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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 3/13/15

March 16
00:14 2015

1020805_25983300_Trending_Topics_2015.03.16_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
Fred Reish Unravels Washington Regs and Explains 401k Plan Sponsor Fiduciary Liability,” (, March 10, 2015) Things in the news aren’t as they seem, but that doesn’t mean they’re not as they seem.

Compliance – Not to Say We Told You So, But…:
We’re simply not going to repeat ourselves.
Study: Many workers could see cuts in pension benefits,” (Yahoo, March 11, 2015) Alex, I believe the correct question is “What is ‘Ponzi Scheme’?”

Fiduciary – Are the Voices Getting Louder:
This may end in a classic “he said/she said” melee. Delicious.
Finke: Lack of Fiduciary Protection for Elderly Is ‘Insane’,” (ThinkAdvisor, March 5, 2015) A sudden decline in cognitive abilities is more threatening than a sudden decline in the markets.
Perez says Labor worked closely with SEC on fiduciary rule,” (BenefitsPro, March 6, 2015) Congress asks, Perez answers thoroughly and in a very public way. Maybe he should give Hillary some tips.
Supreme Court asked to hear another 401k case,” (BenefitsPro, March 11, 2015) Watch this case carefully because it could have ramifications well beyond the 401k world. Ostensibly a “company stock” case (how many times have we said not to do company stock in a 401k plan?), the essence of the plaintiff’s complaint relies on a “bad” investment decision. Generally bad investment decisions are permitted if the decision maker acts prudently. In other words, the burden of proof is on the accuser, not the accused. That’s the difference in this case so far, but if that changes, all investment advisers should take note (as in, their spines should start shivering).
Industry Gears Up for Bloody Fiduciary Battle,” (On Wall Street, March 11, 2015) Again, it’s the “Industry against Washington” meme. It’s a civil war within the industry. There’s a big difference.
Fiduciary rule second thoughts,” (BenefitsPro, March 11, 2015) What if the new DOL Rule comes and nothing material changes at all? Some are starting to think that will be the outcome.
Deconstructing One Broker’s Take on a Fiduciary Standard,” (ThinkAdvisor, March 11, 2015) It’s all about that pesky vowel thing in the words “advisor” and “adviser.” Kinda ironic given the source of the article.
Why Fiduciary Revision Is a No-Brainer,” (Financial Planning, March 11, 2015) The title says it all.
DOL head says fiduciary standard will happen,” (InvestmentNews, March 13, 2015) Yeah. Just in time for a new Republican president to ignore implementing it. Nice job, DOL. But seriously, do you realize this thing is scheduled to come out of OMB just about the same time the Supreme Court is set to rule on Tibble. Coincide – or – It’s-so-crazy-it-just-might-work strategy?

Fees – “There’s Gambling in This Casino?”:
You, too, might be shocked to discover that some mutual funds are better than other mutual funds simply because of the fees those other mutual funds charge. We know the SEC is “shocked.” As in, “deer in the headlights” at the rate they move on these types of things.
Retirement savings conflict rule: lemons or lemonade?” (BenefitsPro, March 9, 2015) Although the title might make it appear this article is about the Fiduciary Rule, it’s only so on the periphery. The article is really all about fees.
SEC Urged to Reform 12b-1 Fees, Block Risky ETFs,” (ThinkAdvisor, March 12, 2015) For those old enough to remember, before the SEC wasted 5 years doing nothing about the Fiduciary Standard, it was busy wasting years doing nothing about 12b-1 fees.

Investments – I’m With Stupid:
Is it possible to point at one’s self?
Time to focus on the threat of higher rates,” (MarketWatch, March 6, 2015) How many times must this be said before people start to listen?
Securing retirement income with annuities,” (USA Today, March 8, 2015) As long as one can afford it.
Companies Should Have to Offer Low-Cost Funds in 401k Plans,” (Wall Street Journal, March 9, 2015) The article is not much more than the headline. It’s written as something less of an op-ed and more as a plaintive cry. There’s no support for the statement, no discussion of the dangers to 401k plan sponsors when doing this, and no discussion as to the employee persona this products are best suited for. Oh, and that “low-cost” thing is not a valid reason, since all funds should be “low-cost” relative to their general classification. (Said another way, even though they’re available, why would you offer a “high-cost” index fund when all index funds are investing in the same assets.)
7 questions to ask before buying a QLAC,” (MarketWatch, March 10, 2015) These are useful questions.

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.
4 serious retirement plan errors to avoid,” (Yahoo, March 9, 2015)
Read This Before You Trade In Your Pension,” (Wall Street Journal, March 10, 2015)
Employer contributions to retirement plans revisited,” (Employee Benefit Adviser, March 13, 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.
Parents Risk Retirement to Support Millennial Kids,” (Bloomberg, March 5, 2015)
Do you really need $2.5 million for a good retirement?” (CNBC, March 10, 2015)
Don’t Fall for These 5 Retirement Fallacies,” (USNews, March 10, 2015)
For women, retirement is even riskier,” (CBS News, March 10, 2015)
Median retirement account balance drops to $2,500,” (BenefitsPro, March 12, 2015)

Wisdom from Some of Our Favorite Blogs:
Scholarly Financial Planner: Plan Sponsors: Beware Reliance on Non-Fiduciary “Consultants” |
The Chicago Financial Planner: My Top 10 Most Read Posts of February 2015 |
Data “Points”: The Trouble With Tibble |
Behavioral Gap: Doing Nothing Isn’t a Financial Plan |
The Trust Advisor: Retirement: How to Invest in a Low Rate World |
Fred Reish: Did you know …About the Fiduciary Requirements for Selecting and Insurance Guarantee for your Participants? |
Proskauer’s ERISA Practice Center Blog: Delinquent Contributing Employer May Be Fiduciary |
Pension Risk Matters: ERISA Litigation and Enforcement: Role of Independent Fiduciary and Financial Advisor Best Practices |
The Frugal Fiduciary: 401k Sponsors Should Take Note |

Hot Tips from Popular Web Resources:
NAPA Net: Does a Surge in CITs Portend 401k Fee Reductions? |
NAPA Net: 7 Signs You’re a Great Fiduciary |
NAPA Net: Do Your Plan Sponsor Clients Know They’re Fiduciaries? |
Morningstar: Backdoor Roth IRA? Avoid These 6 Mistakes |
NAPA Net: U.S. Retirees Need $2.5 Million For Retirement |
NAPA Net: 4 Things You Need to Know About Default Funds |
NAPA Net: Iowa Bills Would Eliminate Taxes on Retirement Income |
Kiplinger: Retire on the Road |
Motley Fool: Why Your Retirement Will Cost More Than You Think |
NAPA Net: Case of the Week: The Importance of IRS Form 8606 |
NAPA Net: Florida Bill Could Affect Tax Treatment of Plan Loans |
NAPA Net: Pension Funds Lag Individuals’ Adoption of Index Funds |
NAPA Net: Garden State Enters State-Run IRA Fray |
NAPA Net: Millennials Struggle to Save but Are Open to Advice |
NAPA Net: Cuts Ahead for Multiemployer Plan Benefits? |
NAPA Net: Key GOP Senators Say DOL Fiduciary Rule Could Restrict Access to Advice |
NAPA Net: The Biggest Plan Sponsor Mistake? Not Understanding They Are a Fiduciary |
NAPA Net: Easy Money and Bad Advice: Why DC Plans Leak |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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