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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 6/21/13

June 24
00:02 2013

1020805_25983300_Trending_Topics_2013.06.24_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 with fi360’s Blaine Aikin: Competitive Forces Favor Fiduciary Standard,” (, June 18, 2013). Investors who understand the fiduciary standard demand it, and practitioners who fail to embrace it will find themselves at an increasingly competitive disadvantage.

Compliance – The Dark Side Consumes Washington:
Hmm, if Phylis Borzi is Obi-Wan Kenobi, who’s Luke Skywalker? Read below and you’ll see we’re falling into the usual trope when it comes to destroying an idea (in this case, the idea is the fiduciary standard).
Trone: Dodd-Frank A Horror; Fiduciary Movement Has Lost Its Way,” (Financial Advisor, June 18, 2013) Trone calls the legislation the “Doodle-Frankenstein Act.” He cites many familiar complaints about the Act and says (in another great line), “Too many rules are the bane to moral courage.” Dodd-Frank allows inefficiencies to go unpunished on account of “following the rules.”
Congress urges DOL to consider minorities in fiduciary definition,” (BenefitsPro, June 18, 2013) The race card? Seriously? How do they expect a rule which requires advisers to “always put the clients’ interests first” to have anything to do with the color of one’s skin. So much for MLK’s dream.
Fiduciary duty bill could kill DOL rule,” (InvestmentNews, June 19, 2013) Or not. Even it is passes, Phyllis Borzi insists she will plow ahead. The bill is expected to pass in the House and fail in the Senate.

Fiduciary – The Force Will Be With You:
The Jedi Knights at the DOL are doing their best, but where is the rebel alliance?
DOL’s Fiduciary Rules Will Come With Strong Economic Analysis, Exemptions,” (On Wall Street, June 19, 2013) It looks like Phyllis Borzi is armed with those academic studies we have incessantly referred to. You know the ones. They prove investors without fiduciary protection pay an enormous penalty (in real dollar terms). That’s good. But there will be exemptions. That’s bad.
Market forces ahead of regulators on fiduciary standard,” (BenefitsPro, June 20, 2013) If headlines are to be believed, there’s growing evidence fiduciary advisers will soon be saying, “Regulators? We don’t need no stinkin’ regulators!”
DOL to Hold Two Fiduciary Seminars,” (, June 21, 2013) If you’re anywhere near Fairfax,Virginia in early August or San Diego, California in late July, you’re in luck. If you’re not, well, you’ll just have to wait for the movie.

Fees – Wait for it…:
Once we hit the one-year anniversary, expect to see a plethora of stories. Well, maybe. There may be no “there” there.

Investments – The Clone Wars:
It’s not enough to insist “index funds or nothing,” now we’re learning something index funds are more equal than others.
Too Much Choice Can Be Positive and Negative for DC Participants,” (Employee Benefit Adviser, June 17, 2013) You’d think this would be about limiting choice, but, no, it’s about throwing more confusing choices on top of already confusing choices. This article is definitely written from the point of view of a sophisticated practitioner, not your typical 401k investor.
The missing bond funds in 401k Plans,” (CNN, June 17, 2013) Perhaps they’re not missing, as the article unknowingly alludes. Perhaps they’re being replaced by better options since, after all, bond funds are equities, not bonds. You knew that, but the person sitting next to you didn’t. That’s why we had to say it.
Overhaul of TDFs in the works,” (BenefitsPro, June 18, 2013) Again? How many times will this have to be done before they get it right? Or is that the whole point?
Are Your Participants Too Conservative,” (, June 18, 2013) They are if they’re overweighted in fixed income instruments. They’re the opposite if they’re holding alternative investments.
CalPERS switches to all-passive DC plans,” (InvestmentNews, June 19, 2013) A commitment to mediocre. Just remember the 00’s.
Busting the myth of manager diversification,” (InvestmentNews, June 20, 2013) We’ve known this for a long time. It’s called over-diversification.
Active or Passive Investing: Why Not Both?” (, June 20, 2013) Here’s a common sense approach that bypasses all the marketing literature and provides an honest assessment. The fact is, index funds beat active funds, unless active funds beat passive funds. In more direct language, each has its turn in the sun, and putting your eggs all in one basket may not be appropriate for a fiduciary.

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.
Plan Sponsors Look to Change Up Investment Menu,” (AdvisorOne, June 12, 2013)
More Retirement Savers Turning to Professional Advice: Vanguard,” (AdvisorOne, June 14, 2013)
Plan Your ‘Retirement Landing’,” (, June 18, 2013)
Security About Retirement Ticks Up,” (, June 18, 2013)
Participants Actively Move to Equities in May,” (, June 18, 2013)
Gen X Has Competing Financial Priorities,” (, June 18, 2013)
401k plan optimization generating maximum interest,” (InvestmentNews, June 19, 2103)
Plan sponsors to advisers: More, more, more,” (InvestmentNews, June 19, 2013)
How short-term thinking damages 401k plans,” (Employee Benefit News, June 19, 2013)
Today’s Economy May Make Tax-Deferred 401k Plans A Bad Deal,” (Financial Advisor, June 19, 2013)
Gen X most at risk to burn through retirement savings early,” (Employee Benefit Adviser, June 20, 2013)
DC Plan Participants Favor Target Date, International Equity Funds,” (On Wall Street, June 21, 2013)
Tax-Deferred investing Matters More Than Ever,” (, June 21, 2013)

Wisdom from Some of Our Favorite Blogs:
Boston ERISA Law Blog: Why the Complexity of Plan Valuation Argues Against Turning Appraisers into Fiduciaries by Regulatory Pronouncement |
Fred Reish: Managing Plan Costs |
fi360: Fiduciary Links: Bogle, Schweiss, Others All Chime in on Fiduciary Standard |
The Chicago Financial Planner: Trading vs. Investing – Which Do You Do? |
Scholarly Financial Planner: Does Wall Street Control Congress? What Can YOU Do – NOW? |
Squared Away Blog: Are You An Ostrich About Investing? |
The Chicago Financial Planner: Are Retirement Rules of Thumb Useful? |

Hot Tips from Popular Web Resources:
NAPA Net: Top 10 Record Keepers |
NAPA Net: Style Boxes Mean Nothing to Participants |
NAPA Net: ‘Like’ Minded? |
NAPA Net: Passive TDFs? Inconceivable |
NAPA Net: CITs Gain Momentum |
NAPA Net: House Panel Approves Fiduciary Definition Bill |
NAPA Net: Did Fee Disclosure Cause Fund Shifts? |
NAPA Net: 57 Different Flavors of Indexing |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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