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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 10/4/13

October 07
00:03 2013

1020805_25983300_Trending_Topics_2013.10.07_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:
Plan Sponsor Alert: Behavioral Finance Reframing Future of 401k,” (, October 1, 2013). It’s clear behavioral finance and economics studies will continue to define the leading edge of 401k design and implementation.

Compliance – The Dangers of Not Going Plain Vanilla:
This week we learn again what it means to take a chance. Plan sponsors have a lot of tough decisions to make. Sometime they get too cute by half. Plan sponsors of private retirement plans have increasingly decided to “swing for the fences” with a variety of alternative investments. These are sometimes tough to price and could cause problems in the future. Likewise, plan sponsors of public retirement plans have depended too long on their Ponzi Scheme methods. The piper is now calling.
Small Businesses Unlikely To Get More Retirement-Plan Tax Breaks, Says Congressman,” (Financial Advisor, October 2, 2013) There’s talk of raising the minimum deferral to 8% and eventually to 10%. There’s also mention that retirement plans might be more attractive to small business if the rigors of being a plan fiduciary are removed.
Chicago’s pension woes threaten city,” (BenefitsPro, October 4, 2013) Welcome to New Detroit. Amazingly, even as Illinois is trying to tackle this issue, a single judge has yelled “stop,” not at the wave of oncoming bankruptcy, but at the elected officials trying to stave it off.
Audit Faults EBSA for Inadequate Oversight,” (ThinkAdvisor, October 4, 2013) Seems like pricing Alts represents at least one of the problems.

Fiduciary – Is it raining?:
Did the SEC just water down the fiduciary standard while we were busy watching the government shut down?
Fiduciaries Consider Outsourcing of Certain Duties,” (PLANSPONSOR, September 30, 2013) A new research report indicated there’s a trend among plan sponsors to go with 3(38) or 3(16) advisers as they find their fiduciary duties have expanded so much they’re intruding on their business duties.
Controversy Over Fiduciary Definition Extends To IRA Rollovers,” (Financial Advisor, October 1, 2013) For years, Registered Investment Advisers have been prohibited from “double-dipping,” – i.e., charging a management fee on top of investing a client into a proprietary mutual fund. Brokers could double-dip. Is double-dipping fair to the investor? What’s more important: The broker’s business model or the investor?
SEC advisory-panel proposal calls for tough fiduciary standard,” (InvestmentNews, October 2, 2013) Well, we guess that means there’s a new standard for the word “tough.” As in, “watered-down.” It seems that a fiduciary who is a broker that would be allowed to engaged in the same sort of prohibited self-dealing transaction that a fiduciary who is an adviser is not allowed to engage in as long as the fiduciary who is a broker “discloses” said self-dealing conflict-of-interest is not really a “fiduciary” in the sense that we’ve always known “fiduciary.” Unless, of course, you mean to water down the definition of “fiduciary.” Well, here’s one good reason to cheer for the government shut down: It’s delaying moving forward on this plan to dumb-down “fiduciary.”
Shutdown Causes SEC Advisory Committee To Delay Vote On B-D Fiduciary Standard,” (Financial Advisor, October 2, 2013) Too funny. This thing has been hurry up and wait for so long, it makes you wonder of this new delay is just part of the original game plan.

Fees – Maybe, just maybe, it’s not all about the fees after all…:
…maybe, just maybe, it’s about something else. Something called “conflict-of-interest.”
Your 401k fees: High, or just normal?” (MarketWatch, October 3, 2013) On the heels of the record $30 million settlement against International Paper for failure to monitor fees, there’s renewed interest in this subject. The thing to remember about fees is this: It’s not so much how much they are, but how they’re paid.

Investments – MPT’ers hard at work on perplexing “problems”…:
…while those on the behavioral side are too busy providing practical solutions to notice.
TDFs shouldn’t be the only solution for 401k plans,” (Employee Benefit Adviser, September 27, 2013) Is it possible to be right for all the wrong reasons?
401k Annuities: If You Build it, Will They Come?” (Employee Benefit Adviser, September 30, 2013) Aye, there’s the rub!
Using behavioral finance techniques in 401k plans,” (BenefitsPro, October 3, 2013) This article is a operational example of how to use behavioral finance techniques to describe using behavioral finance techniques in 401k plans.
Pensions: Calpers embraces indexing,” (, October 3, 2013) Well, if you’re a contrarian, or if you don’t believe in Modern Portfolio Theory, then this might be of interest to you.

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.
In Retirement, More Could Be Less (And Vice Versa),” (Financial Advisor, September 27, 2013)
18% of the workforce could retire within five years,” (LifeHealthPro, September 27, 2013)
What Makes a Successful Retirement Plan? Advisors Disagree,” (ThinkAdvisor, September 27, 2013)
The Most Important Ratio in HNW Retirement Planning,” (ThinkAdvisor, September 30, 2013)
Retirement doesn’t have to be a dream,” (The Washington Post, October 1, 2013)
International Paper Pays $30 Million Over 401k Claims,” (Wall Street Journal, October 1, 2013)
More People Seek Retirement Help, Survey Says,” (Financial Advisor, October 1, 2013)
7 Ways to Blow Your Retirement Nest Egg,” (, October 1, 2013)
International Paper Files to Settle 401k Fees Suit,” (PLANSPONSOR, October 1, 2013)
Your retirement plan is now following you on Twitter,” (Crain’s Wealth, October 2, 2013)
Will 401k Benchmarks Put You Out of Business?” (, October 2, 2013)
International Paper to pay $30M to settle 401k lawsuit,” (InvestmentNews, October 2, 2013)
Bad Idea: Rolling a 401k Account into an IRA – Part II,” (Employee Benefit News, October 2, 2013)
Working With Divorced, Single or Widowed Women Retirees,” (On Wall Street, October 2, 2013)
Nebraska RIA Settles With SEC Over Fiduciary Duty Breach,” (Financial Planning, October 3, 2013)
Grill your adviser about retirement income,” (, October 3, 2013)

Wisdom from Some of Our Favorite Blogs:
fi360: Fiduciary Links: NASAA, SEC Tell Investors to Take Deeper Look at Advisor Titles |
Proskauer’s ERISA Practice Center Blog: Agencies Release Guidance on HRAs, FSAs, and Employer Payment Plans |
RetirementRevised: How delaying your Social Security filing can boost portfolio longevity |
ERISA Lawyer Blog: Fifth Circuit Rules That Plan Administrator’s Denial Of Claim For Death Benefits Must Be Upheld |
Boston ERISA Law Blog: The International Paper Settlement and the Continued Vitality of Excessive Fee Claims |
The Chicago Financial Planner: Some Stock Market Perspective amid the Government Shutdown | “After” Images |
Squared Away Blog: Compulsive Spender? Blame Your Parents |

Hot Tips from Popular Web Resources:
NAPA Net: Last Week’s Top 5 Posts on NAPA Net  |
NAPA Net: Excessive Fee Lawsuit Settled for $30 Million  |
NAPA Net: SEC Investor Advisory Committee Recommends Fiduciary Status for Broker Dealers  |
NAPA Net: Record Keeping Fees Hit New Lows   |
NAPA Net: Investment Lineups Adjusted in Anticipation of Rising Interest Rates  |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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