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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 11/22/13

November 25
00:04 2013

1020805_25983300_Trending_Topics_2013.11.25_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: Industry Veteran Greg Carpenter Draws a Line Against Too Much 401k Paternalism,” (, November 19, 2013). “If you’re comfortably middle class, you can make the 401k work as a retirement vehicle.”

Compliance – More From Fram:
They used to run them during football games – all of them, not just the games on Thanksgiving – all the time. For those of you who don’t get it, Google “Famous Fram Oil Filter Advertisement.” You can do it now, or you can do it later.
Why an all-Roth 401k system is a bad idea,” (MarketWatch, November 18, 2013) We’ve mentioned this plenty of times before, but it’s interesting that even those who want to change 401k plans into pension plans also recognize the short-term tax thinking going on in Washington.

Fiduciary – Turkey Call:
Nine out of ten turkeys voice strong opposition to the celebration of Thanksgiving. Ever wonder why?
Advisor Opposition to DOL Fiduciary Revamp Still Strong: Poll,” (ThinkAdvisor, November 18, 2013) One thing the article leaves out is that this poll was taken among brokers. It may have therefore tilted the results a bit. It would have been interesting to see a breakdown by RIA’s who are not dual-registered, dual-registrants and brokers who are not dual-registered. There’s no indication this poll covered all three classes.
SEC committee to vote on fiduciary plan,” (BenefitsPro, November 19, 2013) The vote would have occurred on October 10th had it not been for the government “shutdown.” Seems to us, if you’re getting paid for not working, it’s a vacation, not a shutdown. In either case, any real organization would have found the way to get the job done regardless of outside obstacles. That is, if they really wanted to get the job done.
SEC Panel Approves RIA Fee, Uniform Fiduciary Proposals,” (Financial Planning, November 22, 2013) And so it begins.
Advisory panel calls on SEC to move fiduciary duty to front burner,” (InvestmentNews, November 22, 2013) No response from the SEC regarding its culinary priorities.

Fees – Have We Had Our Fill?:
At the end of the never-end feast, we sit back, completely sated, wondering if we’ll ever have room for pie. With the dearth of relevant articles, does this mean we’ve had our fill of fees? Or have we left just enough space of mind for the politically incorrect truth. Stay tuned.

Investments – Empty Carbs or Vital Protein?:
Is all this white noise or is it critical data? What’s real scary is that only your barber knows for sure. And that’s a sure sign of a market high.
What Pension Plan Managers Know that Investors Need to Learn,” (MainStreet, November 18, 2013) It’s about having the discipline to buy low and sell high.
Grantham: Emperor Fama Has No Clothes, Shiller Does,” (Financial Advisor, November 18, 2013) A must read for anyone who still thinks Modern Portfolio Theory has any credibility.
All-ETF 401k Plans Showing How Less Can Be More,” (Forbes, November 19, 2013) Or it could be less, depending on what statistics you believe. To wit: Do Index Funds always outperform actively managed funds? For the first ten years of this century they didn’t – to the tune of a 50% difference in growth. That means folks in the average actively managed fund were at least 50% ahead of their counterparts at the end of those ten years. That’s a lot to make up.
Increase Stock Allocations In Retirement? Maybe, Maybe Not,” (Financial Advisor, November 19, 2013) One thing is clear, retirees need a stock component in their portfolio. The only question is how much. The article describes a neat little behavior finance trick that we’ve seen work wonders.
Advisors Can Help 401k Sponsors Target The Right Target-Date Fund,” (Financial Advisor, November 20, 2013) Investors have voted overwhelmingly with their dollars that they like the concept of a self-rebalancing fund (maybe that’s a better name for this category of funds). What confuses them, however, is the significance of the date attached to the fund. In the real word of investors, the “date” in the target date fund have no meaning; therefore, no value. It often takes a professional who can wade through the various disclosures in the TDF’s annual filings to determine exactly what the TDF means to an investor.
The Glidepath Illusion… and Potential Solutions,” (The Journal of Retirement, Fall 2013, Vol. 1, No. 2: pp. 13-28) Here it is, all wrapped up with a bow on it: All you’ll ever want to know about what is wrong with target date funds. Here’s a more interesting question, though: Do you agree the solutions are actually workable?
The Truth About Annuities,” (Financial Advisor, November 22, 2013) A quick read from an industry insider describing the pros and cons of annuities.
Too Many Choices,” (Investment Advisor, December 2013) This is a very thorough and comprehensive article that explains the problem of so many 401k plan menu options – there are too many choices.

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.
Court OKs Asset Restoration for Mass Plan,” (PLANSPONSOR, November 18, 2013)
More Americans opting for partial retirement,” (BenefitsPro, November 18, 2013)
Boomers Risking Retirement By Acting as ‘Family Bank’,” (, November 18, 2013)
Health Care Expense In Retirement Is Biggest Concern For Those Over 50, Survey Finds,” (Financial Advisor, November 19, 2013)
8 misperceptions about 401k plans,” (Employee Benefit News, November 19, 2013)
Wealthy Baird Clients Question SS Benefits,” (Financial Advisor, November 20, 2013)
Don’t Stop Investing After Retirement,” (, November 20, 2013)
Decoding your 401k plan’s ridiculous jargon,” (MarketWatch, November 21, 2013)
Chesapeake Stock Drop Suit Dismissed,” (PLANSPONSOR, November 22, 2013)
Don’t Stop Investing After Retirement,” (, November 22, 2013)
Companies Beef Up 401k Retirement Plans,” (, November, 30, 2013)

Wisdom from Some of Our Favorite Blogs:
fi360: Fiduciary Links: Self-Dealing Takes on New Meaning with Novel IRA Investment |
MainStreet: Why Your Retirement Is in Peril |
Frugal Fiduciary: Schwab’s CEO embraces passive management. And Fidelity confirms a trend. Tipping point? |
The Chicago Financial Planner: 7 Reasons to Consider Selling a Mutual Fund |
Proskauer’s ERISA Practice Center Blog: District Court in Tenth Circuit Adopts Presumption of Prudence |
MainStreet: Retirement Savings Secret Financial Advisors Don’t Tell Clients |
fi360: Practice 1.2: Follow governing documents  |
MainStreet: Retirement’s Unexpected Crisis |
The Chicago Financial Planner: New Stock Market Highs: It’s Different This Time Right? |
Scholarly Financial Planner: A Thanksgiving Mystery: The Tale of the Cake Corner Thief |
Scholarly Financial Planner: Is Ken Fisher Correct? Will RIAs Disappear? |

Hot Tips from Popular Web Resources:
NAPA Net: More Advisors Oppose DOL Fiduciary Rule |
NAPA Net: Most Participants Misuse TDFs |
NAPA Net: ‘Great Rotation’ Muted by Pension Fund Demand |
NAPA Net: Higher Education Institutions Consolidating Retirement Plans and Features |
NAPA Net: Case of the Week: How and When Should Plan Sponsors Use Forfeitures?  |
NAPA Net: Sen. Warren and WashPo Call for Expanding Social Security |
Ivins, Phillips & Barker: 401k Investment Committee Topics |
NAPA Net: Beyond TDFs – LDI? One Advisor Thinks So |
NAPA Net: Tips for Preparing for a Plan Audit |
NAPA Net: Time to Reboot 401k Jargon |
NAPA Net: What Should a Plan Committee Member Bring to the Table? |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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