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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 6/13/14

June 16
00:02 2014

1020805_25983300_Trending_Topics_2014.06.16_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:
Has the 401k Fiduciary Unknowingly Put Employees in Peril?” (, June 10, 2014). If 401k plan sponsors have failed to update both their plan menu options and their education program to this new paradigm, they may have unknowingly placed their employees in peril.

Compliance – Stay Away. No. Really. Just Stay Away:
The problem is that Washington doesn’t realize it doesn’t solve our problems, it’s the source of our problems
Are Rubio’s retirement reforms right?” (BenefitsPro, June 9, 2014) Among its problems: An attempt to Federalize 401k plans for small businesses (why not got the MEP route and let private enterprise do it) and the failure to propose a Child IRA.
Galvin Asks Congress to Force 401k Plan Disclosures,” (Bloomberg, June 13, 2014) This is all about the DA of Massachusetts doing his victory lap for all of Congress to see. The disclosures concern how fast the money gets from the payroll processor to the employee’s 401k account.

Fiduciary – The Fonz is Not Amused:
Wait. Our official response will be in the form of a satirical allegory in this week’s RetirementPro column.
About That DOL Fiduciary Survey…,” (ThinkAdvisor, June 10, 2014) The author connects the dots while dodging FINRA constraints to show the latest conflict of interest hidden within yet another industry sponsored anti-fiduciary survey.
Has ‘Fiduciary Standard’ Jumped the Shark?” (, June 10, 2014) You usually ask a question in a title knowing full well what the answer will be. The author certainly feels the Fonz has made his statement. Unfortunately, in doing so, the author concedes the argument to the anti-fiduciary side. He claims, despite acknowledging the legal difference, there’s no practical difference between the two because bad actors exist in both the fiduciary and suitability universes. He also claims “you can’t legislate trust,” saying that this is what it’s all about. By stating it this way, he misses the point. The Fiduciary Standard doesn’t attempt to legislate trust. It attempts to legislate liability. In other words, and, ironically, the author cites this, albeit in a way that indicts the consumer, we don’t want to rely on caveat emptor. Heck, even cars – the ultimate caveat emptor product if there’s ever been one – have lemon laws. The Fiduciary Standard is the lemon law for the investment advice industry – except, somewhere along the way, a certain class of professionals became exempt from this law. It’s only fair they be brought back into this fold. It’s only fair that everyone play by the same rules.

Fees – Twisted Logic:
Sometimes it’s better to pay attention to what’s not said. It’s called reading in between the lines. Not only does it tend to reveal the truth, we hear it can also lower cholesterol.
Be vigilant about 401k plan fees,” (Employee Benefit News, June 6, 2014) This lengthy article attempts to cover all bases, but the title leaves a lot to be desired.
Groups Weigh In on Proposed Fee Disclosure Regs,” (PLANSPONSOR, June 11, 2014) Here’s the gist of the article: DOL disclosure guidelines are OK for small businesses because they’re too unsophisticated to understand what’s really going on, but the same guidelines are not OK for big business because they have enough people with enough advisors to know what’s really going on. To translate: The industry is saying we don’t care if small businesses know they’re paying a lot because they don’t have any alternatives, but we don’t want our meat and potatoes (i.e., big) clients to know they can get better service at a cheaper price from someone else down the street.

Investments – There’s a Storm Brewing:
Two diametrically opposed forces cannot circle each other ad infinitum. Sooner or later they must meet and, assuming we all survive the resultant conflagration, once the smoke clears life will be much better.
The great investment heresy: risk doesn’t matter,” (BenefitsPro, June 11, 2014) Some veterans will read it an weep, seeing their entire life’s modus operandi go down in a sea of common-sense flames.
They Just Re-Invested Your 401k, for Your Own Damn Good,” (Bloomberg, June 11, 2014) It’s called re-enrollment and it’s putting a lot of people into target date funds. Is this a good thing or a powder keg ready to explode?
Distinguish volatility and risk when serving 401k clients,” (Employee Benefit Adviser, June 13, 2014) This is a recap of last week’s lead story in

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 Planning Essentials From Lena Rizkallah, Elaine Floyd,” (On Wall Street, June 9, 2014)
New Approach to Avoiding Retirement Ruin,” (Investment Advisor, June 2014)
Half of Boomers Do Not Know Retirement Need,” (PLANSPONSOR, June 10, 2014)
Maximizing Retirement Savings Through Smart Tax Planning,” (MainStreet, June 10, 2014)
401k auto-enrollment is key for enhanced retirement savings,” (Employee Benefit Adviser, June 11, 2014)
Focus on employee retirement readiness,” (Employee Benefit Adviser, June 12, 2014)
401k Participants Need The 411 On Plan Basics,” (Financial Advisor, June 12, 2014)
Can Older Unemployed Workers Salvage Their Retirement Plans?” (, June 13, 2014)
5 Common Mistakes 401k Investors Make,” (MainStreet, June 13, 2014)
Going Broke in Year One A Real Possibility EBRI Says,” (PLANSPONSOR, June 13, 2014)

Wisdom from Some of Our Favorite Blogs:
Proskauer’s ERISA Practice Center Blog: Plan Sponsors’ Decision to Change Form of Employer Contributions Not A Fiduciary Function |
The Chicago Financial Planner: Financial Advice and Mini Bottles of Liquor |
The Trust Advisor: For Brokers, Taking on Employers Gets Tough |
Squared Away Blog: Social Security at 62 but Fairly Healthy |
Proskauer’s ERISA Practice Center Blog: Plaintiff’s Claim for Estoppel, Reformation and Surcharge Strikes Out |
Behavior Gap: Worrying About Money? You Shouldn’t |
Boston ERISA Law Blog: How to Trigger Insurance Coverage for an ERISA Claim |
Pension Risk Matters: Pay to Play and Pension Funds |
Behavior Gap Newsletter: A $5,000 Investing Experiment |
The Trust Advisor: Brokers Fight Rule to Favor Best Interests of Customers | “Short” Changed? |
The Trust Advisor: Inherited IRA is Not a Retirement Account, High Court Rules |
The Chicago Financial Planner: Indexed Annuities – Pros and Cons |

Hot Tips from Popular Web Resources:
NAPA Net: NAPA GAC Submits TDF Comment Letter to SEC |
NAPA Net: The Hassle Factor |
NAPA Net: Rep. Miller Urges DOL to Investigate Consultants’ Potential Conflict of Interest |
NAPA Net: In Loco What? |
NAPA Net: Case of the Week: When is a Safe Harbor 401k Not so Safe? |
NAPA Net: Bipartisan Initiative Seeks to Boost Savings, Retirement Readiness |
NAPA Net: Death of the Blind Squirrel is Greatly Exaggerated |
NAPA Net: Smart Beta: Adoption Trends in Europe vs. U.S. DC Plans |
NAPA Net: Inherited IRAs Are Not Retirement Funds, Supreme Court Rules |
NAPA Net: Set-it-and-Forget-it, Not So Much |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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