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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 5/31/13

June 03
00:05 2013

1020805_25983300_Trending_Topics_2013.06.03_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:
401k Plan Sponsors: These 4 Steps Will Change the Retirement Lives of Your Employees,” (, May 29, 2013). Experts explain how success begins with a single step on a well-worn, proven path.

Compliance – Short Week Spells Boredom:
If you’re an editor, you hate Monday holidays. It totally messes with your weekly calendar. And then you wonder if your readers aren’t actually on vacation. You start to question if it’s all worthwhile.  Then you suck it up, reprint a few press releases, allow a gratuitous political comment and then go for a tried and true subject.
LIMRA supports lifetime income illustrations for DC plan statements,” (BenefitsPro, May 22, 2013) Let’s see, this is how LIMRA describes itself: “…a worldwide research, consulting and professional development organization, is the trusted source of industry knowledge, helping more than 850 insurance and financial services companies in 73 countries increase their marketing and distribution effectiveness.” So, why is this worthy of being an article.
Wealth Watch: Stuck-in-the-‘90s 401k Plans,” (Businessweek, May 24, 2013) If you can stand the political overtones of this article (it digresses to salute the Obama administration for implementing a policy initially started in the Bush administration), it does contain some good stuff.
EBSA Enforcement Strategy: We’re Looking at Everything,” (NAPA, May 29, 2013) They might say everything, but, reading between the lines, it’s all about fees and last year’s Fee Disclosure Rule.

Fiduciary – Can You Handle the Truth?:
Again, why are we having this debate? Because it’s just like all other public debates – an exercise for big government and big business to join hands and show us how big they are.
Retirement plan advice needs more scrutiny,” (BenefitsPro, May 23, 2013) We may have missed this one when it originally came out, but it’s good ammunition for fiduciary advocates.

Fees – Sometimes Fees Just Don’t Matter:
But only if you realize what really does.
Fund fees, not management, key to 401k success,” (MarketWatch, May 29, 2013) Alicia Munnell offers a mea culpa on her earlier suggestion to ban actively managed funds when she discovers, coincidentally weeks after first wrote about it, that fund fees are more important than active vs. passive. She was kind enough not to credit us for pointing it out first.
401k Folly Continues,” (Forbes, May 29, 2013) Oops! This article is based on Munnell’s earlier statement that, ironically, she retracted on the same day (see above article) Forbes published this.

Investments – “007” Reasons to Reject Bonds, All Bonds:
Well, maybe not seven, but here are five articles that bring us closer to the much anticipated Bond-ocalypse.
Record Cash Sent To Balanced Funds,” (AdvisorOne, May 28, 2013) This goes beyond merely target-date funds and could be a sign investors are looking for the “One Portfolio” solution mutual funds were originally designed to capture. It could be signaling a growing disenchantment with the Modern Portfolio Theory approach to do-it-yourself asset allocation through style-box mutual funds.
The Next Big Thing for 401k Plans?” (Employee Benefit Adviser, May 28, 2013) The question mark in the title should be a clue this article is more of a warning than a prediction.
For Performance, 401k Plans Can’t Touch Pensions,” (, May 28, 2013) Why should this surprise anyone? There are three reasons for this. First, too many 401k investors are overweighted in fixed income instruments. Second, too many 401k investors buy high and sell low. Third, all other studies suggest professionally managed portfolios (e.g., pension plans) do better than do-it-yourself portfolios (i.e., 401k plans). This brings us back to the “One-Portfolio” solution for the average 401k participant.
Storm Clouds Gathering on Fixed Income Front,” (, May 30, 2013) A new white paper suggests the upside/downside of fixed income just ain’t what it used to be.
Here’s Why Diversification Matters,” (, May 31, 2013) Interesting and revealing stats for folks who thing investing in an S&P500 index fund is the cat’s pajamas. The base line, though, is towards the end. It warns bond investors of the impending reality (see above article) they must soon deal with.

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.
Where Does the Money Go in IRAs?” (AdvisorOne, May 23, 2013)
Why Gen X And Late Boomers Aren’t On Track For Retirement,” (Forbes, May 28, 2013)
401k account balances hit record in Q1,” (BenefitsPro, May 28, 2013)
Contributions to 403(b) plans rising,” (Employee Benefit News, May 28, 2013)
Six tips on managing your 401k plan,” (BenefitsPro, May 28, 2013)
The Search for Better Retirement Plans,” (, May 29, 2013)
Staying Ahead of the Curve – Trends in Plan Design,” (Employee Benefit News, May 30, 2013)
Ode to a retirement investor,” (BenefitsPro, May 30, 2013)
Enhanced Tools for 401k Investors,” (Wall Street Journal, May 31, 2013)

Wisdom from Some of Our Favorite Blogs:
ERISA Lawyer Blog: IRS Waives 60-Day Deadline For IRA Rollover, Since IRA Owner Did Not Receive 402(f) Rollover Notice |
The Chicago Financial Planner: Ignore These 5 Investing Lessons at Your Own Risk |
fi360: Fiduciary Links: Why SEC-DOL “Coordination” isn’t Good for Investor Protection |
Scholarly Financial Planner: Responding to Readers’ Questions re: DOL/EBSA’s Definition of Fiduciary Rule-Making |
The Chicago Financial Planner: Forget Retirement Seek Financial Independence | “Half” Baked? |

Hot Tips from Popular Web Resources:
NAPA Net: Retirement Tax Incentives Back on the Chopping Block? |
NAPA Net: More or Less? |
NAPA Net: DOL Gets Aggressive on Abandoned Plan of Bankrupt Company |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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