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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 7/25/14

July 28
00:03 2014


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:
Exclusive Interview: Harold Evensky says Robo-Advisors ‘Roadmap to a Rocky Future’,” (, July 22, 2014). The Dean of the financial service industry speaks out on robo-advisors, consumer confusion, and the “You” test.

Compliance – What a Difference Not Being in the Beltway Makes:
This past week saw several new and intriguing ideas. The good ones came from well outside the highway ribbon wrapped around our nation’s capital. They were published in industry media and express the veneer of common sense and real-world experience. The, well, let’s be nice, “less than good” ones came from Washington insiders and were trumpeted by the mass media.
Is the Form 5500 worthless?” (BenefitsPro, July 17, 2014) Interesting idea. Worth the read.
A 401k for All,” (New York Times, July 22, 2014) Wow! We mean “Wow!” If you’re ever looking for definitive proof of the disconnect between Washington and the real world, this op-ed is the poster child. We don’t recommend giving it the honor of you click. We’re including it in case you need to know the source of “what everyone’s talking about” in the echo chamber known as the mass media (see below).
How to Fix the 401k and Income Inequality in One Fell Swoop,” (Money/CNN, July 23, 2014) Here’s a great example of the mass media echo chamber this is article about an article about a failed political initiative. The article (or the one it was based on) of course conveniently disregards this truth. I won’t waste type on this. Look at the NAPA Net entry below about an “Obama-care prescription.”
Proposal: The great fiduciary compromise of 2014,” (BenefitsPro, July 24, 2014) We might not be the most objective commentator on this particular article, but you’ve really got to read this. And pass it on.

Fiduciary – Washington vs. Real World, Part Deux:
If the above section demonstrates where good ideas and bad ideas come from, this section shows where good arguments and bad arguments originate. It’s as if our country has two different languages.
It will take a profession to enhance fiduciary standards,” (InvestmentNews, July 20, 2014) This is a blunt take on the reality of the fiduciary standard. It starts with a frank dismissal of the impact of Dodd-Frank. Indeed, the authors claim Dodd-Frank is potentially damaging to investors. It then continues with what we should expect moving forward, how the fiduciary standard already exists, and why it’s in the best interests of the credible health of the industry for practicing professional fiduciaries to make that known.
Congressman explains why he’s trying to stop SEC fiduciary rule,” (InvestmentNews, July 21, 2104) Apparently, before Congressman Lankford was rich, he wasn’t. No he’s rich enough to run for U.S. Senate. But back when was poor, only a broker was kind enough to help advise him. To hear him tell the story, he was too meat and potatoes for those snobby fiduciary advisers. OK, for the sake of argument, let’s concede Congressman Lankford’s point and say poor people need self-dealing brokers because they are the only “advisors” that would stoop so low as to serve them. Let’s push aside the argument as to whether it’s OK to potentially cheat someone out of their savings only because that savings is meager. It might represent their entire savings, but it’s really too small to shake a stick at. Let’s agree to let the brokers have their will with these poor folks. Instead, let’s introduce a Uniform Fiduciary Standard only for wealthy clients. So, where do we draw the line? Should it be all right to take advantage of clients who have less than $50,000? $100,000? We can throw the anti-fiduciary contingent a bone and agree the small market won’t get any advice if we force brokers to abide by the fiduciary standard, and we all know that potentially damaging self-serving advice is better than no advice at all. Right? So, now all we have to do is to agree on where to draw the line? So where should it be drawn?

Fees – That’s What Its All About:
Don’t be lulled into a false sense of security. When it’s legitimately about fees, it’s also about reining in conflicts-of-interest. Take the latter away, and the former becomes less of an issue.
A Caveat for Plan Sponsors on Choosing Share Classes,” (PLANSPONSOR, July 22, 2014) The DOL is watching.
Surrender fees haunt legacy 403(b) plans,” (InvestmentNews, July 23, 2014) But wait! Didn’t they tell us annuities were a good thing?

Investments – Remember When We Thought Barbers were Doctors?:
…and the most popular cure was the draining of leaches. Somehow, that never worked. For centuries they kept prescribing it. For centuries it didn’t work. For centuries they couldn’t understand why is didn’t work. So they just tried harder and harder until, one day, some smart person realized, “Hey! This just doesn’t work.”
The Powerful Psychology Undermining Your Returns,” (US News, July 21, 2014) An extensive overview of some of the key points in behavioral finance.
5 Longevity Annuity Questions and Answers,” (ThinkAdvisor, July 22, 2014) Just a few quick questions and a few quick answers here. Nothing groundbreaking.
Many Consider, But Few Purchase Annuities,” (Financial Advisor, July 23, 2014) Maybe, just maybe, they don’t buy because either: 1) It’s not what the doctor orders; or, 2) The side effects are too costly.

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.
Three Easy Retirement Rules of Thumb,” (Forbes, July 18, 2014)
What should I do with my 401k now?” (MarketWatch, July 18, 2014)
Is this retirement move right for you?” (CNN, July 18, 2014)
The Leeway in Required IRA Withdrawals,” (Wall Street Journal, July 20, 2014)
Cash Rules Everything Around Millennials: Study,” (ThinkAdvisor, July 21, 2014)
How to avoid the biggest 401k mistakes,” (MarketWatch, July 21, 2014)
How an Early 401k Withdrawal Affects Your Retirement Security,” (Yahoo Finance, July 21, 2014)
Building a solid nest egg: It’s location, location, location,” (CNBC, July 21, 2014)
The 7 deadly sins of retirement,” (MSN Money, July 21, 2014)
Auto features, education are powerful retirement tools for cautious under-30 investors,” (Employee Benefit News, July 22, 2014)
Retirement Readiness Within Reach For Americans Who Take Advantage Of 401k Plans,” (Insurance Broadcasting, July 22, 2014)
Why your 401k isn’t likely to offer a ‘longevity annuity’,” (MSN Money, July 22, 2014)
Do You Have The Best or Worst 401k Plan?” (Forbes, July 23, 2014)
401k rankings reveal discrepancies in matches, benefits,” (Employee Benefit News, July 23, 2014)
Help Clients Reset Retirement Expectations,” (Financial Planning, July 24, 2014)
Why You Can’t Borrow From Your 401k… and the Only Way You Should,” (MainStreet, July 24, 2014)
A smart way to make your retirement money last,” (CBS News, July 24, 2014)
Avoid Rollovers of IRA CDs,” (Kiplinger, July 24, 2014)
This Simple Move Can Boost Your Savings by Thousands of Dollars,” (CNN, July 24, 2014)

Wisdom from Some of Our Favorite Blogs:
The Chicago Financial Planner: Money Conversations – Caring for Aging Parents |
Scholarly Financial Planner: Evidence of Harm; Who Will You Choose to Be? |
ERISA Lawyer Blog: Fifth Circuit Holds That A Wealth Accumulation Plan Is A “Pension Plan” Within The Meaning Of ERISA |
ERISA Lawyer Blog: Sixth Circuit Rules That Plaintiffs Are Entitled To Pension Benefits Under The Plan’s Change In Control Provisions |
Squared Away Blog: Summer Reading: Retirement |
Fiduciary Matters Blog: Court Grants Summary Judgment to Plaintiffs in Rollins v. Dignity Health |
fi360: QLACs Offer New Retirement Planning Options, Advisors Must do their Due Diligence |
The Frugal Fiduciary: In small business retirement plans, small balance employees need help |
Behavior Gap Newsletter: I’ve Been Good. I Deserve It |
The Trust Advisor: Trusts: Out With the Old, In With the New |
ebri: Look-Back “Provisions” |
The Trust Advisor: Money Fund Rule Changes Offer New Reality to U.S. Retail Investors |

Hot Tips from Popular Web Resources:
NAPA Net: No Summer Vacation for Public Pension Reform  |
NAPA Net: Retirement’s Silver Bullets |
Motley Fool: How to Plan for Retirement as a Stay-at-Home Parent |
NAPA Net: Rollovers on the Menu for Media, Lawmakers and Consumer Advocates |
NAPA Net: State Auto IRA Bills Face an Inconvenient Wrinkle |
Motley Fool: When Does a Roth IRA Make Sense for You? |
NAPA Net: Detroit Pensioners Approve Cut |
NAPA Net: Routing ‘Slips’ |
NAPA Net: Case of the Week: Excluding Part-time Employees from a 401k Plan |
NAPA Net: An Obamacare-sized Prescription for a Retirement Crisis Misdiagnosis |
NAPA Net: The New Normal and New Neutral and the Good, the Bad and the Ugly |
NAPA Net: The Rollover Obsession |
NAPA Net: Re-enrollment a Path to Improved Investing and Fiduciary Protection, Paper Argues |
NAPA Net: 401k Plan Expense Ratios Down, Says ICI |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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