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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 5/3/13

May 06
00:06 2013

1020805_25983300_Trending_Topics_2013.05.06_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:
Exclusive Interview: Frontline Producer Explains Controversial 401k Documentary,” (, April 30-May 3, 2013). This is the 4 part series that shattered all viewership records last week. Each part contains surprises and revelations that you might not expect.

Compliance – A Rising Market…:
…increases the apathy towards Washington, politics and the regulations they concoct.
Taxing pensions and 401k Plans,” (Pensions & Investments, April 29, 2013) A more erudite perspective on the proposed Obama budget and its negative impact on retirement plans.
Regulations: What’s Happened and What’s Coming,” (, May 1, 2013) In case you haven’t been paying attention and don’t know, now you do.
Top Treasury Official Defends 401k Tax Proposal, FSOC Moves,” (Financial Planning, May 2, 2013) So the administration claims this will only impact the richest of the rich, a very small number of people. Less ignore the fact the administration is ignoring the greater, philosophical, argument, and take people back to the fiscal cliff debate. Remember how the administration insisted taxes would only be raised on the few who are “millionaires” (which they defined as anyone making more than $250,000 a year)? We remembered that the other day after a presentation when we were sitting down with a group blue collar worker making only a tenth (i.e., $25,000) complaining about the tax increases they’ve seen since January.
Pension Reform Bill Heads to Illinois Senate,” (, May 3, 2013) Normally we’d get excited about a headline like this, but, c’mon folks, this is Illinois. Is it smoke or is it mirrors?

Fiduciary – A Rising Market…:
…diminishes the concern for self-dealing conflicts-of-interest.
Fiduciary advocate: Disclosure alone won’t work,” (, April 28, 2013) If academic research proves disclosure doesn’t work and may even be more dangerous than non-disclosure, why do regulators continue to believe it’s a valid policy tool? Answer: Because, in the Dilbert universe from which they reside, it remains a tool because it’s measurable. No, its effectiveness is not measurable, but whether or not you use it is measurable. And that’s what counts most for a regulator.
Fiduciary Matters,” (Financial Advisor, April 29, 2013) It looks like the big wire-houses are expecting the DOL to bring the hammer down. These firms are now setting up fiduciary training classes to get prepared.
Borzi Hints at Exemptions to DOL Fiduciary Rule,” (NAPA Net, May 1, 2013) The article suggests Borzi might be folding under pressure from Congress and may now be comfortable with dumbing fiduciary down and relying on “transparency” and “disclosure.” (Yeah, because all the academic research shows how well that works!) If this is true it’s a major win for industry lobbyists and a significant condemnation of retirement investors everywhere.

Fees – A Rising Market…:
…makes people forget about fees.
Benchmarking Fees for Optimizing Plan Value,” (, May 3, 2013) This is a very good article. It repeats “the DOL does not want plan sponsors to get the lowest fee,” and adds plans should pay an above average fee because plans should seek above average service. Also, all fees are not created equal and you need to make sure what service is associated with what fee.

Investments – A Rising Market…:
…begets yet more and more investment stories until people start believing the snake oil can cure anything.
Will Indexing Kill the Market?” (AdvisorOne, April 28, 2013) It’s tough to tell if this article is for or against indexing. It does allude to the outcome of the boundary condition test outline in “3 Reasons to Outlaw Index Investing Right Now (and One Selfish Reason Not To) in 5 Acts,” (, May 12, 2010), but doesn’t link to the article.
Another Argument for Smaller Investment Menus,” (, May 1, 2013) Unlike the commercial with the kids, bigger is not better, at least when we’re talking about 401k investment menus. This study goes beyond the indecision caused by too much choice. It explores why people actually make better choices when their options are limited.
Alan Reid Quips That Indexing is ‘Un-American’,” (The, May 2, 2013) The quip was said in jest and the laughing audience took it that way, but all good humor contains an element of truth (q.v., “free rider problem”).
My Conversation With Harry Markowitz: MPT and Behavioral Economics,” (AdvisorOne, May 3, 2013) Fav Bob Clark scores a big interview with the father of MPT and learns, to his surprise, Harry Markowitz recognizes MPT and behavioral economics can live together. Big daddy said it’s one thing to create an efficient portfolio, it’s quite another to create one that clients won’t run away from. That’s an interesting take on things. But it sounds too close like breaching one’s fiduciary responsibility. For example, if a beneficiary insists a trustee choose an inappropriate portfolio, what should the trustee do? Anyone who answers “Not budge” wins. The others get sued by the beneficiary’s heirs.

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.
I’ll Have What She’s Having: How a So-called Retirement Expert Would Worsen Our Retirement,” (Huffington Post, April 24, 2013)
How To Trim Your Taxes Using Your Retirement Plans,” (Investors Business Daily, April 26, 2013)
Retirement Research Roundup: Savings, Not Income, Biggest Driver of Retirement Success,” (AdvisorOne, April 26, 2013)
Giving Clients a Push When It Comes to Retirement,” (On Wall Street, April 28, 2013)
Advisers affronted by ‘Frontline’ piece,” (InvestmentNews, April 28, 2013)
5 Ways to Improve 401k Plans,” (Employee Benefit News, April 30, 2013)
Majority of Baby Boomers won’t have homes paid off by retirement,” (BenefitsPro, April 30, 2013)
401k Report: Fewer Matches, Fewer Plans,” (On Wall Street, May 1, 2013)
Small Business Retirement Plans Survived Recession,” (, May 1, 2013)
Profits take the day as fewer employers match kick-ins to 401k plans,” (InvestmentNews, May 1, 2013)
Unplanned, Early Retirement Difficult To Overcome, Advisors Say,” (Financial Advisor, May 1, 2013)
Improving Your Odds in the ‘Retirement Gamble’,” (, May 1, 2013)
How to help job-changers shift retirement savings,” (Employee Benefit News, May 1, 2013)
My Conversation with Frontline Producer Martin Smith,” (BenefitsPro, May 2, 2013)
Retirement Readiness a Top Priority for Plan Sponsors,” (, May 2, 2013)
William Sharpe: Savers Can Increase Living Standards 20% In Retirement,” (Financial Advisor, May 3, 2013)

Wisdom from Some of Our Favorite Blogs:
The Trust Advisor: Loans Borrowed Against Pensions Squeeze Retirees |
ERISA Lawyer Blog: Government Provides New Guidance On Summary Of Benefits And Coverage |
Boston ERISA Law Blog: My Journal of Pension Benefits Article on Operational Competence after Amara |
Fred Reish: GAO Report on IRA Rollovers |
The Chicago Financial Planner: My Thoughts on PBS Frontline “The Retirement Gamble” |
ERISA Lawyer Blog: Employee Benefits-IRS Provides Relied For Certain ESOP Amendments |
fi360: Fiduciary Links: What can we read into the SEC’s assumptions regarding fiduciary rule making? |
Scholarly Financial Planner: “The Retirement Gamble” Producers Reverse Course and Embrace Wall Street’s Claims |
The Chicago Financial Planner: Call the Safe Money Guy: My Road Sign Epiphany |
RetirementRevised: Retirees and debt: How to avoid the worst traps |
The Chicago Financial Planner: Friday Finance Links May 3, 2013 – Dow 15,000 Edition |

Hot Tips from Popular Web Resources:
NAPA Net: It’s a 401k World | Even Jay Leno Recognizes the Tax Burden on Small Business! | Decision Points |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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