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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 1/17/14

January 21
00:03 2014

1020805_25983300_Trending_Topics_2014.01.21_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:
Wall Street’s Whipping Boy and a World Without a Fiduciary Standard,” (, January 14, 2014). Ron Rhoades explains how and why we lost the fiduciary standard and why that might be a good thing for bona fide fiduciaries.

Compliance – Wild Craziness!:
Read it all and absorb. Some of it might be good news, some might not. You decide.
Wall Street Watchdogs Target Bad Rollover Advice,” (Financial Advisor, January 9, 2014) This article is aimed at brokers. Apparently, both FINRA and the SEC will be targeting that group to ensure they aren’t giving conflicted advice to 401k investors looking to roll out into an IRA. Bear in mind, the textbook of financial planning generally advises ex-employees to take their money with them (either in the form of a IRA Rollover or by transferring it to the 401k plan of their new employer). That being said, most industry pros would recommend an IRA Rollover because it gives the investor more control over their assets.
Do Right by $3 Trillion Retirement Fund,” (Financial Planning, January 10, 2014) Here’s a really bad idea: Have the government start a “rainy day” savings fund and have the government run the investments. If we’ve learned anything from government management of state pension plans, this really gives too much power to people who seem to be prone to graft, cronyism and outright scandal. The article goes on to tell you more.
SEC takes deep dive on conflicts of interest,” (InvestmentNews, January 10, 2014) Again, brokers are in the target hairs. The SEC will be making wrap fees, IRA Rollovers and dual registration its top examination priorities in 2014. It’s interesting that the SEC will be enforcing the current fiduciary standard without saying there’s a uniform fiduciary standard. In reality, this is as it should be, but, given all the hoopla surrounding the fiduciary standard proposal, wouldn’t it be ironic if the world moves on without one, but merely enforces as it should have been all along?
Washington legislator pushes plan to put state workers on 401k plans,” (Spokesman Review, January 14, 2014) Whoa! This one’s coming out of left field – almost literally.
Washington bill offers $10K to workers who swap pension for 401k,” (BenefitsPro, January 14, 2014) OK, this adds a little more light to the situation. Apparently, the bill comes on the heels of a Boeing union agreeing to move from a defined benefit plan to a defined contribution plan. This union action apparently added to the momentum of doing the same with public workers. If you’re a member of some future generation, this is good news for you.
New Retirement Account: 51% of Workers Could Benefit from It,” (MainStreet, January 16, 2014) This is a really great idea. You wanna know an even greater idea? Some think you can do this right now.

Fiduciary – Killing Fiduciary Softly…:
…with politics. And lobbyists. And maybe it’s just time to throw in the towel and turn to the market.
House Democrats urge caution on DOL fiduciary-duty rule,” (InvestmentNews, January 14, 2014) Just as Ron Rhoades predicted in last week’s lead story in
Congressional Democrats Want Say In Fiduciary Definition,” (Financial Advisor, January 14, 2014) Wait! But, you just said…? What’s really going on?
Is the SEC about to pull an end run around the fiduciary standard?” (BenefitsPro, January 15, 2014) If true, this could be a brilliant strategy on the part of the SEC. You’ll have to read the article to find out what it is.
SIFMA Calls for Business-Model Neutral Fiduciary Standard,” (On Wall Street, January 16, 2014) And you would expect something else? The funny this is, the Fiduciary Standard is agnostic when it comes to business models. That is, it means “placing the clients’ interests ahead of anything else.” Any business model can conform to that. If a particular business model can’t than it cannot purport to offer its clients a fiduciary relationship. Simple as that.


Fees – More Silence:
Is it possible the health care debacle is crowding fee stories off the pages of the media?

Investments – New Products, Old Warnings:
How can investors be so dense? We’ve told them any number of times they’ve got to invest for the long-term. But they don’t. Wait. Maybe that’s our fault.
Variable Annuities Cases Surge in Arbitration,” (Wall Street Journal, January 8, 2014) Hmm,… let’s see, at least 220 investors have apparently discovered the bill of good they were sold on their annuities turned out not to be the case. Despite the significance of this surge in arbitration complaints, no one is holding back on trying to get more of them in retirement plans.
Retirement plan participants make more conservative investments,” (Employee Benefit News, January 17, 2014) Say, isn’t this exactly what the Pension Protection Act of 2006 was created to prevent? Worse, investing in bond funds right now, with interest rates poised to go up, is like giving a toddler a loaded gun to play with. What do they do to babysitters who make such irresponsible decisions like that? Once the downside risk of these bond funds becomes exposed, what fiduciary will be held accountable for giving 401k investors a loaded gun? The plan adviser? The plan sponsor? Both?

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.
Fidelity hit with another 401k lawsuit,” (BenefitsPro, January 10, 2014)
The 7 hottest 401k trends for 2014,” (BenefitsPro, January 10, 2014)
Can You Retire Comfortably In A Beach Community For Less Than $750 A Month?”  (Financial Advisor, January 13, 2014)
4 Excuses You Make to Avoid 401k Investing,” (, January 13, 2014)
Average 401k Loan Size Drops,” (Financial Advisor, January 13, 2014)
DOL Seeks Recovery of Pa Plan Assets,” (PLANSPONSOR, January 14, 2014)
Annual 401k plan education: 5 action items for participants,” (Employee Benefit News, January 14, 2014)
As More U.S. Workers Go Independent, A Retirement Time Bomb Is Ticking,” (Financial Advisor, January 13, 2014)
NBA, law firms, physician groups have most-generous 401k plans,” (Employee Benefit Adviser, January 15, 2014)
Retirement Plan Participants Must Prove Harm to Sue,” (PLANSPONSOR, January 15, 2014)
Retirement Is Not One Long Vacation,” (Financial Advisor, January 15, 2014)
Only one-third of employees consider retirement savings a priority,” (Employee Benefit Adviser, January 15, 2014)
Reps Petition DOL on Fiduciary Rule,” (PLANSPONSOR, January 15, 2014)

Wisdom from Some of Our Favorite Blogs:
fi360: Fiduciary Links: 401k trends for 2014 |
Squared Away Blog: Confidence Key to Retirement Planning |
fi360: Practice 1.4: Avoid or manage conflicts of interest |
The Trust Advisor: Having Good Reason to Do an IRA Rollover |
MainStreet: 401k Investors May Be Missing the Stock Market’s Record Performance |
The Chicago Financial Planner: Annuities On Trial! Is Your Annuity Guilty or Not Guilty? |
The Frugal Fiduciary: Great Free Retirement Readiness Tools to Help You Become Organized |
MainStreet: Retirement Accounts To Get Taper Boost | “Left” Overs |
MainStreet: Most Generous 401k Plans in America |

Hot Tips from Popular Web Resources:
NAPA Net: Arbitration Claims About Variable Annuities Surge |
NAPA Net: The Match is Back |
NAPA Net: Form 5500: Don’t Procrastinate! |
NAPA Net: Bonds Surge as DB Plans Look to Reduce Risk |
NAPA Net: Case of the Week: Status of DOL’s Fiduciary Rule |
NAPA Net: Passively Managed Investment Options More Popular Amid Fee Cutting |
NAPA Net: Camp Pushes Roth IRAs as Part of Tax Reform |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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