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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 1/10/14

January 13
00:03 2014

1020805_25983300_Trending_Topics_2014.01.13_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:
Compliance Headaches Coming for 401k Plan Sponsors Due to New Fiduciary Regs in 2014?” (, January 7, 2014). What might surprise you the most is how easily the industry will adapt to the new fiduciary guidelines.

Compliance – The Beginning of the End?:
What’s that we hear? Could it be the “drip, drip, drip” of the inevitable? No, it’s not the traditional January Thaw. It may be the beginning of the end of the public pension plan. For that matter, and ironic, as the rise in the market makes corporate pension plans safer, it also makes it easier for plan sponsors to get rid of them.
2014’s looking good for the pension industry. Unless…,” (BenefitsPro, January 6, 2014) OK, we admit this title fooled us. We expected the “unless” to talk about de-risking the pension by shifting the liability to employees either through lump sum payouts or conversion to 401k-type plans, or re-risking by selling the whole pension liability to some insurance company. Instead the article speaks of the typical bad things that can happen to pension plans, primarily investment related and primarily related to rising interest rates.
Washington to keep things hopping for DC plans in 2014,” (Pensions & Investments, January 6, 2014) It’s time to begin again our annual reenactment of the fiduciary version of “Waiting for Godot.” How long until they push the decision into 2015 is anyone’s guess.
Detroit manager freezes pension fund, creates 401k-type plan,” (Reuters, January 6, 2014) This is exactly the trend many are expecting to see regarding public employee retirement plans. The only question is whether it’s too late to make this transition.
Court sides with Cincinnati move to reduce retirees’ benefits,” (BenefitsPro, January 8, 2014) Again, as with Detroit, we’re seeing a move away from the Ponzi pension and towards the self-reliant defined contribution plan.

Fiduciary – One Way or Another…:
… the fiduciary bug will get you. The only question is: Will the government lead the charge or will the market itself be on the vanguard? We’ll have a much better idea by the end of the year.
Will 2014 be the year of the retirement advisor?” (BenefitsPro, January 8, 2014) This goes beyond mere predictions and describes the likely reactions of wire-house advisors, Registered Investment Advisers and plan sponsors in the event the DOL moves ahead (as expected) with its new Fiduciary Rule. Hint: It might not be what you think.

Fees – On Hiatus During the Football Players:
Or at least it seems that way.

Investments – Giving the People What We Want…:
…by making them think they want it. Heck, it worked for target-date funds, why not annuities?
Demand Is Growing for Retirement Income Products,” (ThinkAdvisor, January 6, 2014) The article alludes to growing demand, but we’re still not convinced where this demand is coming from.
The Problem with the Glidepath,” (, January 10, 2014) Oops! Industry experts have discovered yet another vexing problem that is sure to nag at the credibility of target date funds: they may be reducing equity exposure prematurely for most investors. Ironically, the PPA of 2006 – the very instrument that led to the ordination of TDFs as the “choice de jour” for 401k plans – was designed to discourage 401k investors from being too conservative in their 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.
401k balances grew across the board in past two years,” (BenefitsPro, January 2, 2014)
Social Security: Qualifications, Benefits and Milestones,” (Financial Planning, January 8, 2014)
Older Americans Shun Retirement at 65 for Risky Startups,” (Bloomberg, January 8, 2014)
401k investment adviser annual review: What plan sponsors should expect,” (Employee Benefit News, January 8, 2014)
Changing lens,” (BenefitsPro, January 8, 2014)
Employees tapping into retirement plans early,” (Employee Benefit News, January 9, 2014)

Wisdom from Some of Our Favorite Blogs:
Scholarly Financial Planner: The Magical Guiding Stone |
fi360: Fiduciary Links: FINRA wants you to focus on your clients |
The Chicago Financial Planner: My Fearless 2014 Investing Forecast |
ERISA Lawyer Blog: Second Circuit Rules That A Proposed Offset Is An Unreasonable Interpretation Of A Retirement Plan And Fails To Provide Notification In Accordance With ERISA |
The Chicago Financial Planner: How Does Your Financial Advisor Define Success? |
The Trust Advisor: A Solution To The IRA Required Minimum Distribution Blues |

Hot Tips from Popular Web Resources:
NAPA Net: Don’t Shoot the Messenger |
NAPA Net: DCIIA: Better Communication and Education Will Enhance DC Plans and Retirement Security |
NAPA Net: ‘Whether’ Forecasts |
NAPA Net: 2014: What Should Fiduciaries Expect? |
NAPA Net: Detroit Pension Freeze Delayed |
NAPA Net: Strong Funding May Add to DB Plans’ Demise |
NAPA Net: Hoosiers Missing the Mark |
NAPA Net: What to Look for in 2014 |
NAPA Net: Emerging Challenges to Glide Path Constructs |
NAPA Net: Benchmark Fees to Better Manage Plans |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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