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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 1/31/14

February 03
00:03 2014

1020805_25983300_Trending_Topics_2014.02.03_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:
Bad News Bonds Could Increase 401k Fiduciary Liability,” (, January 29, 2014). What can 401k plan sponsors do to help prevent employees from getting hurt by the coming bond crash?

Compliance – The President Speaks…:
…and a brief moment of hope changes into a maelstrom of “Oh, no. Not again.”
Warning on IRA Rollovers: Regulators to Scrutinize Suitability,” (ThinkAdvisor, January 27, 2014) Both the SEC and FINRA have set their sights on advisors who recommend clients rollover 401k into IRAs. This might sound like a good idea, except, well, darn it! – there’s that “suitability” word again. Let’s ask the question another way, if an bona fide fiduciary recommends the client rollover 401k money into a private IRA, are there any circumstances when the client shouldn’t? Remember, this is a bona fide fiduciary making this recommendation.
Illinois unions sue to stop $100 billion pension funding fix,” (BenefitsPro, January 28, 2014) Hmm, what’s more unconstitutional? A law that guarantees bankruptcy, saddles debt to the next generation for benefits paid to this generation and, ultimately, leads to a poorer state economy? Or… A law that reverses the previous law?
Retirement industry feels both pleased, attacked by Obama,” (Employee Benefit Adviser, January 29, 2014) If there’s any doubt how far Obama’s stock has fallen, read this article to see how normally staid leaders of professional societies light into him. Of course, they have good reason to, as they rightly explain.
Obama offers retirement savings plan for workers lacking 401k,” (BenefitsPro, January 29, 2014) It’s an interesting idea, although it doesn’t go as far as 401k 2.0 (originally published in on December 7, 2010). In this reporter’s eyes, it would seem Obama’s creating a needless bureaucracy were tweaking the existing rules should be adequate enough.
Obama Unveils Retirement-Savings For Workers Lacking 401k,” (Financial Advisor, January 29, 2014) No, this is not a typo. This is one of those rare instances where “the story writes itself.” This often leads to headlines that appear remarkably similar.
SEC to Keep Close Eye on Advisors Who Are ‘Highly Successful’ at Rollovers,” (ThinkAdvisor, January 29, 2014) Apparently the original article did so well (see top of the pile) the publisher decided to repurpose and rerun it here.
Obama Retirement Plan More Limited Than 401k Benefits,” (Bloomberg, Janaury 29, 2014) Oops! Seems like there’s a few kinks in the system.
After MyRA Unveiling, Obama Still Gets Mixed Reviews on Retirement,” (ThinkAdvisor, January 29, 2014) The more folks peel back the specifics on the MyRA, the more ridiculous it looks. Could this be the one issue that finally unites an already fractured (due to the Fiduciary Standard controversy) industry against a common enemy?
Obama s new MyRA Plan Draws Praise, Scorn,” (Financial Planning, January 29, 2014) More piling on.
MyRA proposal seeks to solve problem that doesn’t exist,” (Employee Benefit News, January 29, 2014) It’s official. The MyRA proposal is DOA.
Obama MyRA proposal unlikely to boost retirement savings,” (Los Angeles Times, January 29, 2014) As they say in Hollywood, “That’s a wrap!” When the LA Times pooh-poohs it, you know it’s time to stick a fork in it.
Did Obama speech slam the 401k market?” (BenefitsPro, January 30, 2014) Double Hmm, looks like people are starting to understand the deeper intent of the President.
The trouble with Obama’s myRA plan,” (MarketWatch, January 31, 2014) Chuck Jaffe hammers the final nail in the coffin.

Fiduciary – It’s Really, Really, Hard”:
‘nuff said.
SEC’s Piwowar talks fiduciary, money fund reform,” (InvestmentNews, January 27, 2014) It’s going to be “really, really, hard” he says. Really?

Fees – Round Up the Usual Suspects:
In a moment of peak frustration, the words mostly like to be heard are “You have got to be kidding me!” We’re not saying we’re hearing them now, but… we’re hearing them now.
How To Boost Your 401k Savings Simply By Changing Funds,” (Forbes, January 24, 2014) Actually, you don’t have to change funds, you just have to change the class of your fund. That is what this article is about. It’s about the advantages of hiring a fiduciary consultant you can identify lower cost classes of the same fund. This isn’t about the expense ratio, it’s about loads, commissions and 12b-1 fees that are over and above the fund’s expense ratio.
Public enemy No. 1 for 401k profiteers,” (InvestmentNews, January 26, 2014) Again, this isn’t just about fees in general, it’s only about those excessive fees brought about by carelessness in the due diligence process. Specifically, this means failing to vet conflicts-of-interest. Too bad these 401k plan sponsors didn’t hire those fiduciary consultants recommended in the above article.

Investments – Back to the Future:
We don’t like retirement investors investing in bonds… so let’s offer them a plan that invests solely in bonds. As they say, the ten most feared words are “Hi! I’m from the government and I’m here to help!”
Barack’s New Bond Fund,” (Wall Street Journal, January 30, 2014) Didn’t we just have a series of reports showing how retirement investors are too conservative and the problems arising from that?
It’s Time To Let 401k Holders Invest Like the Pros,” (Wall Street Journal, January 30, 2014) Here’s the problem with investing like the pros – most people don’t need to. This article is all about alternative investments. As the Yale endowment proved during the credit crisis, what goes up must come crashing down. Why can’t we teach people to be satisfied with the results of the tortoise, rather than urging them to run like the hare?

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.
Behavioral techniques goosing retirement savings,” (BenefitsPro, January 24, 2014)
10 Tips for a Successful Rollover: FINRA,” (ThinkAdvisor, January 27, 2014)
DOL SEC Reach Settlements with Western Asset Management,” (PLANSPONSOR, January 27, 2014)
More Retirees Are Helping Adult Kids,” (Financial Advisor, January 29, 2014)
Considerations for Outsourcing Fiduciary Duties,” (PLANSPONSOR, January 29, 2014)
What If Retirement Security Is Not About The Money?” (Financial Advisor, January 29, 2014)
Employees Not Braking for Lunch,” (PLANSPONSOR, January 29, 2014)
Participants Seeking Retirement Income Guarantee,” (PLANSPONSOR, January 29, 2014)

Wisdom from Some of Our Favorite Blogs:
FiduciaryPath: Does SIFMA Seek to Protect Model Where Client Serves the Broker, Not Fiduciary Model Where Broker Protects the Client? |
FiduciaryPath: Fiduciary Weekend Round Up 1.25.14 |
The Chicago Financial Planner: Shake-Up at PIMco – Should Investors Care? |
fi360: Fiduciary Links: What investors need to know about rollovers |
The Chicago Financial Planner: The Super Bowl and Your Investments |
Behavior Gap: Tactical Asset Allocation: Market Timing By Another Name |
Pension Risk Matters: Pensions, Politics and the ERISA Fiduciary Standard |
Squared Away Blog: TV’s “Shameless” Takes on 401k plans |

Hot Tips from Popular Web Resources:
NAPA Net: Callan: Expect Lower Fees and Fewer Proprietary TDFs |
NAPA Net: Graff Warns of Potential Damage to DC Plans |
NAPA Net: IRS: Inadequate Plan Amendments, Fidelity Bonding Top DC Plan Issues |
NAPA Net: DOL and SEC Settle Case with Western Asset Management |
NAPA Net: President Attacks Tax Incentives for Retirement |
NAPA Net: Newest SEC Commissioner Questions Efficacy of Uniform Fiduciary Rule |
NAPA Net: Illinois Unions Sue State, Challenging Pension Reform |
NAPA Net: Price-Weighted Indices: An Accident Waiting to Happen? |
NAPA Net: Employer Mandate Key to Harkin Plan |
NAPA Net: Treasury Secretary Touts ‘MyRAs’ |
NAPA Net: Plan Sponsors’ New 3-Part Role |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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