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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 2/21/14

February 24
00:10 2014

1020805_25983300_Trending_Topics_2014.02.24_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: Treasury Senior Advisor Mark Iwry Explains the Early History of the 401k and Where We Might be Heading,” (, February 19, 2014). The DOL might get all the press, but the IRS has played – and continues to play – a significant role in the evolution of the 401k.

Compliance – Moving Forward Now:
Iteration for iteration sake yields nothing but stagnation. Continuous improvement, though, is an ideal long in need of pursuit. Therefore, it’s one thing to question bad practices, but unless the questions are meant to universally eliminate those bad practices, the process is useless. This week’s stories highlight progress, not process.
4 reasons the feds are examining company stock in 401k plans,” (Employee Benefit News, February 19, 2014) It’s all about fiduciary duty. Read it and weep. You should know this already.
Move to 401k-style retirement clears Okla. Senate,” (News OK, February 19, 2014) The movement away from pensions and towards self-responsibility continues.

Fiduciary – Blah, Blah, Blah:
If you like talk, you’ll love this week’s stories. If you like action,… uh,… we’ll be right back after these messages.
Changes Afoot in Washington Well Ahead of Midterm Elections,” (InvestmentNews, February 14, 2014) One of the leading advocates for the fiduciary standard has left his post as chairman of the relevant committee to take up the same position for a committee that heads up, among other things, American Indian affairs.Does this mean anything? Who knows? It’s Washington.
SEC’s White: Fiduciary Rule’s Fate to Be Decided This Year,” (ThinkAdvisor, February 21, 2014) Don’t get too excited. By “fate” they mean whether or not they will continue to talk about it.

Fees – Maybe they Forgot?:
There’s been a long silence on fees. It’s possible those intent on confusing the issue hope this silence may have allowed people to forget the real issues. We don’t think so.
The failure of fee disclosure regulations,” (Employee Benefit Adviser, February 18, 2014) How much more can be said that hasn’t already been said? This is why we’ve seen a dearth of articles on the subject. The consensus is that fee disclosure has failed. So, what’s the next step?
Would Banning Investment Commissions Resolve Conflicts of Interest?” (MainStreet, February 19, 2014) Normally this would fall under the “Blog” category, but we just had to say “Ignore this post.” It address a non sequitor point. No one is suggesting eliminating commissions for brokers. We’re only saying to go back to the old standard and prohibit transaction-based fees (of which commissions represent but one). No disclosure, just eliminate them. If people want these investments, they can buy them from brokers like they used to.
SEC says investors need to know more about fees,” (InvestmentNews, February 20, 2014) Hmm, talking about coming to the party late… Has the SEC finally read what the DOL has been working on the past five years? Worse, will it make the same mistakes and relying on disclosure instead of simply outlawing the most obvious conflicts-of-interest?

Investments – Kids will be kids…:
There’s a reason why older, more experienced people tend to be viewed as smarter. They are. This article merely proves this adage.
Millennial investors shun stocks, survey says,” (InvestmentNews, February 19, 2014) Ah, to be young and foolish… It never seems to go out of style. That being said, this is probably more of a statement on national pessimism than on financial (if not mathematical) illiteracy.

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 and IRA accounts holders take out as much as 45 percent prematurely,” (BenefitsPro, February 14, 2014)
Why 4% May Be A Sustainable Withdrawal Rate,” (Financial Advisor, February 14, 2014)
Retiring Workers Lack Planning For Use Of Savings,” (Financial Advisor, February 18, 2014)
Creating ‘Aha’ Moments In Retirement,” (Financial Advisor, February 19, 2014)
Top 1% of plans hold more than 71% of all 401k assets,” (LifeHealthPro, February 19, 2014)
Good Luck Saving For Retirement With A 401k,” (Financial Advisor, February 19, 2014)
Herb Brooks and the miracle of the 401k,” (BenefitsPro, February 19, 2014)
Why Canadians want to retire in the U.S.,” (MarketWatch, February 19, 2014)
5 retirement errors you must not make,” (MarketWatch, February 20, 2014)
How to help employers prepare for DOL investigations,” (Employee Benefit Adviser, February 20, 2014)
In four years, more than one-third of all retirement assets will be in IRAs,” (BenefitsPro, February 20, 2014)

Wisdom from Some of Our Favorite Blogs:
fi360: Fiduciary Links: Coaches Can Benefit Advisors | “Off” Putting |
The Chicago Financial Planner: 3 Considerations When Opening an IRA Account |

Hot Tips from Popular Web Resources:
NAPA Net: Rhode Island Blinks on Pension Reform |
NAPA Net: DCIIA Releases Guide to Evaluating TDFs |
NAPA Net: Can Anyone Be a Fiduciary? |
NAPA Net: 401k Fees Continue to Decline; Assets Concentrated in Larger Plans |
NAPA Net: Case of the Week: What Pension De-risking Means |
NAPA Net: Many Close to Retirement Have No Retirement Income Solution |
NAPA Net: Remember the Basics on Variable Annuities |
NAPA Net: Maryland Legislature Considers Auto-IRA Program |
NAPA Net: Ideal Plan Fosters Participation, Leads to Secure Retirement |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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