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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 4/10/15

April 13
00:02 2015

1020805_25983300_Trending_Topics_2015.04.13_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
Why Isn’t 401k Fee Disclosure Working?” (FiduciaryNews.com, April 7, 2015) Who Needs Fee Disclosure When You Have Jerry Schlichter?

Compliance – Some Good, Some Bad:
At least the IRS is trying, albeit not wholly across the board. As for the rest of the bureaucratic machine, garbage in, garbage out.
IRS make 401k auto enrollment easier,” (BenefitsPro, April 3, 3015) In many ways the IRS is much more proactive than the DOL when it comes to incentives that encourage greater savings retirement plans. This action is no doubt in response to recent surveys that show, despite more than 60% of the large 401k plans using auto-enrollment, only about a third of all 401k plans are using it. This means the smaller plans are lagging the larger plans.
Democrats Rethink Social Security Strategy,” (Wall Street Journal, April 5, 2015) Apparently they’ve decided it’s easier to just promise a free lunch than figure out how to actually provide one. But wait! Isn’t that the entire premise of Ponzi Schemes. Good to see the Dems playing along with this meme.
IRA Rollover Limit May Lead to Tax Penalties for Clients,” (Financial Planning, April 7, 2015) It seems like the bureaucracy has no problem unilaterally dissing the courts when it means generating revenue. If that’s the case, why don’t they ignore the courts on this one is as good a question as any. Could it be this allows them to generate revenue?
Maryland shows even strongest states keep kicking pension can,” (Benefit News, April 9, 2015) If you ever wanted to see the anatomy of a (legal) Ponzi Scheme, read this.

Fiduciary – Is the Dust Settling?:
As we near the home stretch of the public disclosure of the DOL Fiduciary Rule – er, we mean Conflict-of-Interest Rule – we’re beginning to see support grow and opponents search for an acceptable out.
Advisor Support For Retirement Plan Fiduciary Duty Increasing, Says Survey,” (Financial Advisor, April 7, 2015) Of greatest interest are the results that say 80+% believe the fiduciary rule should apply to IRAs and that 80+% say this won’t hurt their ability to serve small clients.
Merrill Lynch’s John Thiel urges colleagues to work with DOL on fiduciary rule,” (InvestmentNews, April 8, 2015) Could it be that the other guy just blinked? Or is this just another ruse?
SEC Chief: Fiduciary, Third-Party Audit Rules to Advance This Year,” (ThinkAdvisor, April 9, 2015) Different year, same tune.
Where does a plan sponsor’s responsibility end?” (Benefit News, April 9, 2015) This is all about leakage and what the plan sponsor is on the hook for.
Fiduciary foes are spitting into the wind,” (InvestmentNews, April 10, 2015) Blaine Aiken tells it like it is.

Fees – Not a Good Week for 12b-1 Fees:
We had this pegged a couple of weeks ago. Nice to see the rest of the world catch up. Now, if they can only figure out that it’s revenue sharing, not 12b-1 fees, that eat up the bulk of those nasty conflict-of-interest fees.
SEC Reviewing 12b-1 Fees,” (ThinkAdvisor, April 7, 2015) Interest the SEC would say this – two weeks after FiduciaryNews.com ran an article on this issue! Coincidence? We’d like to think not. Then again, there are plenty of things we’d like to think not, but we think anywhere. That’s why, therefore, we are.
What went wrong with 401k fee disclosure?” (BenefitsPro, April 8, 2015) What if the Department of Labor invited everyone to a party – and nobody came?
The Single Most Obnoxious Retirement Fund Fee: How To Dump It,” (Forbes, April 8, 2015) This is all about 12b-1 fees. Old news. Time to target revenue sharing.
Push for fee transparency continues,” (Benefit News, April 9, 2015) Just another in a long line of confused reporters mixing up “fees” with investment decisions. Yes, there are conflict-of-interest fees that often make certain investment options much more expensive than they need to be, but these fees exist across all investment options, including index funds.
Many in the dark about broker fees,” (BenefitsPro, April 9, 2015) This article is primarily about retail investors, but what is a plan sponsor if not a retail investor with a different job title?
SEC Probes Whether 12b-1 Fees Are Used Properly,” (ThinkAdvisor, April 9, 2015) Again with the 12b-1 fees. This is such old news.
Regulators Seek Clarity In Fee Disclosures,” (Insurance News Net, April 9, 2015) Another survey showing too many people think their retirement plan doesn’t cost them anything and even more admit they have no idea what they’re being charged. Worse, the vast majority claim “fees are important” to them. Why? Do they even know what they’re getting for those fees? Maybe there’s something more important?

Investments – A Potpourri of Thoughts:
All over the board this week, but mostly leftovers from last week.
8 myths about collective investment trusts,” (BenefitsPro, April 6, 2015) This is less of an article and more of a press release.
The Real Point of Active Investing,” (ThinkAdvisor, April 6, 2015) Somewhere along the line, Wall Street convince investors they should all have the same goal: “Beat the Market.” Then they convinced those same investors they couldn’t beat the market, so they may as well limit their investments to index funds. Truth be told, no one wants his epitaph to read “He Beat the S&P 500.” No, life is more bountiful than that. As such, we all have different goals, personal goals, and beating the S&P 500 is probably very low on the list, if it is there are all.
When it comes to stocks vs. cash, follow Buffett’s lead,” (MarketWatch, April 8, 2015) Buffet was a discipline of Ben Graham. This interpretation of Buffet would fly in the face of all the Graham says. Not that it’s factually incorrect, but that it amplifies the problem with trying to invest via “risk” instead of goals.

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.
U.S. workers falling short in healthy retirement savings,” (Employee Benefit Adviser, April 6, 2015)
Helping employers understand the difference between retirement plans,” (Employee Benefit Adviser, April 6, 2015)
Keep it simple: Getting the retirement message to employees,” (Benefit News, April 7, 2015)
Employer contributions to retirement accounts on the rise,” (Benefit News, April 7, 2015)
Modern-day 401k plan emerging,” (BenefitsPro, April 7, 2015)
401k redesign requires clarity, focus on financial literacy,” (Benefit News, April 8, 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.
Look who’s retiring later,” (CNBC, April 3, 2015)
Can neuroeconomics improve 401k decision-making?” (Employee Benefit Views, April 7, 2015)
Early Retirement: How to Withdraw Retirement Funds Penalty-Free Before 59,” (US News, April 7, 2015)
7 retirement mistakes Gen X’ers are making,” (MarketWatch, April 7, 2015)
1 in 3 Older Workers Likely to Be Poor or Near Poor in Retirement,” (Money, April 8, 2015)
Can your retirement survive a financial shock?” (CBS News, April 8, 2015)
Clients’ Top Retirement Worry Is Going Broke: AICPA,” (ThinkAdvisor, April 8, 2015)
Why You Will Need Less Money Than You Think for Retirement,” (Wall Street Journal, April 9, 2015)
The Pros and Cons of Hiring a Financial Adviser,” (Money, April 9, 2015)

Wisdom from Some of Our Favorite Blogs:
Boston ERISA Law Blog: Company Stock in Retirement Plans: Where Lies the Line Between Prudent and Imprudent Conduct? |
fi360: Expanding the IPS to the rest of your financial and personal life |
Behavior Gap: Simple Financial Solutions Often Beat the Complex Ones |
Squared Away Blog: Kids’ College Trumps Parents’ Retirement |
Proskauer’s ERISA Practice Center Blog: Ameriprise Agrees to Pay $27.5 Million to Settle Fiduciary Breach and Prohibited Transaction Claims |
Proskauer’s ERISA Practice Center Blog: Settlement Reached in Stock-Drop Case |
ERISA Lawyer Blog: IRS Discusses Correction Of A Violation Of The Universal Available Rule For 403(b) Plans |
Squared Away Blog: Retirement Coverage Expanded: UK vs US |
ERISA Lawyer Blog: IRS Discusses How A Self-Employed Individual Should Calculate His Or Her Retirement Plan Contribution And Deduction |
Data “Points”: 3 Pervasive Retirement Industry Myths |

Hot Tips from Popular Web Resources:
NAPA Net: 7 Signs You Don’t Have a Code of Ethics |
NAPA Net: Helping Automatically Enrolled Participants Maximize Their Match |
NAPA Net: What’s Undermining Retirement Confidence? |
NAPA Net: Retirement Focus Grows for NQDC Plans |
NAPA Net: 3 Pervasive Retirement Industry Myths |
NAPA Net: TDF Adoption Explodes in Vanguard Plans |
NAPA Net: Public Pension Strain on States Likely to Continue, S&P Says |
Kiplinger: Retirees, Reduce Your RMDs with a Roth Conversion |
Motley Fool: Should You Roll Over Your Old 401k? |
NAPA Net: fi360 Survey Backs DOL Fiduciary Regulation |
NAPA Net: Case of the Week: Appointing an ERISA 3(38) Investment Manager |
NAPA Net: Supreme Court to Hear ERISA Overpayment Case |
NAPA Net: Study: As Economy Has Recovered, Pension Plans Haven’t |
Motley Fool: The Average American Is Paying Too Much in 401k Fees. Are You? |
NAPA Net: Towers Watson CEO: Trends Don’t Favor Lifetime Income Adoption |
NAPA Net: SEC Regulators Now Examining 12b-1 Fees |
NAPA Net: Court Ruling a Reminder About Electronic Communication Limits |
Kiplinger: How to Pick the Best Place to Retire |
NAPA Net: For 401k Investors, Good News on TDF Returns, Fees |
NAPA Net: Reader Poll: Failure to Save, Plan Trips Up Retirement Confidence |
Motley Fool: How Much Should You Contribute to Your 401k, and How Should You Invest It? |

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Christopher Carosa, CTFA

Christopher Carosa, CTFA

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