee Benefit News, April 25, 2013)
Households Saving 10 Percent on Track for Retirement,” (, April 25, 2013)
Lump Some,” (, April 25, 2013)
Most Gen Xers Own 401k Plans,” (, April 26, 2013)

Wisdom from Some of Our Favorite Blogs:
Pozek On Pension: SchoolHouse Rock Meets The 401k Plan |
fi360: Fiduciary Links: Fiduciary of the Year and Article Competition Winners Announced |
The Chicago Financial Planner: Your Old 401k Take it or Leave It? |
ERISA Lawyer Blog: Seventh Circuit Affirms Dismissal Of Stock Drop Case |
The Trust Advisor: The Keys to Retirement Savings |
The Chicago Financial Planner: Target Date Funds: 6 Considerations Before Investing |
The Trust Advisor: Advisors: Ask Yourself, Who Owns You? |
The Chicago Financial Planner: Friday Finance Links April 26, 2013 – NFL Draft Edition |
fi360: On Transitioning My Children into Young Fiduciary Clients |
RetirementRevised: Gambling with your retirement: PBS gets in on the action |

Hot Tips from Popular Web Resources:
ICI: The Facts on Limited Access to Retirement Funds Before Retirement |
ICI: Americans Support Their 401k Plans |
NAPA Net: California Case Raises Thorny Fiduciary Issues for Record Keepers  | “Gamble” Gambit |
Scholarly Financial Planner: Can You Legislate Morality? |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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