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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 2/27/15

March 02
00:10 2015

1020805_25983300_Trending_Topics_2015.03.02_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
Obama Fires Fiduciary Starter Pistol to Mixed Reviews,” (, February 24, 2015) When a reputed home run hitter with such a pronounced track record of striking out wants to join your team, what do you do?

Compliance – Living Too Long to Prosper:
The pension Ponzi Scheme keeps rolling along. It’s like musical chairs, except in this version, you want to be one of the first to get out of the game.
Pumping billions more into corporate pensions,” (BenefitsPro, February 20, 2015) We can’t help be hear the strains of Peter, Paul and Mary… “When will it ever end…”
There ought to be these retirement laws,” (USA Today, February 23, 2015) Couldn’t agree more.
Obama’s ‘Oversimplification’ of Industry Frustrates RIAs,” (WealthManagement, February 25, 2015) This one can’t be blamed on Obama. He’s just doing what the media has been doing (and what the SEC has been allowing) for a decade.
Participants in the dark about lump-sum payouts, GAO says,” (BenefitsPro, February 26, 2015) Underfunded pension plans increasingly look towards lump sums as a well to escape the inevitable. Some say employees who take lump sums risk losing the value of their benefits. Others say those who don’t get out of these underfunded pension plans while the gettin’s good risk losing some or all of their benefits. That is, after all, how all Ponzi Schemes operate, isn’t it?

Fiduciary – Let This Be Your Last Battlefield:
The day of reckoning has arrived. Well, sort of. It’s more like the day announcing the imminent day of reckoning has arrived. The opponents have now gone to their respective sides. The gloves are on and… Wait, there’s nothing after the “and.” How do you reckon that?
Obama Tells DOL to Move Forward With Its Fiduciary Redraft,” (ThinkAdvisor, February 22, 2015) He’s what they said he was going to say before he actually said it.
Obama directs Labor Department to move ahead on fiduciary rule,” (InvestmentNews, February 23, 2015) No he doesn’t. He directs the DOL to move ahead on the “Conflict of Interest” Rule. There’s a big difference.
Obama to support tougher rules on retirement brokers,” (Employee Benefit Adviser, February 23, 2015) Again with the lazy headline writers. It’s not “brokers” in general, but, specifically, brokers who hold themselves out to be advisors. Brokers will not be subject to tougher rules. Brokers who hold themselves out as advisers will.
DOL takes new shot at broker fiduciary rules,” (BenefitsPro, February 23, 2015) This time the DOL is not going it alone. As we’ve seen above, they’ve brought out the big White House guns, including the biggest gun of all. Unfortunately, this big gun doesn’t have a very good track record of success in bringing bipartisan consensus.
Fiduciary Proposal More Bark Than Bite?” (Financial Planning, February 23, 2015) If the source of this article is correct, than Obama’s declaration to “protect the retirement investor” may soon rank right up there with “you can keep your doctor” as one of the greatest lies of his two terms presidency.
Critical Moment for Fiduciary Advisors,” (Financial Planning, February 23, 2015) Here is Ron Rhoades call to arms for all those who stand for the Fiduciary Standard.
Brokers condemn Obama attack on retirement advisers,” (Employee Benefit Adviser, February 23, 2015) While Ron Rhoades calls for a Tea Party revolt again entrenched lobbyists, the “Too-Big-to-Fail” consortiums wields its might like so many Redcoats.
Obama Endorses DOL Fiduciary Redraft, Girds for Fight,” (ThinkAdvisor, February 23, 2015) The time for fighting this has passed. The minute Obama proclaimed his endorsed signaled the end of all things fiduciary. It is now more likely the SEC will remove the fiduciary standard from those currently forced to follow it than include those who have successfully skirted it.
With Obama’s push, is fiduciary a done deal? Not so fast,” (InvestmentNews, February 24, 2015) Alas, ‘tis true, but we sure spilled a lot of ink of something that’s vaporware.
Labor Department rankles advisers with quick video on fiduciary,” (InvestmentNews, February 24, 2015) The video is linked to the article. Watch it and judge for yourself.
Labor s Fiduciary Rule: What Are the Next Steps?” (On Wall Street, February 25, 2015) This is a well written article that really looks at all the angles of this issue and how they’re likely to play out.
Putting clients’ interests first all along,” (BenefitsPro, February 25, 2015) Be careful with this article, as it implies that an hourly fee is the same thing as a fiduciary fee. Fiduciaries can charge by the hour (but rarely do), charge based on a percentage of assets (which best aligns the interest of the adviser with the client), or charge an annual “consulting” fee, (but only for very large accounts).
Does ‘fiduciary’ play in Peoria?” (BenefitsPro, February 25, 2015) Here’s what the heartland think about this whole fiduciary thing. Neither Washington nor the industry will be happy about this.
Republican Revives Bill to Block DOL Fiduciary Rule,” (WealthManagement, February 25, 2015) Only because the voters in November weren’t really interested in sending Republicans to Washington to block Obamacare, immigration, net neutrality and any other number of issues that inspire Tea Partiers. Instead, the usurp Tea Party language to defend the big box financial firms the Tea Party despises. Is it time for another Tea Party?
Fiduciary Standard for Advice is Long Overdue in U.S.,” (WealthManagement, February 25, 2015) An excellent summary of where we stand and why we’re standing there.
The Two Faces Of A Fiduciary Standard: Positive And Punitive,” (Financial Advisor, February 26, 2015) Don Trone offers a compelling take on the issue in a way we haven’t before seen.
Real Reason Brokers Oppose a Fiduciary Standard,” (Financial Planning, February 27, 2015) Like Willie Sutton said, “That’s where the money is.”


Fees – The Trouble with Tibble:
Many see Tibble v. Edison as a watershed event. It’s not. It stands to only reaffirm a fiduciary’s ongoing duty, not whether conflict of interest fees breach that duty.
401k Fees: What Is Reasonable?” (Wall Street Journal, February 20, 2015) The fees quoted in this article, from a June 2014 Deloitte Touche Report, seem a little understated, especially at the smaller plan level. This needs to be reconciled with other sources.
Lockheed to pay $62 million to end worker pension fees case,” (Employee Benefit Adviser, February 23, 2015) Plan sponsors who have doubted the seriousness of their fiduciary liability must read this article. As usual, the case hinged on “excessive management fees.” And company stock. But mostly about the fees, including the fees charged for investing in company stock.
DOL primed to expand 401k oversight through Tibble v. Edison,” (Employee Benefit News, February 23, 2015) An interesting juxtaposition. Could it be more than a coincidence?
Supreme Court hints at new monitoring rules for 401k plans,” (BenefitsPro, February 24, 2015) As if on cue, the justices – well, most of them, at least – signal one’s fiduciary duty is a serious, and ongoing, matter.
White House Is Not Fond of Hidden Retirement Fees,” (ThinkAdvisor, February 24, 2015) Don’t be fooled by this headline. This isn’t that same as all the articles written about Obama’s fiduciary fling, it’s all about abusing the fiduciary issue to make it appear everyone should be invested in (and only invested in) mutual funds. As the article implies, that’s not at all what this is about.
How Financial Advisors Screw Up Americans Retirement,” (On Wall Street, February 24, 2015) If you want to see an example of how some are deliberately confusing the fee issue with index funds, read this article.
Flood of 401k Suits Expected if Tibble Prevails in Supreme Court,” (ThinkAdvisor, February 24, 2015) As they say, if you “show me the money” they tend to “follow the money.” If you can name the two movies alluded to here, then you get a special thumbs up.
Supreme Court Receptive to Investors in 401k Case,” (Wall Street Journal, February 25, 2015) Here’s a pretty thorough review of what we know so far.
401k fees remain flat, mostly,” (BenefitsPro, February 24, 2015) This is data from the new 401k Averages Book.
The Supreme Court’s 3 options in Tibble,” (BenefitsPro, February 26, 2015) The author warns not to get too excited about the recent Supreme Court concerning the Tibble case. He claims, with some sound reasoning, the most likely outcome is for the high court to remand the case back to the lower court with limited guidance.


Investments – To Boldly Go!:
There’s a growing trend to (thankfully) toss aside the stale advice of tradition and get retirement savers on the right track.
Conservative 401k investment picks hurting minorities,” (BenefitsPro, February 20, 2015) Emily Latella would have a field day with this headline, but we’ll head her off at the pass. No, this is not about “racist Tea Party extremists,” it’s about the fallacy of “safe” investments. It’s also about leakage.
Company stock fading in 401k plans,” (InvestmentNews, February 23, 2015) It’s about time.
Top 10 mistakes by annuity shoppers,” (MarketWatch, February 25, 2015) It would have been funny if the #1 mistake was “buying an annuity.” His actual #1 comes close.
Index investing purists ignoring mounting downside risks,” (FiduciaryNews, February 26, 2015) It’s a tricky treat but one worth recognizing. This is becoming a popular meme as more and more people come to understand the downside dangers of index investing.


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.
The shape of automatic enrollment to come,” (BenefitsPro, February 19, 2015)
Retirement: Why small-business owners don’t save,” (USA Today, February 24, 2015)


Trends and News for Retirement Savers:
If you’re a retirement plan fiduciary – whether a plan sponsor or a financial professional, don’t you think it’s a good idea to keep up on the topics retirement savers are most interested in? That’s what the media tries to do. Here’s what they think is on the mind of the people saving for retirement.
How to Lobby for a Better 401k,” (Wall Street Journal, February 20, 2015)
Does The Retirement Buckets Strategy Really Work?” (Forbes, February 21, 2015)
Kitces: When NOT to Convert a Roth,” (Financial Planning, February 23, 2015)
The astounding difference that can come from saving an extra 1% of your pay,” (MarketWatch, February 23, 2015)
Retirement: 5 tips on how to save $1 million,” (USA Today, February 24, 2015)
Give financial help to adult children without putting your retirement at risk,” (Yahoo Finance, February 25, 2015)
5 benefits of a capital gains retirement strategy,” (MarketWatch, February 25, 2015)
Homes of Retirees: I Want It My Way,” (Forbes, February 25, 2015)
When To Roll Over Your 401k – And When Not To,” (Forbes, February 26, 2015)
The Hidden Threat to Your Retirement,” (TIME, February 26, 2015)
IRA Providers Offer Bonuses to Attract Money on the Move,” (Wall Street Journal, February 26, 2015)


Wisdom from Some of Our Favorite Blogs:
Pension Risk Matters: X Marks The Spot Approach to Pension Risk Management |
The Trust Advisor: Advisers Tout ‘Fiduciary’ Label to Stand Out From Crowd |
The 401k Plan Blog: Obama directs Labor Department to move ahead on fiduciary rule |
Scholarly Financial Planner: Wall Street’s Complaints About DOL Fiduciary Rulemaking Don’t Withstand Scrutiny |
fi360: White House Stirs Up Fiduciary Debate |
The Trust Advisor: Making Brokers Toe the Mark |
Fiduciary Matters Blog: Lockheed Martin Settles Excessive Fee Lawsuit for $62 million |
fi360: How Long Should An IPS Be? |
The Trust Advisor: Don’t Throw in the Towel on Active Management Yet |
RetirementRevised: White House fiduciary embrace is a turning point for retirement security |
The Frugal Fiduciary: Target Monthly Income when Saving for Retirement |
Fiduciary Matters Blog: Supreme Court Wrestles with Issues in Tibble v. Edison |
The Chicago Financial Planner: Do I Own Too Many Mutual Funds? |
Scholarly Financial Planner: Why Does the U.S. Chamber of Commerce Oppose the Interests of American Business? (DOL Fiduciary Rule) |
Proskauer’s ERISA Practice Center Blog: White House Budget Recommends Elimination of in-Plan Roth Rollovers of After-Tax Contributions |


Hot Tips from Popular Web Resources:
NAPA Net: It’s Baaack … Labor Department Sends Fiduciary Reproposal to OMB |
NAPA Net: SEC’s Gallagher: Fiduciary Rulemaking a ‘Runaway Train’ |
NAPA Net: What’s Holding Back Lifetime Income Solutions? |
NAPA Net: Lockheed’s 401k Fee Settlement Tab: $62 Million |
Morningstar: The Proven Way to Retire Rich |
NAPA Net: Chamber White Paper Pushes Back on Fiduciary Proposal |
NAPA Net: The Importance of Having a Plan |
NAPA Net: Evaluating Managed Accounts |
Motley Fool: Will Obama Really Limit Your Retirement Savings? |
NAPA Net: Supremes Hear Arguments in Tibble 401k Revenue-Sharing Case |
NAPA Net: Case of the Week: Undoing a 401k-to-Roth IRA Conversion |
NAPA Net: Graff Warns of Possible Consequences to Fiduciary Reproposal |
NAPA Net: Savings Rate Jumps to 5.5%, But 25% Save Nothing |
NAPA Net: Fees at Smaller Plans Remain High |
NAPA Net: Robert Shiller: Asset Prices in the ‘Age of Anxiety’ |
NAPA Net: Closing the Coverage Gap |
NAPA Net: Economy’s Rising Tide Doesn’t Wash Away Financial Worry |
Kiplinger: Make Your Retirement Savings Last a Lifetime  |
Motley Fool: Retirement and Risk: The Difference Between Tolerance and Capacity |
NAPA Net: Bill to Slow DOL Fiduciary Proposal Introduced in House |
NAPA Net: What’s Holding Back Lifetime Income Solutions? Advisors. |
NAPA Net: GAO Wants More, Better De-Risking Notifications |
Kiplinger: Consolidate Individual Retirement Accounts |


Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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