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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 3/6/15

March 09
02:07 2015

1020805_25983300_Trending_Topics_2015.03.09_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
The Best Way Plan Sponsors Should Pay Fees for 401k Fiduciary Advice,” (, March 3, 2015) Someone who visits the doctor for a regular check-up pays more than someone who doesn’t. Guess which one is healthier.

Compliance – Say It Again, Sam…:
There’s a problem looming with government run pensions, whether they be for public employees or for Social Security. The only question is if people will listen and do something about it before it’s too late.
Pennsylvania CPAs warn of looming pension crisis,” (BenefitsPro, March 2, 2015) According to these experts, the financial situation is “unsustainable” and they recommend all newly hired public employees be enrolled in a defined contribution plan rather than a defined benefit plan.\
Roth IRAs may soon have required minimum distributions,” (CNBC, March 2, 2015) Yeah. No.
Social Security’s negative returns,” (InvestmentNews, March 3, 2015) Ah, Social Security, the government’s version of an annuity or lifetime income stream. We’ll say it again. What is it about “Ponzi Scheme” that you don’t understand? This study shows most people never recoup the payroll taxes they put into Social Security. Given this, why would anyone ever want to trust the government with their precious retirement?
Do New Regs on Brokers Limit Choice?” (Fox Business, March 5, 2015) Here’s a quick overview from a major media source.

Fiduciary – Here’s Looking at You, Fiduciary…:
The usual suspects have rounded themselves up to do battle in this continuing debate.
A stand-in for the fiduciary standard?” (BenefitsPro, March 3, 2015) Worth the read simply for the Walt Whitman reference. Oh, and the thing about Italian food.
OMB urged to give fiduciary rule full review,” (BenefitsPro, March 5, 2015) Because we haven’t waited long enough already.
Fiduciary Backers Seek Advisor Input on New Standards,” (Financial Planning, March 5, 2015) The would be the Institute for the Fiduciary Standard looking for comments on their “Best Practices” proposal.
Republicans demand proof DOL worked with SEC on fiduciary rule,” (BenefitsPro, March 5, 2015) And when they get it, they’ll start claiming there was collusion. Go figure.
SEC Needs to Take Ownership of Fiduciary Duty Question,” (Financial Planning, March 4, 2015) Can’t tell if this article is saying “SEC get off your duff and get on board with the DOL” or “SEC get on your duff and get in the way of the DOL.”
The WSJ’s Public Service on Fiduciary Standard: Lifing the Veil,” (ThinkAdvisor, March 4, 2015) One word for Knut Rostad’s likening the current debate on the fiduciary standard to crony capitalism: Brilliant!

Fees – Of All the Fees in All the World…:
Like a tube of toothpaste, you can squeeze fees with all the fee regulations you want, but the stuff just oozes to the other end of the tube.
Monitor your 401k investment menus or else,” (BenefitsPro, March 3, 2015) Surprise! This isn’t about investments, it’s about fees! And, as the article states, it’s only a harbinger of things to come should the Supremes rule in favor of the plaintiffs in Tibble vs. Edison.
Is there such a thing as a ‘fiduciary fee’?” (BenefitsPro, March 5, 2015) Short answer: “No.” But read the article to see if you really agree, or only think you really agree.
The Case Against Fee Disclosure: Good Idea; Bad Timing,” (ThinkAdvisor, March 4, 2015) “I was for fee disclosure before I was against it,” write Bob Clark. He then offers a compelling reason for his change of heart. A worthy read and much to consider.
IRA incentives help savers, but they need to keep a close eye on fees,” (InvestmentNews, March 4, 2015) Interesting juxtaposition this article appearing on the list immediately after Bob Clark’s piece. You realize, a broker can get away with paying for investment business whereas doing the exact same thing would land an RIA in the klinker.
Fee awareness growing among plan sponsors,” (Employee Benefit Adviser, March 4, 2015) Editors need to do a better job vetting articles like these. Once again we see a repetition of the myth that “high fees cause low performance” mantra. Academic studies have shown t’s not the size of the fee that leads to underperformance, it’s the source and type of fee. Said another way, you’re likely to be in a better position long term when you pay a higher fee without a conflict of interest than you would be if you paid a lower fee with a conflict of interest.
Do You Understand Your 401k and IRA Fees?” (Fox Business, March 6, 2015) A familiar voice offers the basics on America’s #1 news source.

Investments – The Beginning of a Beautiful Friendship…:
Well, maybe, but only if you focus on the second article.
Should 401k plans include index funds only?” (Employee Benefit Adviser, March 3, 2015) The article contains all you need to know about the index fund sales pitch. The comments offer some of the sales pitch points of active funds.
Investing in an insecure world,” (MarketWatch, March 4, 2015) If you are at all interested in investing and your don’t know who Ben Graham is, you better educate yourself. This article provides a primer.

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.
Financial security worries nix retirement hopes,” (BenefitsPro, February 27, 2015)
Why one-size fits all benefit communications don’t work,” (Employee Benefit News, March 2, 2015)
What should plan sponsors do about inactive retirement accounts?” (Employee Benefit Adviser, March 3, 2015)
Cost of 401k auto-enrollment negligible,” (BenefitsPro, March 4, 2015)
Generational differences force re-examination of workplace retirement education,” (Employee Benefit Adviser, March 6, 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.
Does employer match count toward 401k limit?” (Yahoo Finance, February 27, 2015)
The Biggest Expenses In Retirement — And How To Prepare For Them Now,” (Forbes, March 1, 2015)
Millennials Need to be More Aggressive Investors,” (Wall Street Journal, March 2, 2015)
7 steps to a financially secure retirement,” (USA Today, March 2, 2015)
Many believe US faces retirement crisis,” (BenefitsPro, March 3, 2015)
15 facts about women’s risky retirement outlook,” (BenefitsPro, March 3, 2015)
A smarter way to budget for retirement health-care costs,” (MarketWatch, March 3, 2015)
Borrowing From Your 401k Might Not Be Such a Bad Thing,” (Money, March 3, 2015)
How Much Of Your Income Should You Save?” (Forbes, March 3, 2015)
What to Do When Your 401k Doesn’t Cut It,” (Yahoo, March 4, 2015)
Americans are feeling a little better about their retirement crisis,” (Employee Benefit Adviser, March 5, 2015)

Wisdom from Some of Our Favorite Blogs:
Data “Points”: The Importance of Having a Plan |
Scholarly Financial Planner: The Fallacy of the “Choice” Argument by Opponents to the DOL’s Fiduciary Rulemaking |
Pension Risk Matters: ERISA Litigation Conference Addresses Timely Fiduciary Issues |
Pension Risk Matters: ERISA Litigation Costs |
Boston ERISA Law Blog: Back to the Future: Learning from the Past and Looking into the Future of 401(k) Advisor Fees |
RetirementRevised: IRA providers are waving cash; should you take it? |
fi360: Tibble v. Edison: Why investment monitoring is as important as investment selection |
The Frugal Fiduciary: Not Everyone is Happy about DOL’s Fiduciary Rule |
The Chicago Financial Planner: Are IRA Promotions a Good Reason to Invest? |

Hot Tips from Popular Web Resources:
NAPA Net: Federal Budget Seeks to Support State-Based Auto IRAs |
NAPA Net: Washington State May Create Product Clearinghouse for Small Plans |
NAPA Net: Top 10 Reasons to Have an ERISA Litigator on Speed Dial |
Motley Fool: Doing This Could Derail Your Retirement |
NAPA Net: The Trouble with Tibble |
NAPA Net: Management of TDFs in Flux, DC Survey Confirms |
NAPA Net: NYC Public Advocate Pushes Private Sector Plan |
NAPA Net: Setting Plan Priorities for 2015 |
NAPA Net: Case of the Week: DB Plan Annual Funding Notices |
NAPA Net: Try, Try Again: Retirement Bills Reintroduced in Congress |
NAPA Net: Maryland Assembly Contemplates Retirement Plan Mandate |
Morningstar: How Often Should You Adjust Your “Retirement Number”? |
NAPA Net: LPL Backs Away from Robo Advisor |
NAPA Net: With Fiduciaries, the Simplest Mistakes Can Cause the Biggest Problems |
NAPA Net: Average 401k Balances Continued Climbing in February |
Kiplinger: 101 Most Popular Mutual Funds for 401k Plans |
NAPA Net: Reps. Kline, Roe Press for Details on DOL, SEC Coordination |


Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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