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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 11/8/13

November 11
00:06 2013

1020805_25983300_Trending_Topics_2013.11.11_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:
Are 401k Plan Sponsors Poised to Cut a Popular Feature?” (, November 5, 2013). Company matching has long provided a turbo boost for employees saving in their 401k plans. With the advent of auto-enrollment, will such matching go the way of the once popular crossfire injection?

Compliance – “Lies, Damned Lies and Statistics”:
Mark Twain, who’s credited with the above quote, was certainly a man ahead of his time. So much of today’s ills can be described (and probably solved) with his homespun philosophy. For one thing, he had no fear of bankruptcy (it was a constant traveling companion of his). Well, maybe he did fear it (avoiding it was one of the reasons he was such a prolific writer and speaker), but at least he understood its place in one’s life.
How About Forever? Does That Work for You?” (PLANSPONSOR, November 5, 2013) No, we’re not talking about how long you’ll have to work. The article talks about the reasonable amount of time plan sponsors should keep relevant plan documents. It poses a sensible question.
GAO finds conflict, confusion in pension disclosure rules,” (BenefitsPro, November 6, 2013) Here’s a surprise, the government is telling retirement plan sponsors to go every which way but loose. The result: Participants looking at their electronic statements may not get all the information they should.
Many Oppose Tax Changes for Retirement Vehicles,” (PLANSPONSOR, November 7, 2013) It’s too bad people weren’t feeling this way about their medical insurance five years ago. If nothing else, ObamaCara (a.k.a. ACA) has shown people how scary it might be for the government to take over, uh, anything.
Corporate Pensions Ecstatic Over Funded Ratio, Returns,” (DCDB Daily, November 8, 2013) Before you get too excited, they’re still a 100 billion dollar shortfall.

Fiduciary – “Let My Fiduciary Go!”:
Moses didn’t really demand this of Pharoah, but it’s kinda cool to think it’s consistent that he might have. It makes on appreciate Charleton Heston even more. Hmm, we’re just wondering how he would handle the parting of the Red Sea of Ink (see above).
Uniformity = Mediocrity,” (Financial Advisor, November 1, 2013) Don’t really know the point of this one, other than to introduce a term called “steward” which the author positions above “fiduciary.” Since a trustee is generally considered a steward of the beneficiaries assets and since the author refers to fiduciaries and trustees as being one in the same, things tend to get a little confusing.
4 Things for Fiduciaries to Consider With IRA Rollovers,” (ThinkAdvisor, November 1, 2013) The issue of who’s allowed to pitch for IRA rollovers when you’re a plan fiduciary has come up a lot recently. There seems to be an obvious answer, but we don’t agree. The issue represents a classic split-interest trust problem. In other words, there may be no “correct” answer right now, although future case law may define one.
Let the DOL act on fiduciary,” (InvestmentNews, November 3, 2013) Here’s an editorial that pulls no punches when it comes to overt political – er, sorry, we meant “mindless” – meddling in regulatory affairs.
SIFMA Launches Investor First Initiative; CEO Gregg Says SEC Should Go First on Fiduciary,” (ThinkAdvisor, November 7, 2013) We already knew this. Nothing really new in this report.

Fees – In Search of Schrödinger’s 401k:
“The Measurement Problem” gnaws at those studying quantum physics. In a nutshell, if something is either X or Y and you measurement for X, that something is determined to be X. If you measure that same something for Y, then that same something is determined to be Y. You can recall this as the paradox of Schrödinger’s Cat, which, according to quantum physics, can be both dead and alive at the same time – at least until you measure whether or not it’s dead or alive. This is the same superposition of states that occurs with 401k fees. They are both too high and reasonable at the same time. If you measure them under the assumption they are too high, they will be determined to be too high. If you measure them under the assumption they are reasonable, they will be determined to be reasonable. Let’s take solace with what Schrödinger said of the problem he helped discover: “I don’t like it, and I’m sorry I ever had anything to do with it.” Wait. Was that Schrödinger about his cat or Obama about his ObamaCare?
Brits May Cap Retirement-Plan Fees, Should We?” (Bloomberg, November 7, 2013) Apparently the conservatives in the British government want to cap retirement plan fees at 75 basis points. The article doesn’t make clear if this includes mutual fund expense ratios or why the folks supposedly representing the free market have decided to thwart the free market. The article also doesn’t explain how this would help smaller plans.
Fee Management Issues Important to DC Plans,” (PLANSPONSOR, November 7, 2013) The article contains several good tips for handling 401k fees. Among them, get separate quotations for recordkeeping fees (which are generally a function of the number of participants) and investment management (which are generally a function of asset size).

Investments – “An Investment in Knowledge Pays the Best Interest.”:
Ben Franklin said a lot of things, and if he didn’t then Mark Twain did. Well, ol’ Ben said that particular diddy, so we guess all those pennies saved failed to offer a yield that surpassed that of knowledge. The theme of knowledge pervades this week’s articles.
Index vs. actively managed funds: It’s not all about price,” (InvestmentNews, November 5, 2013) This is a very good article that avoids the often controversial topic of which style is better from a performance standpoint. Instead, it focuses on fees and objectives. In doing so, it suggests there may be more to index funds than investors suspect – and investors better be aware of them.
Why 401k investors are thankful for behavioral finance,” (Benefits Selling, November 1, 2013) It’s all about taking the intimidation out of investing.

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.
Planning for a Part-Time Retirement,” (Financial Planning, November 1, 2013)
4% Limits,” (Financial Advisor, November 1, 2013)
Consultant: Retirement industry itself to blame for poor image,” (BenefitsPro, November 4, 2013)
Suit by Retired Pilots Against PBGC Dismissed,” (PLANSPONSOR, November 5, 2013)
Stern Advice: How 401k lawsuits are bolstering your retirement plan,” (Reuters, November 5, 2013)
Preparing for Spending in Retirement,” (PLANSPONSOR, November 5, 2013)
The 7 Attributes of Successful 401k Plans,” (Employee Benefit Adviser, November 6, 2013)
Boom in Demand for 401k Advisors,” (ThinkAdvisor, November 6, 2013)
Turbo-charging your 401k,” (BenefitsPro, November 6, 2013)
How To Stop Being Scared About Retirement Saving,” (, November 6, 2013)
Positive Messaging Can Empower Participants,” (PLANSPONSOR, November 7, 2013)
MassMutual employees file suit against employer over management of 401k,” (InvestmentNews, November 7, 2013)
More Realistic Retirement Expectations Needed,” (PLANSPONSOR, November 7, 2013)
Planning For Non-Retirement,” (, November 8, 2013)
DOL Sues Firms for Plan Administration Failures,” (PLANSPONSOR, November 8, 2013)

Wisdom from Some of Our Favorite Blogs:
fi360: Fiduciary Links: Other People’s Money |
The Chicago Financial Planner: Financial Planning: The Power of Questions |
MainStreet: Forced Early Retirement: How to Manage It |
RetirementRevised: Retirees get a slim COLA boost next year |
Boston ERISA Law Blog: AAA Arbitrations Now Include an Appeal Process for Complex Commercial Disputes |
MainStreet: Automatic-Enrollment 401k Plans Have This Danger |
Frugal Fiduciary: Mandatory 401k Participation? |
MainStreet: 401k Boost by 23.5% |
Business of Benefits: A Regulatory and Fiduciary Framework for Providing Lifetime Income from Defined Contribution Plans |
fi360: Anatomy of a Fiduciary Vote |
Pension Risk Matters: Probing Pension Advisers For Possible Conflicts of Interest | Connecting the Dots |
The Chicago Financial Planner: Five 401k Investing Tips for This or Any Market |

Hot Tips from Popular Web Resources:
NAPA Net: The Perils of Rollovers for Plan Advisor Fiduciaries |
NAPA Net: ‘After’ Images |
FRA PlanTools: Breaking: New Excessive Fee Case Filed By MassMutual Employees |
NAPA Net: No Pension Cuts in Stockton Bankruptcy Settlement |
NAPA Net: Reader Poll: Impact of Fee Disclosure |
NAPA Net: Best Practices: Monitoring and Negotiating DC Plan Fees |
NAPA Net: Survey: Retirement Savings Should Be ‘Off Limits’ |
NAPA Net: Building and Running the Ideal Investment Committee |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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