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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 4/4/14

April 07
00:14 2014

1020805_25983300_Trending_Topics_2014.04.07_stock_xchng_royalty_free_300Welcome to FiduciaryNews.com 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.

Welcome to FiduciaryNews 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:
New 401k Plan Sponsor Fiduciary Worry: Study Reveals Previously Unpublicized Conflict of Interest Can Harm Mutual Fund Performance” (FiduciaryNews.com, March 25, 2014). What’s a fiduciary to do? It’s so deeply hidden, even professionals can’t find it, let alone plan sponsors.

Compliance – A Rare Week of Silence:
Not really, it just seemed the topics fit better in other categories.

Fiduciary – Courts Make This a Key Fiduciary Duty:
We’ve been saying it for years, it’s not about the fees, it’s about the conflicts-of-interest. Read it an weep all you naysaying fee-aphobes.
How The Supreme Court Could Stop the 401k Rip-off,” (USNews.com, March 31, 2014) This is all about Tibble v. Edison International. It’s also about retail versus institutional funds. And, oh yes, about a little thing called fiduciary duty.
Employers overwhelmingly favor fiduciary standard for plan providers, advisers,” (Employee Benefit Adviser, April 1, 2014) Nearly nine out of ten want the fiduciary standard and want the adviser to clearly explain to participants of their advice is not required to be in the best interest of the participant. Unfortunately, almost three out of every four think their adviser is above reproach. Sort of the same way how everyone hates Congress but loves their own Congressman.
Did you even know about this very well hidden mutual fund conflict-of-interest?” (BenefitsPro, April 3, 2014) Why is the Ayres/Curtis paper, which didn’t really offer anything new, still being talked about when this paper, which reveals something hurtful that we never knew before, has fallen on deaf ears? Does Ayres have a better PR firm?

Fees – And here’s the Man Who Made It All Possible:
Nice country, America. A land where, when you see an opportunity everyone ignores, you can build a nice niche for yourself. One wonders how much longer will it be until others jump on the bandwagon?
A Lone Ranger of the 401k plans,” (New York Times, March 28, 2014) A surprising good overview of the cases St. Louis attorney Jerome J. Schlichter has brought against the 401k service provider industry and their (sometimes) unknowing accomplices 401k plan sponsors. Of course, the article does make the usual mass media mistake by foolishly implying a straight-line extrapolation of these historical events. Although it does mention – through a DOL quote – that these infamous “hidden” fees aren’t hidden since the 2012 401k Fee Disclosure Rule, it fails to note the major implication. Schlichter’s charge against the service providers – unless he can connect them through the dots to being a fiduciary – must now necessarily focus on the 401k plan sponsor. Is that a good thing or a bad thing?

Investments – How Many Times Have We Said…:
…investments just don’t matter. Pick an reasonably good selection and let it ride. Don’t get too fancy lest ye find yourself hoist on your own petard.
DOL ponders more guidance on 401k brokerage account windows,” (Employee Benefit News, April 1, 2014) And when a regulator ponders, that usually means bad news for the particular issue. Truth be told, brokerage windows, although extremely popular with very small plans (think “a doctor’s office) are wrought with all sorts of fiduciary difficulties, especially in much larger plans. The article says expect the DOL to severely restrict their use.
Tide Is Shifting Toward Custom TDFs,” (PLANSPONSOR, April 1, 2014) So, the first one’s weren’t good enough. So let’s make a new one. And “customize” them.

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.
Retirement Plan Committees Need a Custom Charter,” (PLANSPONSOR, March 31, 2014)
More Workers Delay Retirement, Survey Says,” (Financial Advisor, April 2, 2014)
Retirement Anxiety,” (Financial Advisor, April 2014)
The Old Normal Is Scary Enough,” (Financial Advisor, April 2004)
Few plan sponsors evaluating retirement income replacement ratios,” (Employee Benefit Adviser, April 1, 2014)
Private sector retirement coverage remains a serious issue,” (Employee Benefit News, April 1, 2014)
How Accurate Are Retirement Plan Coverage Stats,” (PLANSPONSOR, April 1, 2014)
24 Social Security Quirks That May Help Or Hurt Clients,” (Financial Advisor, April 2, 2014)
Don’t let RMDs ruin your plan,” (Employee Benefit News, April 2, 2014)
Retirement Assets Reach Record High, Study Finds,” (Financial Advisor, April 2, 2014)
Record High Retirement Account Assets in 2013,” (PLANSPONSOR, April 2, 2014)
401k Contributions Increase,” (Financial Advisor, April 2, 2014)
Employees Could Use More Financial Education,” (PLANSPONSOR, April 2, 2014)
Legal pros, plan advisers eye Supreme Court 401k case,” (Employee Benefit News, April 2, 2014)
Positive 401k Behaviors Picking Up,” (PLANADVISER.com, April 2, 2014)
Employees getting back on the 401k bandwagon,” (Employee Benefit Adviser, April 3, 2014)
Auto-Enrollment Boosts Participation in 401k Plans, Study Shows,” (Financial Planning, April 3, 2014)
DOL Seeks Losses from Failing to Remit Contributions,” (PLANSPONSOR, April 4, 2014)

Wisdom from Some of Our Favorite Blogs:
The Trusted Advisor Blog: For Planners and Advisors: What Else is There Besides the Certified Financial Planner Designation? |
ERISA Lawyer Blog: Reminder: Tomorrow Is April 1: Don’t Forget Your Required Minimum Distribution From Your Company Retirement Plan Or IRA |
Proskauer’s ERISA Practice Center Blog: Supreme Court Finds Severance Payments are Subject to FICA |
Boston ERISA Law Blog: Tussey v. ABB – Opening Up New Avenues for Excessive Fee Litigation and Putting the Final Nail in the Coffin of Hecker v. Deere |
Proskauer’s ERISA Practice Center Blog: Second Circuit: Five Factors Still Relevant to ERISA Attorney Fee Awards |
FRA PlanTools Blog: Court Finds St. Peter’s Pension Plan is NOT a Church Plan & A New Case is Filed in Chicago |
Boston ERISA Law Blog: Can You Avoid Being Investigated by the Department of Labor? |
Behavior Gap: What if Financial Success is About Saving More? |
The Trusted Advisor: Shielding Inherited IRAs From Creditors |
The Frugal Fiduciary: ERISA Section 404(c) turns forty this year. Reform, Safe Harbor |

Hot Tips from Popular Web Resources:
NAPA Net: Is the Stock Market Rigged? |
NAPA Net: N.Y. Times’ Morgenson Hails Jerome Schlichter’s Efforts |
NAPA Net: Holding an Effective Investment Committee Meeting |
NAPA Net: Yale Law Professor ‘Ayres’ his Concerns in Forbes |
NAPA Net: Popularity of Custom TDFs Growing |
NAPA Net: Case of the Week: Proposed $3.2 Million Cap on Retirement Savings |
NAPA Net: Supreme Court Hears Arguments in Stock Drop Case |
NAPA Net: Require an Index Fund in all DC Plans — Really? |
NAPA Net: State Pension Reforms: The Next Obamacare? |

Miss anything? Feel free to add a comment below.

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Christopher Carosa, CTFA

Christopher Carosa, CTFA

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