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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 1/24/14

January 27
00:05 2014

1020805_25983300_Trending_Topics_2014.01.27_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 with Investor Advocate Kathleen McBride: SIFMA Seeks to Protect Business Model Where Client Serves Broker, Not the Fiduciary Model Where the Broker Protects the Client,” (, January 22, 2014). “There’s a relatively simple solution to this. Eliminate the broker-dealer exemptions and the ERISA exceptions.”

Compliance – Creative Accounting:
Is it bribery, loss prevention or just creative accounting? Only your legislator knows for sure.
Would You Take $10K to Swap Your Pension for a 401k?” (ThinkAdvisor, January 15, 2014) This is all about an idea being floated in Washington State. It’s novel. It’s leading edge. It solved the problem. It’ll probably never get anywhere.
DOL set to take a look at ‘brokerage windows’ in 401k plans,” (InvestmentNews, January 22, 2014) This is the wild west of the 401k world. The DOL fears its rife for abuse. Not that it’s saying there is any. It just wants to head any trouble off at the pass.
Detroit offered $350 million to ease pension cuts,” (BenefitsPro, January 23, 2014) Here’s a bribe to prevent Detroit from finally fixing its problem. Let’s see if they take it.

Fiduciary – Regulatory Due Diligence:
Perhaps regulators should just step back and reassess their primary responsibilities. Are they to the industry they regulate or are they to the citizens who interact with those industries?
SIFMA Fears New DOL Rules Could Hurt Brokers,” (Financial Advisor, January 20, 2014) That may very well be true, but it’s also irrelevant. Why? Because, the headline could have easily read “DOL Happy to Report New Rule Could Help Investors.” As a regulator, you have a fiduciary duty to do what? Promote the industry you’re regulating or protect the costumers of the industry you’re regulating?
Why can’t a broker act more like a broker?” (BenefitsPro, January 23, 2014) In the play My Fair Lady, Professor Henry Higgins asks “Why can’t a woman be more like a man?” By the end of the second act, he finds out. Will the brokerage industry survive long enough to give itself a second act? This article gives a clue as to why it probably won’t.

Fees – Wherest arest Thee?:
Nowhere to be found, that’s where. So long and thanks for all the fish. We’ll bring you the next time some innocent schmuck of an idea needs to be raked over the coals.

Investments – Beware Bonds:
Cue to Peter, Paul and Mary and their song “Where Have All the Flowers Gone?” (Or, more appropriately for the above paragraph, “Where have all the fees gone?” or, for this section, “Where will all the bonds go?” When will they ever learn? When WILL they ever learn?
Study: Retirement Savers Have Dangerous Lack of Bond Knowledge,” (Financial Advisor, January 21, 2014) Well, well, well. It’s taken a study to show what many financial professionals already know: “plain folk just know nothin’ ‘bout investin’ in bonds.” At a time when bonds are perhaps their most dangerous, too many investors see them as 100% guaranteed safe. That ain’t a good thing.

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.
Consider Generational Needs for Employee Financial Education,” (PLANSPONSOR, January 15, 2014)
How the IRS Can Ruin Your Retirement,” (ThinkAdvisor, January 17, 2014)
Why Is the 401k Industry Getting Such a Bad Rap?” (ThinkAdvisor, January 21, 2014)
Peer Pressure Could Help Raise Deferral Rates,” (PLANSPONSOR, January 21, 2014)
Social Security And 401k Can Replace 60% Of Income,” (Financial Advisor, January 22, 2014)
Social Security 401k Savings Could Sustain Retirement,” ( January 22, 2014)
Retirement prospects are fairly good for people with 401k plans,” (Los Angeles Times, January 22, 2014)
Most don’t borrow from their 401k accounts,” (BenefitsPro, January 22, 2014)
Retirees Should Think About Spending Needs, Not Assets,” (Financial Advisor, January 23, 2014)
Andrew Biggs and Sylvester Schieber: Retirees Aren’t Headed for the Poor House,” (Wall Street Journal, January 24, 2014)
Firms Are Successors for Multiemployer Plan Liability,” (PLANSPONSOR, January 24, 2014)
Which IRA Is Best for You: Roth or Traditional?” (, January 24, 2014))
Using Technology to Communicate to Participants,” (PLANSPONSOR, January 24, 2014)

Wisdom from Some of Our Favorite Blogs:
The Chicago Financial Planner: Six Things Your Divorce Attorney May Not Tell You |
fi360: Fiduciary Links: Odds Raised Slightly SEC Will Knock on Your Door This Year |
ERISA Lawyer Blog: Employee Benefits- IRS Issues a Checklist For SEPs |
Squared Away Blog: Retirement Delayed to Pay the Mortgage |
Boston ERISA Law Blog: Tick Tock, Tick Tock, Pay Attention to the Clock: The Importance of Procedural Timing Issues in ERISA Litigation |
Behavior Gap: The Trap of Too Many Choices | Safety “Net” |
MainStreet: Social Security Goes Digital Along With Everything Else |
Frugal Fiduciary: New Year Be a Better Fiduciary, Small Business 401k Plan |

Hot Tips from Popular Web Resources:
NAPA Net: Retirement Income Projections Not a Panacea |
NAPA Net: Case of the Week: Retirement Plan Tax Credits |
NAPA Net: The ‘Cost’ of the Retirement Tax Deferral to Increase 18%, CRS Projects |
NAPA Net: FINRA Rollover Notice Causing Upheaval for Broker Dealers |
NAPA Net: Fiduciaries, Know thy Duty |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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