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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 3/27/15

March 30
00:03 2015

1020805_25983300_Trending_Topics_2015.03.30_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
12b-1 Fees/Revenue Sharing Add to 401k Plan Sponsor Fiduciary Liability Woes,” (, March 24, 2015) In some distant future, what fossilized evidence of poor judgment will come back to haunt unsuspecting 401k plan sponsors.

Compliance – “Hi! I’m from the government and I’m here to help.”:
Ronald Reagan once said these were the scariest words in the English language. Are future retirees about to find out why?
Retirement savings sure to draw legislative attention,” (BenefitsPro, March 20, 2015) This will be the big test of the Republican leadership. It will show if they will remain a distinct party continuing the legacy of Reagan or whether they will consign themselves to a mere Democrat-Lite. Mind you, nothing need actually pass for this determination to be made. It’s the nature of the arguments that will tell the true story.
State-run retirement programs picking up steam,” (BenefitsPro, March 22, 2015) They’re coming to take your business away, ha-ha, ho-ho, hee-hee!
Growth in state-run retirement plans could help employers,” (Employee Benefit News, March 23, 2015) Unless that employer happens to be in the business of managing retirement plans.
Pension Funds Seek Shelter From Dollar’s Rise,” (Wall Street Journal, March 23, 2015) Karma for betting against America?
Doing 401k rollovers right,” (BenefitsPro, March 23, 2015) An uneasy guide through unchartered waters.
Transportation bill may be best hope for MEPs,” (BenefitsPro, March 24, 2015) Ya gotta do what ya gotta do.

Fiduciary – If it ain’t broker, don’t fix it.:
But if is a broker, it looks like it’s going to get fixed one way or another.
NAPA’s deep reservations about DOL’s broker rules,” (BenefitsPro, March 22, 2015) It’s all about the IRA rollover business. The issue will be moot if the SEC outlaws 12b-1 fees and revenue sharing.
NAPA adopts proactive stance against fiduciary standard,” (Employee Benefit Adviser, March 23, 2015) Different take on the same story above.
SEC’s White: Fiduciary battle far from over,” (InvestmentNews, March 24, 2015) Well, it was fun while it lasted. Wonder who got to White.
SEC Chief White: Fiduciary Rulemaking Just Getting Started,” (ThinkAdvisor, March 24, 2015) Just to clarify(?) things, White said it’s not “whether” the SEC will go ahead with the Rule, but that she thinks they “should.” Whatever that means…
Are 401k brokerage windows ‘dirty?’,” (BenefitsPro, March 25, 2105) It’s not clear why any plan sponsor would want to take on this added fiduciary responsibility. It is therefore not clear why the DOL would do anything to encourage plan sponsors from taking on this added fiduciary liability. If someone wants to drive their retirement account into a bridge abutment, let them do it in their own plan.
New York City Comptroller to Call for New Fiduciary Disclosures by Brokers,” (Wall Street Journal, March 25, 2015) And so it begins.
Sen. Shelby, NY Comptroller Enter Fiduciary Debate,” (ThinkAdvisor, March 25, 2015) At least he admits there’s a fiduciary duty.
Will She or Won’t She? Mary Jo White and the Broker Fiduciary Standard,” (ThinkAdvisor, March 25, 2015) At least it’s comforting to know we’re not the only party confused by the matter.
DOL chief Perez says new fiduciary rule will distinguish between investor education and investment advice,” (InvestmentNews, March 25, 2015) Captain Kirk never said “The best offense is a good defense.” Perex must have never watched Star Trek.
Are brokers being branded with a scarlet ‘S’?” (InvestmentNews, March 27, 2015) Don’t know if this will generate any sympathy. No one is saying “suitability” is bad when dealing with traditional brokerage functions (i.e., brokering trades). But once brokers crossed the line into providing advice, especially in a non-incidental way, then they committed themselves to the road to “fiduciary,” whether the intended to or not.

Fees – Abandon Hope All Ye Who Enter:
When you make a deal with hidden fees, you make a deal with the devil. Sooner or later, he’ll come asking for your soul. Is that what you really want?
Moving out of the shadows on revenue-sharing,” (BenefitsPro, March 22, 2015) According to one study, only 13% of 401k plans have totally revenue-sharing free menu options. That could be a problem for 87% of the plan sponsors out there.
401k suits draw employee attention to fees, fiduciary duty,” (Employee Benefit Adviser, March 25, 2015) For those of you just back from a 10 year stay on Mars, this is news.
Let my revenue-sharing go,” (BenefitsPro, March 25, 2015) Remember 12b-1 fees? They used to roam like proud lions in the 401k forest. Today, they are relatively rare. But a stealthy panther has replaced them – revenue sharing. With the low hanging fruit of 12b-1 conflict of interest fees nearly fully harvested by class action attorneys, will their sites now be turned to revenue sharing? And what can a plan sponsor do about it?

Investments – Lotsa questions…:
…precious few answers.
A Scary Movie: Filling Your 401k With Company Stock,” (New York Times, March 20, 2015) It’s about time the Times got something right.
Overcoming TDF overload,” (BenefitsPro, March 22, 2015) Well, this is what happens when plan sponsors act like so many lemmings. We’ll see which of these products (if any) survive the next market crash.
401k bond funds get a makeover,” (InvestmentNews, March 22, 2105) But, they’re still bond funds. And that’s the most important thing to know – and worry about.
Americans’ Retirement Funds Increasingly Contain Tech Start-Up Stocks,” (New York Times, March 22, 2015) We know the New York Times has a lot of really smart people on its staff, so how an article of this nature can go without any mention of the significance of the Prudent Man Rule as it pertains to this issue. But, then again, that doesn’t fit the meme, and isn’t that what the New York Times has devolved to?
What Is a Future Income Stream Really Worth?” (Wall Street Journal, March 23, 2015) The article focuses on structured settlements but it’s really about annuities.
Evensky, in Reversal, Sees Annuities as Vital for Retirement,” (ThinkAdvisor, March 24, 2015) Before you get too excited, is one very specific type of annuity, not all annuities.
Why the 1% loves annuities,” (MarketWatch, March 24, 2015) Because they are the only one who can are them and they are the only ones that can afford the risk of relying on them.

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 Stress of It All: DC Plan Participants Need More Than Just Retirement Advice,” (ThinkAdvisor, March 20, 2015)
Traditional IRA contributions see dip,” (Employee Benefit Adviser, March 20, 2015)
5 ways to keep plan sponsors out of trouble,” (BenefitsPro, March 22, 2015)
Bracing for the next wave of 401k lawsuits,” (BenefitsPro, March 22, 2015)
New areas for 401k lawsuits emerge,” (InvestmentNews, March 23, 2015)
Removing the Roth IRA Contribution Limit With 401k Dollars,” (ThinkAdvisor, March 23, 2015)
A better way to give 401k advice,” (BenefitsPro, March 23, 2015)
The Growing Divide Between the Retirement Elite and Everyone Else,” (Money, March 23, 2015)
401k access key to positive retirement outcomes,” (Employee Benefit News, March 24, 2015)
Swarm of litigation rocks 401k space,” (Employee Benefit Adviser, March 24, 2015)
Ameriprise 401k participants win $27.5M settlement,” (BenefitsPro, March 26, 2015)
Employer objections stand in way of 401k plan success,” (InvestmentNews, March 27, 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.
Here’s How to Tell If You’re Saving Enough for Retirement,” (Money, March 19, 2015)
How to Get Half of Your Spouse’s Social Security Check,” (DailyFinance, March 19, 2015)
The right way to roll over your retirement accounts,” (MarketWatch, March 19, 2015)
How to Increase Your After-Tax Wealth in Retirement,” (Wall Street Journal, March 19, 2015)
What Americans Really Think About IRAs, in 5 Charts,” (ThinkAdvisor, March 20, 2015)
IRAs are better than ever for retirement savings,” (MarketWatch, March 21, 2015)
7 Ways Private Equity Is Gaming Your Pension,” (Bloomberg Business, March 23, 2015)
3 reasons to use a Roth IRA to save for college,” (MarketWatch, March 25, 2015)
Tackle retirement health costs early,” (Yahoo Finance, March 25, 2015)

Wisdom from Some of Our Favorite Blogs:
ERISA Lawyer Blog: IRS Reminds Us That Many Retirees Face April 1 Deadline To Take Required Retirement Plan Distributions |
Boston ERISA Law Blog: Breach of Fiduciary Duty, Preemption and Liberal Pleading Rules |
Behavior Gap: Assets & Liabilities: What’s Your Current Financial Reality? |
Trust Advisor: The 6 Most Overlooked Income Tax Deductions |
Squared Away Blog: Why I Dropped My Financial Adviser |
Proskauer’s ERISA Practice Center Blog: U.S. District Court Rules that Float Income Earned by Fidelity Is Not a Plan Asset |
Proskauer’s ERISA Practice Center Blog: Ninth Circuit Rules Beneficiary Designation Forms Are Not Documents and Instruments Governing the Plan |
Trust Advisor: When You Must Take Money Out of Your IRA or 401k |
Fiduciary Matters Blog: Plaintiffs Fail to Float Claim Past District Court |
fi360: An Update to Reg D could be Opportunity for Advisors Willing to Take on Additional Due Diligence |
Pension Risk Matters: Pension Risk Governance Blog Still Going Strong After Nine Years |
Squared Away Blog: Procrastinators Are Not Big Savers |

Hot Tips from Popular Web Resources:
NAPA Net: ‘No Advice’ Rule a Top-Tier Issue |
NAPA Net: State Role in Expanding Coverage Doesn’t Have to Be Partisan |
NAPA Net: TDF Trends and Best Practices |
Motley Fool: The 2 Biggest Risks to Future Social Security Benefits |
Kiplinger: How Much to Invest in an Immediate Annuity |
NAPA Net: Building Engagement Through Fun and Games |
NAPA Net: Redefining Life — and Retirement |
NAPA Net: Excellence from Plan Sponsors’ Perspective |
NAPA Net: Doll, te Wildt Tackle Economic Trends and Investment Outlook |
NAPA Net: SEC, DOL Fiduciary Focus: A Potential Double Whammy? |
NAPA Net: SIFMA White Paper Challenges Rationale for Fiduciary Proposal |
NAPA Net: MEPs Not the Only Option for ‘Nano’ Plans |
NAPA Net: During DC Market ‘Sea Change,’ Advisors Must Swim With Current |
NAPA Net: What’s the Right Savings Rate for a Successful Retirement? |
NAPA Net: ‘Star Wars’ — DC Aggregators Girding for Battle |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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