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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 9/5/14

September 08
00:02 2014

1020805_25983300_Trending_Topics_2014.09.08_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:
These Four Quick Fixes for ERISA Can Reduce 401k Fiduciary Stress,” (, September 3, 2014); and, “These Six Structural Changes to ERISA Can Improve Employee Retirement Readiness,” (, September 4, 2014). We can do these things right now and more people will be able to save for retirement. Yet, if these are so obvious, why are lawmakers ignoring them – and even going in the opposite direction?

Compliance – The Legacy of ERISA:
The industry press was replete with stories glorifying the reign of ERISA, lamenting the damage of ERISA, and just about everywhere else in between. Well, that does average out to an average grade, which seems to agree with the consensus regarding ERISA.
Public Sector Employees Are Worried About Retirement,” (MainStreet, August 29, 2014) Coincidentally, this article was published the day after published its final installment of a three part series questioning the continued viability of pensions – and, in particular, public pension plan. The article says confidence in retirement among public workers has fallen to 18% from 21% according to TIAA-CREF. In addition, 39% of the public employees surveyed don’t think they’ll get the benefits promised to them.
Safe Harbor 401k Deadline Approaching,” (PLANSPONSOR, September 2, 2014) Any questions? Then read the article.
Let’s trash and rewrite ERISA,” (BenefitsPro, September 2, 2014) You’ve heard all the accolades, now here’s the truth.
‘Every Rotten Idea Since Adam’,” (BenefitsPro, September 2, 2014) A version of the same truth only written in a manner anyone who got letter grades at school could understand.
Retirement has changed but ERISA still holds up,” (Employee Benefit News, September 3, 2014) A counterpoint to the above.
What New IRS Rules Mean for Your Retirement Account,” (US News, September 5, 2014) Beginning next year, the IRS plans to move forward with its controversial and restrictive rule to severely restrict IRA Rollover options. This isn’t the IRS’ fault. They’re being forced to do it by a recent – and many say unjustified – court ruling. Let the appeals begin.

Fiduciary – Happy Fiduciary September!:
Will this finally be the Fiduciary September to remember? Now in its third year, there’s a growing number of activities and events. Right now a majority of them merely preach to the assembled choir, but at least now there’s an assembled choir to preach to. That’s the first step. Next? Who knows? Perhaps we’ll see a Saturday morning cartoon? A K-Pop hit? A Papal Decree? The imagination knows no bounds.
Fiduciary Advisors Are in Peril: How to Fight Back,” (ThinkAdvisor, September 2, 2014) Here’s a blunt assessment of where the fight for the fiduciary standard stands today.
SEC Urged to Move on Uniform Fiduciary Rule,” (Financial Planning, September 4, 2014) It’s that time of year again when all things fiduciary get celebrated and promoted. Here’s a report on the kick-off of this year’s campaign.
The SEC Needs to Fix the Problem It Created,” (WealthManagement, September 5, 2014) This article features Barbara Ropers comments at last week’s Fiduciary September kick-off. She mentions two really important facts. First, while the sense of “creating” a fiduciary standard appears to be new, we have had a fiduciary standard for decades and, for a long time, it has operated without question and without controversy. Second, and the reason for the title of this piece, the reason we problem today stems from actions (and inactions) of the SEC over the better part of the last 15 years or so.
Chairman White’s political will may determine fiduciary-duty outcome,” (InvestmentNews, September 5, 2014) Fiduciary Standard advocates want the SEC to move forward and approve it even if it means a split decision of commissioners. File this under “Be Careful What You Wish For.”

Fees – Better Late Than Never:
This may be a good move. Eliminating 12b-1 fees, revenue sharing, platform fees, and their ilk is actually more significant than agreeing to any Fiduciary Standard. Indeed, it has the same bite as a true Fiduciary Standard, only it’s something the public can share the taste in.
Exclusive: Fund payments to brokerages draw SEC scrutiny,” (WealthManagement, September 5, 2014) Finally, a regulator has discovered there’s gambling in this casino! We’re talking about all sorts of questionable – but currently legal – practices including “platform fees,” 12b-1 fees, and revenue-sharing, to name a few.

Investments – The Ads Might be Misleading, but At Least They’re Regulated:
It’s crazy what people complain about. They’ll angrily yap about one group failing to dot their “i’s” cross their “t’s” but then turn around put their arms around a group that uses all capital letters. Go figure.
Avoid Being Conned By Mutual Fund Advertising,” (US News, September 2, 2014) OK, the structure of this article is just downright confusing. After spending most of the article using immediate past performance to blast active managers, it ends by reaffirming the need to pay attention to the SEC’s mandated warning – “Past performance cannot be used to predict future performance.”
More Retirement Plans May Invest in CITs,” (PLANSPONSOR, September 4, 2014) Don’t know what a CIT is? Following the market crash of October 1929, Congress decided one (of many) contributing factors included the then common practice of banks to pool the assets of different parties together and invest in the “speculative” market. Some of these “parties” were (at least prior to October 1929) extremely wealthy, but many were run-of-the-mill folks. In its infinite wisdom, Congress banned this practice, only allowing in the (then) rare case of a bank managing a trust – and by “trust” they assumed private individual or family trust. Funny thing happened. Retirement plans became trusts, and thus were allowed into the CIT pool. Today, the CIT is nothing more than a non-regulated Investment Company. Sure, technically they’re regulated by the OCC, but that regulation doesn’t hold a candle to SEC regulation.

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.
An Answer to the Retirement-Income Puzzle,” (Wall Street Journal, August 30, 2014)
3 reasons not to raid your retirement accounts,” (USA Today, August 31, 2014)
Retirement Planning Goes Long Term,” (On Wall Street, September 2, 2014)
Calming Clients Worried About Retirement Planning,” (On Wall Street, September 2, 2014)
Retirement Special: Financial Planning for Longer Lives,” (Financial Planning, September 2, 2014)
Parents Say Retirement Imperiled By College Costs,” (Financial Planning, September 2, 2014)
More Parents Use Retirement Accounts to Pay for College,” (US News, September 2, 2014)
The One Thing You Need to Get Right for a Secure Retirement,” (Money, September 2, 2014)
Can Your Financial Adviser Solve Your Retirement Puzzle?” (Wall Street Journal, September 2, 2014)
It’s ‘back to the future’ for this 401k plan,” (MarketWatch, September 4, 2014)
IRAs And Trusts: What You Need To Know,” (Forbes, September 4, 2014)
Our Retirement Savings Crisis—and the Easy Solution,” (Money, September 4, 2014)
Berkshire Hathaway Sued Over Retirement Plan Design Changes,” (PLANSPONSOR, September 5, 2014)

Wisdom from Some of Our Favorite Blogs:
Pension Risk Matters: ERISA Pension Law Turns 40 |
ebri: ERISA’s 40th Birthday—Private Plan Performance |
Boston ERISA Law Blog: Tatum v. RJR Pension Investment Committee: What it Teaches About Fiduciary Obligations |
Scholarly Financial Planner: I Acknowledge … (On the Necessity of Fiduciary Investment and Financial Advice) |
Behavior Gap: Alternatives Shouldn’t Make Us Dumb |
The Chicago Financial Planner: The Plutus Awards – Finance Blogs to Read and Discover |
ERISA Lawyer Blog: IRS Changes Group Trust Rules |
Proskauer’s ERISA Practice Center Blog: Sixth Circuit says ERISA does not preempt state law claim for fraudulent inducement |
Behavior Gap Newsletter: Announcing BG Radio |
Scholarly Financial Planner: Learning About Integrity: The Experience of One Group of College Students |
Scholarly Financial Planner: Evidence of Harm, Part 1: Investors Flee the Capital Markets Forever, Ending Their Hopes and Dreams |

Hot Tips from Popular Web Resources:
NAPA Net: Lotteries a ‘Ticket’ to Increased Retirement Savings? |
NAPA Net: Class of ’74 |
NAPA Net: Let’s Save Retirement … By Killing the 401k |
Motley Fool: How Dividends Can Make the 4% Rule Easy |
NAPA Net: Case of the Week: SIMPLE IRAs and the Early Withdrawal Penalty |
NAPA Net: Consistent 401k Participants Gain Ground in August |
NAPA Net: A Longevity Insurance ‘Nudge’? |
Motley Fool: Don’t Let IRA Contribution Limits Wreck Your Retirement Dreams |
NAPA Net: Fed Report Finds Participation Flat, Retirement Balances Up ‘Substantially’ |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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