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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 5/23/14

May 27
00:03 2014

1020805_25983300_Trending_Topics_2014.05.27_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:
Exclusive Interview: Ric Edelman Answers Child IRA Question and Reveals Today’s Investors’ Biggest Question,” (, May 20, 2014). “In the future, people will look back on today’s era with wonder and astonishment, finding it hard to believe there once was a time when the standard was not applied – just as people today look back at racial segregation, women’s suffrage and similar eras.”

Compliance – America Acts While Washington Wastes Words:
You want to know what’s incredible? It’s how incredibly deaf Washington is to the needs of flyover Americans. Not that  flyover America cares. They’re too busy doing things for themselves, they way any responsible human being would do. Maybe that’s the lesson, after all.
Christie Eyes 401k Move for Pensions,” (Wall Street Journal, May 16, 2014) For some states with Republican governors, this train left the station a few years back. Good to see Christie is at least on the same track.
Rating Rubio’s retirement recommendations,” (Employee Benefit News, May 19, 2014) A random author’s view of Rubio’s ideas. Would’ve been more interesting if they polled a cross section of the retirement industry.
Public sector employers in Oklahoma set to adopt DC plan,” (Employee Benefit News, May 23, 2014) While Washington dithers in its own Wonderland, the heartland of America shows how it’s done.

Fiduciary – Just the Facts, Ma’am:
It’s like a broken record. We keep hearing the same old comments about fiduciary this and fiduciary that. Are they trying to bore us to death?
Lines are drawn within the SEC, slowing potential fiduciary duty rule,” (InvestmentNews, May 19, 2014) It’s all about the brokers. Do their clients’ best interests count or not. The answer is simple. If it’s a transaction, then it’s caveat emptor. If it’s advice, then it’s the fiduciary standard. And if the client can’t tell the difference, then it’s the fiduciary standard. Any questions?
META: SEC: No Consensus on Uniform Fiduciary Standard,” (On Wall Street, May 19, 2014) Same story. Different take. Bottom-Line: The SEC is very, very confused.
SEC Commissioner Not Convinced on Uniform Fiduciary Standard,” (On Wall Street, May 20, 2014) A voting member confirms the discord that was leaked the day before.
Gallagher: SEC Fiduciary Rule Won’t ‘Stave Off’ DOL Redraft,” (ThinkAdvisor, May 21, 2014) So much for harmonization.

Fees – I’d Like to ask a fe questions, if you don’t mind.:
To borrow a favorite line from a favorite movie: “Do I have to paint a picture for ya?”
Relief from 408(b)(2),” (BenefitsPro, May 22, 2014) The industry seems to be slowly giving up ground to the DOL regarding the proposed fee template. It now agrees the template might be good for small plans, but large plans don’t need them. Could it be they’re willing to cede this ground because they think small plans have no better alternatives? And, if they need to disclose for small plans, wouldn’t the same system (i.e., no marginal cost) be used to print the same type of one-page disclosures for large plans? Finally, does the DOL know they are negotiating from a (rare, for it) position of strength on this issue?

Investments – Are you a smart investor?:
Or do you only think you’re a smart investor? That’s a classic copywriter line from the salad days of print advertising (i.e., before the era of Mad Men). The thing about the old days is we usually feel so technologically superior to them. We are. Trouble is, we’re not any more smarter than they were – and may eve be a tad less smart.
Ric Edelman: What’s Wrong With IRAs, 401k plans, and the Industry That Sells Them,” (ThinkAdvisor, May 12, 2014)
Why ETFs Are the Future of 401k plan,” (ThinkAdvisor, May 15, 2014) This is coming from a portfolio manager who trades ETFs, so take it with all the grains of salt you’d like.
How to Add Real Estate to IRAs,” (ThinkAdvisor, May 16, 2104) This was popular during the real estate bubble last decade. It’s coming back into favor just as the IRS is beginning to go after some types of self-directed IRAs (which this form of investing requires).
Retirement: Many do-it-yourself investors not engaged,” (USA Today, May 20, 2014) Ironically, far from being the active go-getters implied by the term “do-it-yourself,” these investors are the ultimate in “set-it-and-forget-it” investors… to their own detriment. What’s that they say about folks who represent themselves in court?
Got Knowledge? Informed Investors Get Juicier 401k Returns,” (Barrons, May 19, 2014) What’s this you say? Financial literacy is a good thing? Then here’s the more important question: How can you tell the difference between an investor who is really financially literate and one who merely thinks he’s financially literate?
Is Private Equity Wrong for Retirement Funds?” (ThinkAdvisor, May 19, 2014) What part of “Keep – It – Simple – Stupid” don’t they understand?

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.
3 Approaches to Retirement Income Planning,” (Financial Planning, May 19, 2014)
Retirement Readiness Not Accurately Gauged,” (PLANSPONSOR, May 20, 2014)
The risk of inactive retirement plan participants,” (Employee Benefit Adviser, May 21, 2014)
Employers Recognizing Need for Financial Education,” (PLANSPONSOR, May 21, 2014)
The answer to investors’ most urgent question,” (BenefitsPro, May 21, 2014)
J.P. Morgan’s Roy Says Be Flexible On 4 Percent Rule,” (Financial Advisor, May 21, 2014)
Why risk-averse millennials should rethink retirement planning,” (CNBC, May 22, 2014)
Roth Growth Far Outpaces Traditional IRAs,” (PLANSPONSOR, May 22, 2014)

Wisdom from Some of Our Favorite Blogs:
fi360: Fiduciary Links: SEC Should Fix Longstanding ‘Mismatch’ in Broker-Advisor Data to Advance Fiduciary |
Boston ERISA Law Blog: Me, Lawyers Weekly and Patent Infringement Litigation |
The Chicago Financial Planner: Are Alternative Investments the Right Alternative for You? |
Proskauer’s ERISA Practice Center Blog: Eighth Circuit: “Satisfactory to Us” Plan Language Sufficient to Entitle Plan Fiduciary to Deferential Review |
Fiduciary Matters Blog: 8th Circuit Denies Both Rehearing Petitions in Tussey v. ABB – Next Up is the Supreme Court |
The Chicago Financial Planner: What I’m Reading – Memorial Day Edition |
Frugal Fiduciary: 401k Participants using their small business 401k plan for retirement |

Hot Tips from Popular Web Resources:
NAPA Net: Assets in TRFs Outpace TDFs |
NAPA Net: NJ Gov. Christie Seeks to Move State Employees to Blended Plan |
NAPA Net: Auto Enrollment, Escalation: Helpful but No Panacea |
NAPA Net: TDF Assets Grew 5% in First Quarter |
NAPA Net: Work ‘Forces’ |
NAPA Net: Rethinking the 3% Deferral Baseline |
NAPA Net: TDF Allocation Can Affect Returns |
NAPA Net: Stockton Fix May Include Pension Cuts |
NAPA Net: Partial TDF Usage: Are DC Investors Saboteurs? |
NAPA Net: Retirement Coverage Issue Goes Mainstream |
NAPA Net: EBRI: Rollovers Fuel Growth in IRA Assets |
NAPA Net: Detroit Fights Disinformation About Cuts |
NAPA Net: Record Keeper Consolidation Will Continue |
NAPA Net: Ghilarducci, SSA Actuary Blast DC System |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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