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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 7/18/14

July 21
00:01 2014

1020805_25983300_Trending_Topics_2014.07.21_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:
How Does Goal-Oriented Targeting Work?” (, July 15, 2014). Who wants to be a millionaire? It’s easier than you think – especially if you’re in your twenties.

Compliance – When Irresistible Force Meet Immovable Object:
The public pension problem is real. It’s going to get a lot worse before it gets better. You can’t change the math. Math is a very unforgiving mistress. Don’t mess with math.
Finra Amends REIT Pricing Proposal,” (Financial Advisor, July 15, 2014) Now participants will see an estimated price instead of the usual “N/A” on these illiquid assets. Is that better or worse? Either way it’s misleading. What do you think?
Detroit Judge Trims Disputes for August Bankruptcy Trial,” (Bloomberg, July 16, 2014) This is only about public employees trying to get the same sweetheart deal the GM employees got. Just wait until they start having trials on who got us into this position in the first place.

Fiduciary – If a Tree Falls…:
If no “fiduciary standard” is made, will anything be different? We already have the rules on the books. This whole “fiduciary standard” business is redundant. (See the next category.)
Fiduciary duty rule: No way out,” (InvestmentNews, July 13, 2014) As a result, the playing field remains unlevel, with one group of service providers handcuffed by stultifying regulation and another group of service providers – providing the same service – free from such burdensome regulation. Apparently the government is not supposed to be fair, it’s supposed to yield to the highest bidder.
House Passes Budget Barring SEC From Imposing Fiduciary Duty On Broker-Dealers,” (Financial Advisor, July 16, 2014) Well, let’s they say the House cut the funding levels requested by the Obama administration. The Senate, on the other hand, gave the administration what it wanted. Where will it end up?

Fees – We Don’t Need No Stinkin’ Fiduciary Standard:
Because we already have it. And the SEC knows it. And it looks like they’re going to do something. Stay tuned.
Retirement savers’ fund fees move lower: ICI,” (InvestmentNews, July 15, 2014) Misleading headline. The fees aren’t what being reported as lower, it’s the fund expense ratios. That’s an important difference. And if you don’t know what that difference is, then count yourself among the hoi polloi.
SEC Set To Take Aim At Costly Mutual Funds, Bad Brokers,” (Financial Advisor, July 17, 2014) It was a quandary in deciding whether to put this in the “Fiduciary” category or the “Fees” category since a case can be made for either. On the Fiduciary side, examination policy is a way to enforce the “Fiduciary Standard” without actually agreeing to a new “Fiduciary Standard.” Why? Because the laws, regulations and policies in the books right now are already extremely critical of self-dealing conflicts-of-interest. That’s what the SEC says they’ll focus on (in particular, according to the article, they’ll be targeting the use of “L-Shares” in variable annuities. And these self-dealing conflicts-of-interest all have to do with fees. So, we decided to put this article in the Fee category.

Investments – Zig When They Zag:
Too many studies have shown individual investors make market decisions at precisely the wrong time. Is this one of those times? The pros think so. Then again, the pros don’t seem to have a good track record either.
Investors Pile Into Stocks Just as Pros Say Bull Run Is Over,” (ThinkAdvisor, July 14, 2014) Traditionally, this is a bearish sign.
Pro Forecasters Stink, but Individuals Are Worse,” (ThinkAdvisor, July 14, 2014) So, what does this tell you about the above article from Bloomberg?
Survey Shows Most Investors Simply ‘Follow Their Gut’ When Making Decisions,” (WealthManagement, July 15, 2014) This we didn’t know? More important, the survey also found many investor pick unrealistic goals.
Need Low-Risk Yield? CDs are Back in Fashion,” (Money, July 15, 2015) Or so the author claims. Well, if an 1.25% yield (2% long-term) works for you, then great.

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.
Biggest Retirement Income Gap Seen for Oldest Pre-Retirees,” (ThinkAdvisor, July 9, 2014)
Health care employers need cure-all for retirement epidemic,” (Employee Benefit News, July 11, 2014)
IRA Rollovers Face Scrutiny by ERISA Panel,” (ThinkAdvisor, July 11, 2014)
Retirement Is More Expensive Than You Think: Monday’s Retirement Scan,” (Financial Planning, July 14, 2014)
Social Security Strategy is Situational: Tuesday’s Retirement Scan,” (Financial Planning, July 15, 2014)
Help your employees make the right 401k investment choices,” (Employee Benefit News, July 15, 2014)
How employers can help women achieve long-term financial goals,” (Employee Benefit News, July 15, 2014)
Majority of Workers Feel Responsible To Save For Their Retirement,” (Insurance Newscast, July 15, 2014)
Retirement: From theory to practice,” (InvestmentNews, July 15, 2014)
Retirement Is Not A Feeling,” (Financial Advisor, July 15, 2014)
Fear running short of cash in retirement? What to do,” (USA Today, July 15, 2014)
Out of work? Advisors offer important 401k dos, don’ts,” (CNBC, July 15 2014)
Top 7 retirement milestones you need to know,” (Yahoo Finance, July 15, 2014)
5 retirement planning game-changers,” (MarketWatch, July 16, 2014)
IRS Clarifies IRA Rollover Limitation,” (Financial Planning, July 16, 2014)
Aging adults optimistic about what lies ahead,” (USA Today, July 16, 2014)
Seniors’ Confidence In Finances Improving,” (Financial Advisor, July 16, 2014)
The power of small numbers,” (BenefitsPro, July 16, 2014)
Bull market sends 401k plans soaring to record highs,” (USA Today, July 16, 2014)
How to Figure Out Your Real Cost of Living in Retirement,” (CNN/Money, July 16, 2014)
A retirement planning lesson from a bike ride,” (CBS News, July 17, 2014)
Use A Roth Conversion to Achieve Lower Tax Bills,” (Forbes, July 17, 2014)
Why You Need to Prepare for Retirement in Your 20s,” (US News, July 17, 2014)
Two-Thirds of Gen Y Would Change Jobs for Better Retirement Benefits,” (MainStreet, July 17, 2014)
Answers to 5 of Twitter’s Most-Asked Questions About Retirement,” (CNN/Money, July 18, 2014)
Tax planning for retirees takes several forms,” (MarketWatch, July 18, 2014)
7 habits of highly successful retirement savers,” (Yahoo Finance, July 18, 2014)
5 Secrets to Saving for the Future While Enjoying Life Now,” (CNN/Money, July 18, 2014)
Drawdown strategies key in a financial secure retirement plan,” (Employee Benefit News, July 18, 2014)

Wisdom from Some of Our Favorite Blogs:
The Trust Advisor: Sterling Trust Revocation Seen Putting Bank Loans at Risk |
fi360: Fiduciary Links: The New Wave of Financial Advisors |
Squared Away Blog: Target Date Funds Keep Growing |
ERISA Lawyer Blog: Eighth Circuit Rules That Retiree Health Benefits Are Not Vested And Therefore May Be Unilaterally Changed By The Employer |
The Retirement Plan Blog: Target Date Funds: The Infographic |
The Frugal Fiduciary: Revenue sharing is on the decline in 401k plans |
Behavior Gap: Letting Go for Financial Balance |
Boston ERISA Law Blog: Just Finished Speaking to ASPPA on ERISA Litigation, Soon to Speak at ACI’s National ERISA Litigation Forum |
Proskauer’s ERISA Practice Center Blog: Fourth Circuit Rejects Widow’s Claim for Equitable Relief |
Fred Reish: DOL Proposed Guide |
Behavior Gap: Instant Gratification Today, Disappointment Tomorrow | The Status Quo |
The Chicago Financial Planner: Required Minimum Distributions – 7 Things You Need to Know |

Hot Tips from Popular Web Resources:
NAPA Net: IRS Withdraws Proposed Amendment to IRA Rollover Reg, Will Update Publication |
NAPA Net: ‘Crisis’ or Can Opener? |
NAPA Net: Settlement in ESOP Case a Wake-up Call for Trustees |
NAPA Net: Myth Understandings |
NAPA Net: Form 5500 Filing Deadline Nears |
NAPA Net: Wrongdoing by Public Pension Managers: The Next Big Thing? |
NAPA Net: Case of the Week: Who is Responsible for Filing Form 5500? |
NAPA Net: Missouri First State to Forbid Public Pension Transfers |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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