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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 10/18/13

October 21
00:25 2013

1020805_25983300_Trending_Topics_2013.10.21_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 Fiduciary Liability in a Multi-Vendor Environment,” (, October 15, 2013). The best interests of the 401k participants will always trump convenience and cost.

Compliance – Yin and Yang Strike Again:
While Washington continues to creep back to the socialist future, there are sparks of common sense in currently socialist California. But, is it real, or is it Memorex? Only your fine crystal knows for sure.
California town’s pension plight a lesson to others,” (BenefitsPro, October 14, 2013) Cities like Detroit can run but they can’t hide from reality. This is a cautionary tale, but a real-life one. We are fast closing in on an era of tough decisions.
4 Big Changes to 401k, IRA plans in Obama’s 2014 Budget,” (ThinkAdvisor, October 14, 2013) Just shows you how stupid Washington is. They’ll cut their nose off despite their face. These proposals will reduce government revenues in the long term.
Pension buyouts expected to surge — but not yet,” (Pensions & Investments, October 14, 2013) This mean you should expect even fewer private company pensions as interest rates rise. Surprised? You shouldn’t be. Who would want this potential liability on their books if they didn’t have to have it?
With debt ceiling near, employee benefits in the crosshairs,” (Employee Benefit News, October 16, 2013) Well, this article has a different take. It says to expect easier withdrawals because – voila! – it will raise taxes.
California Mayors Propose Public Pension Reforms,” (PLANSPONSOR, October 16, 2013) This is a rather interesting trend – if it does become a trend. Here we see elected officials making an effort to act responsibly with regard to future expenses. Let’s see how long it takes for the public employee unions to quash it.

Fiduciary – All Praise to the Almighty Dollar:
Despite premature reports of its death, the darn things still seems to be popular – and quite possibly the root of all that is evil in the fiduciary fight.
The 2 biggest causes of fiduciary liability in 401k plans,” (BenefitsPro, October 17, 2013) Pssst. We’ll give you a clue. Follow the money.
SIFMA squares off with SEC advisory group over fiduciary standard,” (InvestmentNews, October 17, 2013) Let’s see here, the Advisers Act of 1940 says brokers are exempt if their advice is merely “incidental.” But SIFMA says they can’t comply with the Advisers Act because it would break their business model, a model which they claim has been providing advice “for decades.” Well, it follows that if it’s incidental, then it’s not critical to the business model. Likewise, if it’s critical to the business model, it’s not incidental and therefore out of compliance with the Advisers Act. Which one is it?

Fees – Too Big Not To Fail:
It’s funny. The big companies’ foibles get all the headlines, it is the drip, drip, drip of small companies that, while individually not appearing to produce enough zeros to grab a headline, collectively can dwarf International Paper and Cigna combined.
Companies retool 401k plans after backlash,” (USA Today, October 11, 2013) This is all about the $30 million settlement against International Paper. It’s interesting only to see how the mass media fails (again) to identify the true significance of the event.

Investments – CrowdSourcing for Better Financial Advice:
Let’s see, who do you think would come up with a better idea: A panel of academic experts or the collective actions of veteran professionals? This is the hidden philosophy of social media, and why centralized planners and elite think tanks claim it merely a gathering of naïve hoi polloi. What they fear, they attack (q.v., the Tea Party).
Participants Favored Fixed Income in September,” (PLANSPONSOR, October 14, 2013) As they say, out of the frying pan and into the fire.
Americans need a simpler retirement system,” (MarketWatch, October 16, 2013) A lot of the same old recommendations here. It appears to another case of an academic with little to no real world experience relying too heavily on lab results, statistics and theory. She misses the obvious. The solution is not to recast the 401k in terms of the lowest common denominator, but to allow for a spectrum (or “tiers” or “categories”) of investor personae within the same plan. Now, here’s the real kicker. It’s already being done.

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.
Evensky’s 10 Tips for Retirement Success,” (, October 11, 2013)
Not your father’s retirement,” (Pensions & Investments, October 14, 2013)
Thinking ‘caps’,” (BenefitsPro, October 14, 2013)
The Challenge of Saving for Retirement,” (, October 15, 2013)
Retirement Readiness Takes Teamwork,” (PLANSPONSOR, October 15, 2013)
6 crucial 401k employee education tips,” (Employee Benefit News, October 16, 2013)
401k account balances nearly double since crisis,” (Crain’s, October 16, 2013)
ICI’s Stevens: Average 401k account balance makes strong recovery,” (Pensions & Investments, October 16, 2013)
Your 401k Education Presentation Should Include These Points,” (Employee Benefit Adviser, October 16, 2013)
Retirement No Longer An Exit from Workforce,” (PLANSPONSOR, October 16, 2013)
Is This Financial Planning Dinner Worth It?” (, October 16, 2013)
Plan Sponsors Doing Even More to Help Employees Save,” (PLANSPONSOR, October 17, 2013)

Wisdom from Some of Our Favorite Blogs:
fi360: Fiduciary Links: Plan Sponsor Considerations in Changes in Retirement Plan Income Options | Motive and Opportunity |
ERISA Lawyer Blog: Employee Benefits-IRS Provides Some Thoughts On Taking A Loan From A 401k Plan |
Employee Fiduciary: Innovative, Pizza, Take and Bake Revolution Comes to 401k Plans |
The Trust Advisor: How Robo-Advisors Are Changing The Wealth Management Playing Field |
Boston ERISA Law Blog: Thoughts on Oral Argument in Heimeshoff v. Hartford Life & Accident Insurance Co. |
The Trust Advisor: fi360 Acquires IPS AdvisorPro |
ERISA Lawyer Blog: Third Circuit Rules That Claim For Pension Benefits Under Theory Of Equitable Estoppel Fails |
Proskauer’s ERISA Practice Center Blog: Seventh Circuit Again Grants Class Certification In Excessive Fee Case |
Boston ERISA Law Blog: Cyber Insurance for Cyber Risks | Sooner or Later? |

Hot Tips from Popular Web Resources:
NAPA Net: Custom TDFs Can Highlight Advisor Value |
NAPA Net: DOL Asking Questions About Fiduciary Training |
NAPA Net: GAO: Automatic IRAs Would Increase Retirement Savings | Reality ‘Checks’: When DB Tops VE 401k  |
NAPA Net: Vanguard May Curb 401k Trading by Southwest Pilots |
NAPA Net: 2014 Plan Limits May Be Delayed |
NAPA Net: Is Outsourcing 3(16) Duties the Wave of the Future? |
NAPA Net: Selecting and Monitoring TDFs |
NAPA Net: Participants Open to Plan Design Improvements |
NAPA Net: Settlement of Largest 401k Excessive Fee Lawsuit Approved |
NAPA Net: PSCA Study: DC Plans Continue to Improve |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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