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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 3/21/14

March 24
00:03 2014

1020805_25983300_Trending_Topics_2014.03.24_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: Quinn Curtis Reveals True Intent of the Curtis/Ayres 401k Fee Paper,” (, March 18, 2014). The headlines may highlight “High Fees,” but the authors really want to change the court’s view of “fiduciary.”

Compliance – Rules, Rules, Rules:
Compliance is easiest if it really is a roadmap that even the busiest person can understand.
Considerations for Service Provider Agreements,” (PLANSPONSOR, March 14, 2014) This is all about helping fiduciaries avoid those darn prohibited transactions.
Connecticut private retirement bill sails through committee,” (Employee Benefit News, March 19, 2014) We’re hard pressed to figure out the answer to this question: When was the last time the government had a good idea? We’re thinking the Lunar Landing.

Fiduciary – He who controls the dictionary…:
…cannot rewrite definitions any way they want. That’s the worry right now. It doesn’t matter what centuries of case law say, all that matters is who has the biggest PAC.
DOL Plan Could Limit Access To Affordable Advice, Reps Say,” (Financial Advisor, March 14, 2014) Here we go again. This time, though, we get to hear how it’s going to hurt the Hispanics. We don’t mean to insult the Hispanics, we’re just repeating what the article (and these congressmen) say.
2 choices, 1 decision: Hiring a third-party fiduciary,” (Employee Benefit Adviser, March 19, 2014) If you’re a plan sponsor, you should read this. If you’re in a real quandary, you should read this.
Plaintiffs win mixed decision in landmark 401k fee case,” (InvestmentNews, March 19, 2014) The court upholds the ruling against the plan sponsor, but lets Fidelity off the hook.
DOL fiduciary opponents point to UK experience to bolster their case,” (InvestmentNews, March 19, 2014) This is an apples-to-oranges comparison. The UK outlawed commissions. We’re not talking about outlawing commissions. Brokers can still charge commissions. Small clients can still pay commissions. Or, to be more specific, brokers who want to be advisers can still charge 25 basis points, only they have to call it an advisery fee and not a commission and they have to be paid by the client, not by the product, which can now presumably charge 25 basis points less because it doesn’t need to pay a broker any longer.
SEC’s Mary Jo White directs staff to develop fiduciary options document,” (InvestmentNews, March 21, 2014)  Advocates appear happy by this developments, but, as Barbara Roper says, and we paraphrase, more research is all fine and good but, in the end, we all no disclosure it not an option.
401k fiduciary lawsuit raises questions on record keeping,” (InvestmentNews, March 21, 2014) This is a very perplexing question and Reish nails the issue – what happens to float from assets leaving the plan (or, and we’ll add this, changing options)?

Fees – Head Banging Frustration:
How many times must we scream from the highest mountain it’s not simply “fees,” it’s certain very specific fees that are easy to identity and easy to prohibit.
Employees sue over excessive fees paid to broker,” (Employee Benefit Adviser, March 14, 2014) This looks like a big one. It may test the concept of “value” that the DOL has placed into its Fee Disclosure Rule. This case claims there was not sufficient value received for the fees paid.
This is what Ayres/Curtis were thinking,” (BenefitsPro, March 19, 2014) Does the Prudent Man Rule apply to a single 401k menu option among an entire array of options? The article makes that case against this.
DOL hopes proposed fee disclose rules will be useful roadmap in difficult terrain,” (Employee Benefit News, March 19, 2014) It’s not a road map. A road map implies people will know how to use it and it will be relatively easy to find your destination. It’s more like a treasure map, meaning half the people won’t believe it to begin with and those that do will find the journey is more of a treacherous adventure rather than a simple Sunday drive.

Investments – Should we even be talking about this?:
Academic studies show education leads to better results than any particular investment strategy. So why do we talk about investments so much? Well, for one reason, it tends to sell newspapers (or whatever the electronic equivalent is these days).
U.S. Retirees Return To Reverse Mortgages, Big Banks Stay Away,” (Financial Advisor, March 17, 2104) If it’s good enough for Robert Wagner and Fred Thompson, we guess it’s good enough for everybody else.
Why bitcoin doesn’t belong in your retirement plan,” (Employee Benefit News, March 18, 2014) It you have to read the article to know the answer, you’re in far worse shape than you think.
6 Things Advisors Need to Know About Target-Date Funds,” (ThinkAdvisor, March 18, 2014) Holy Cow! If even advisers need advice on TDFs, just imagine the position of those poor 401k investors!

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.
Saving for Retirement Is More Important than Ever,” (MainStreet, March 14, 2014)
Recordkeepers Have Strong Influence on Participant Outcomes,” (PLANSPONSOR, March 14, 2014)
The Forgotten Retirement Account,” (MainStreet, March 14, 2014)
U.S. Retirees Grow Confident, Survey Says,” (Financial Advisor, March 17, 2014)
Retirement confidence edges up from record lows,” (InvestmentNews, March 18, 2014)
Some States Make It Harder On Retirees,” (Financial Advisor, March 18, 2014)
The Retirement Illusion,” (, March 18, 2014)
Fiduciary Liability and Form 5500 Reporting,” (PLANSPONSOR, March 18, 2014)
Retirement Income Windfall: How to Get a Social Security Lump-Sum Payment,” (ThinkAdvisor, March 18, 2014)
Calculators Advisers Can Improve Retirement Confidence,” (PLANSPONSOR, March 18, 2014)
Behavior unchanged by retirement income display,” (Employee Benefit Adviser, March 19, 2014)
401k contribution remittance: What’s an employer to do?” (Employee Benefit Adviser, March 19, 2014)
Retirement Planning: Financial Advisors Must Address Longevity Shift,” (On Wall Street, March 19, 2014)
Retirement: 36% have saved $1,000 or less,” (MarketWatch, March 19, 2014)

Wisdom from Some of Our Favorite Blogs:
fi360: Fiduciary Links: 3d Party Fiduciary Assessments Would Enhance SEC Inspection Cycle |
FRA PlanTools Blog: Tussey v. ABB Affirmed, Reversed, and Vacated in Part by 8th Circuit |
RetirementRevised: Retirement trade-offs: Work longer? Play now? Save more? Save less? |
Boston ERISA Law Blog: If an Appeal is Filed and Nobody Knows It, Is it an Appeal? |
The Chicago Financial Planner: Time Well Spent: Choosing an IRA or a Restaurant? |

Hot Tips from Popular Web Resources:
NAPA Net: Borzi Counters Fiduciary Rule Criticism |
NAPA Net: Retirement Plan Savers More Confident, EBRI Finds |
NAPA Net: ‘Background’ Check |
NAPA Net: Ayres’ Collaborator Speaks Out |
NAPA Net: ICI Finds Strong Support for 401k Tax Treatment |
NAPA Net: Fidelity Cleared in Tussey v. ABB Case | “How Would Defined Contribution Participants React to Lifetime Income Illustrations? Evidence from the 2014 Retirement Confidence Survey” |
NAPA Net: A Closer Look at EBRI’s $1,000 Savings Number |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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