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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 5/16/14

May 19
00:02 2014

1020805_25983300_Trending_Topics_2014.05.19_stock_xchng_royalty_free_300Welcome 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:
The Three Most Common “Over”reach Mistakes Plan Sponsors have a Fiduciary Duty to Help Retirement Investors Avoid” (FiduciaryNews.com, May 13, 2014). Sometimes when you overreach, all you get is burned.

Compliance – When Will They Ever Learn?:
Where have all the Republicans gone, long time passing? Where have all the Republicans gone, long time ago? Where have all the Republicans gone? Gone to Washington, every one. When will they ever learn? When will they ever learn?
Senator Rubio’s surprisingly bipartisan retirement saving idea,” (RetirementRevised, May 15, 2014) And by “bipartisan” we mean “another Republican sides with the Democrats.” To be fair, Rubio did do the standard Republican thing by proposing to raise the age for Social Security and by using vouchers for Medicare. But then he goes off on the deep end to repeat and idea long sought by liberals and progressives – the government take-over of the defined contribution business. Oh, he certainly didn’t word it that way, but that would be the long-term result of his proposal to open up government-based (as opposed to individual-based) defined contribution plans. That right there folks, is the difference between a Republican and a Democrat. Democrats want a beneficent government to oversee the good of the huddle masses while Republicans want individuals to take responsibility for their own well being.

Fiduciary – Another Study Bites the Dust:
There are plenty of ways you can hurt an idea. You can bring it to the ground. You can beat it. You can cheat it. You can treat it bad and conduct a study.
DOL fiduciary rule would hurt small business retirement plans, study says,” (InvestmentNews, May 14, 2104) This controversial study claims 30% of small businesses will quit their 401k plan if the DOL adopts their new fiduciary rule. Besides making no sense (the whole premise is based on a non sequitor), the people behind the study are refusing to name the study’s sponsors.
Institute for Fiduciary Standard to Craft Best Practices,” (ThinkAdvisor, May 15, 2014) Knut Rostad damns the torpedoes and moves full speed ahead.

Fees – Fees, Glorious Fees:
Fees, glorious fees!/Eat right through your menu./Just loosen your wallet/two percent and then you/seek to justify these/the fees,/once again, fees/fabulous fees,/glorious fees.
Retirement Advisor Council Sees Flaw in 408(b)(2) Review,” (PLANSPONSOR, May 12, 2014) Apparently, the problem the RAC has is that the DOL wants to interview only smaller firms. The RAC is afraid this will underplay any issues specific to large firms.
Adviser groups, Chamber of Commerce object to DOL fee guide rule,” (Employee Benefit Adviser, May 15, 2014) This is one of the few times when the “er” version of advisor is used in the title – and it’s wrong. It should have been the “or” version. The “er” version applies exclusively to RIAs and the advisors referred to in the article are brokers.

Investments – I Believe in Target Date:
Target Date, 401k’s easy bait /Now I need to recalibrate/Oh, I believe in Target Date
Financial Goals Disconnected From Risk Tolerance,” (On Wall Street, May 12, 2014) Well, we’ve been saying this for a long time (see “Should 401k Plan Sponsors Ban Risk Tolerance Questionnaires?FiduciaryNews.com, August 13, 2013). Good to see more joining the movement.
How 401k plan participants can beat the market,” (Employee Benefit Adviser, May 13, 2014) You’d a thought the simple answer to beating the market is to stop trying to beat the market. That would have been a useful story. Instead, this article merely offers the usual clichés. They’re good for true beginners, but most folks need meatier advice.
The Retirement Fund That People Set, Forget and Regret,” (Bloomberg, May 13, 2014) Another hit piece on target date funds. This time it’s precariously close to the mass media.
Participants Sabotaging Help TDFs Give Them,” (PLANSPONSOR, May 13, 2014) This is an example of di-“worse”-ification. Investors aren’t using TDFs as the “one-portfolio” they’re intended as. They’re using TDFs as just another piece of a portfolio of mutual funds.
TDFs Popular with Female and Younger Investors,” (PLANSPONSOR, May 14, 2014) Yes, but are they buying other funds to boot?

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.
When love won’t keep them together,” (InvestmentNews, May 11, 2014)
Increase retirement plan engagement,” (Employee Benefit Adviser, May 12, 2014)
7 retirement risks to consider closest,” (BenefitsPro, May 13, 2014)
Your 401k plan’s secret weapon,” (MarketWatch, May 13, 2014)
Retirement Plan Help Helps,” (PLANSPONSOR, May 13, 2014)
What retirement advisors can learn from Icarus,” (BenefitsPro, May 14, 2014)
“$1M is not what it used to be,” (InvestmentNews, May 14, 2014)
Straight Talk about Drawdown Boosts Retirement Readiness,” (PLANSPONSOR, May 14, 2014)
What financial advisers really think about retirement,” (InvestmentNews, May 15, 2014)

Wisdom from Some of Our Favorite Blogs:
Pension Risk Matters: Golf Course RFPs and Other Mistakes That Retirement Plan Fiduciaries Make |
RetirementRevised: Cruise control can drive your 401k – just don’t hit the gas |
Proskauer’s ERISA Practice Center Blog: Eighth Circuit: ERISA Plan Beneficiary Designation Trumps Will |
Boston ERISA Law Blog: More on the Golf Course RFP |
fi360: Fiduciary Links: Changing Client Needs |
The Trusted Advisor: The Moral Core of Trusteeship |
MainStreet: 401k Mistakes That Can Cost You |
Proskauer’s ERISA Practice Center Blog: Death, Taxes and …ERISA Disclosure Regulations? |
ebri.org: Surface Conditions |
Pension Risk Matters: Headline Risk For Investment Fiduciaries |
The Trusted Adviser: What Is Wealth Management? |
The Chicago Financial Planner: Peyton Manning and Investing Success |
Scholarly Financial Planner: Fiduciary Rulemaking: “What Can I Do?” |

Hot Tips from Popular Web Resources:
NAPA Net: Maryland Gov. O’Malley Creates Retirement Security Task Force |
NAPA Net: IRA Rollovers Still Growing |
NAPA Net: Concerns Grow Over 408(b)(2) Summary Guide Proposal |
NAPA Net: ETFs in DC Plans: Issues Remain |
NAPA Net: Small is Getting Big for Large Record Keepers |
NAPA Net: SEC Commissioner Sees Bias Against Brokers in Fiduciary Debate |
NAPA Net: DOL’s Fiduciary Rule Would Hurt Small Business Plans, Survey Finds |
NAPA Net: Improving Outcomes: Financial Literacy and Premixed Portfolios |
NAPA Net: 7 Misconceptions About Auto Features |
NAPA Net: Fund Fees, Expenses Continue to Drop |
NAPA Net: BlackRock: ‘To’ TDFs Trump ‘Through’ Ones |
NAPA Net: Lump Sum Matches Revisited |
NAPA Net: The Coming Power Shift |

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Christopher Carosa, CTFA

Christopher Carosa, CTFA

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