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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 4/24/15

April 27
01:05 2015

1020805_25983300_Trending_Topics_2015.04.27_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
Exclusive Interview: PSCA Chair Stephen W. McCaffrey Sees Challenges in Legislative Attempts ‘to ‘Fix’ an Un-Broken System’,” (, April 21, 2015) What currently much discussed 401k “need” was successfully fought by the PSCA in the 1950s?

Compliance – And the Battle Begins:
How do you comply with a rule that won’t change anything and won’t be enforced?
Is DOL education carve out plan too murky?” (BenefitsPro, April 21, 2015) Maybe, but before this they had nothing, just rampant conflicts-of-interest.
Is the DOL’s New Proposal Really a New Broker Standard?” (ThinkAdvisor, April 22, 2015) This is what we immediately thought the day we attending the DOL’s pre-release press conference. It would be funny if, sadly, it weren’t so true.
Broker Best-Interest Contracts Seen as Arbitration Game-Changer,” (WealthManagement, April 22, 2015) Right on schedule, we see the opening bid by the industry to slam the new proposal on an issue that can “destroy their business model” (since that meme worked so effectively the last time). Who knows? The DOL my end watering down the watered down proposal.
Execs See Fiduciary Proposal as Complicated, Costly,” (On Wall Street, April 23, 2015) And the regulators will respond back, “Of course, sir (wink, wink), it’s complicated and too costly (nod, nod), say no more, say no more.” And, yes, we often picture the typical regulator to look and sound like Eric Idle.

Fiduciary – There’s Hope in this Change:
The naïve will continue to believe. The cynical will never believe.
DOL Moves Industry Closer to Harmonization,” (WealthManagement, April 17, 2015) Maybe yes, maybe no. Depends who you ask, as the article points out with quotes from industry thoughtleaders.
Shifting focus is in brokers’ best interests,” (InvestmentNews, April 19, 2015) This op-ed piece generated a lot of controversy in reading the comments. It’s a muddled commentary that may not have hit on all cylinders.
7 Rules You Need to Know in Fiduciary Proposal,” (IAG Blogs, April 20, 2015) In a nutshell. Probably could have used this last week.
Making advisors work for clients is way past due,” (BenefitsPro, April 20, 2015) Ironically, while this article asks the SEC to duplicate what the DOL just proposed, it falsely assumes the DOL proposal will lower fees. Remember, the current DOL proposals not only allows conflict-of-interest fees to remain, by doing so, it tacitly endorses them.

Fees – Using Fees to Fake Fiduciary:
Really. Does it even matter anymore. It’s clear who the winners are, so let them win the regulatory battle and take the war to the marketplace – the only battlefield of importance.
DOL Blasts Industry Fiduciary Studies,” (Financial Advisor, April 17, 2015) This is a lark. It only goes to show how the DOL lacks, what Italians call, “coglioni” – or, translated for family viewing, “courage.” The DOL doesn’t “blast” the infamous Oliver Wyman study because of its spurious objectivity, its lack of significant sample size, and its false conclusions. No. Instead, the DOL “blasted” the report because is assumed commissions would be barred (which, in a true fiduciary standard, they would have been), when, under the DOL’s current proposal, they say, “Fooled ya! We’re not eliminating conflict-of-interest fees after all!”

Investments – Why Trust is so Hard to Earn:
At least for the entire industry. When it comes to individuals, truth and honesty will eventually earn trust, despite everything the industry is doing to tarnish every individual’s reputation.
Should Mutual Funds Be Illegal?” (ThinkAdviser, April 17, 2015) Apparently the rest of the world is coming around to what we published nearly 5 years ago: “3 Reasons to Outlaw Index Investing Right Now (and One Selfish Reason Not To) in 5 Acts,” (, May 12, 2010).
How Many Investments Do You Need In Your Portfolio?” (Forbes, April 17, 2015) Here’s an article for those nostalgic for the time when every still thought Modern Portfolio Theory was the cat’s pajamas and before they realized the dangers of over-diversification. Unfortunately, this author, and apparently the editors of Forbes Magazine, never got that memo.
Money market fund changes: What 401k plan sponsors need to know,” (Employee Benefit News, April 21, 2015) Biggest concern: Not all money market funds will be stable value.
Millennials are saving but their fear of stocks could hurt them,” (InvestmentNews, April 21, 2015) Is this the new mattress savings generation? This makes no sense unless there’s something else going on with millennials. What is means is that they’ll have to save more.
Why Target Date Funds Are Disliked By Financial Advisers,” (DailyFinance, April 22, 2015) There are a lot of reasons and they’re all listed here. The only beef is the “one size fits all” complaint. It’s not that “one size fits all” doesn’t work in general, it’s just that it doesn’t work in a target date scenario (i.e., it works best when all employees – regardless of age – are pooled together as in a traditional profit sharing plan, otherwise, it’ll work much better in by grouping employees together in risk-based target funds, not age-based target funds).

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.
Employees unprepared for adequate post-retirement income needs,” (Benefit News, April 21, 2015)
It’s time to give plan sponsors the bully pulpit,” (BenefitsPro, April 21, 2015)
Money market fund changes: What 401k plan sponsors need to know,” (Employee Benefit News, April 21, 2015)
Employee retirement confidence levels up, retirement plans crucial,” (Benefit News, April 22, 2015)
Employers assuming more responsibility for employee financial wellness,” (Benefit News, April 22, 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 maximize your Social Security benefits,” (CNBC, April 16, 2015)
4 Ways Retirement Is Like Baseball,” (US News, April 17, 2015)
Should you insure your retirement income?” (CBS News, April 17, 2015)
Tax Traps & Retirement Planning Opportunities for American Entrepreneurs Abroad,” (Wall Street Journal, April 17, 2015)
George Carlin and the new retirement minimalism,” (MarketWatch, April 17, 2015)
Aging boomers redefine retirement,” (InvestmentNews, April 19, 2015)
Why Roth IRA Tax Tricks Won’t Rescue Your Retirement,” (Money, April 20, 2015)
This Is the Worst Retirement Solution Ever,” (Financial Planning, April 21, 2015)
U.S. Retirement Confidence Soars Despite Grim Realities,” (WealthManagement, April 21, 2015)
Financial strategies to cover an early or unexpected retirement,” (Los Angeles Times, April 21, 2015)
Married workers save the most for retirement,” (BenefitsPro, April 22, 2015)
Nearly a third of savers have less than $1,000 for retirement,” (CNBC, April 22, 2015)
Why Gen Xers May Be More Prepared for Retirement Than Boomers,” (Time, April 23, 2015)

Wisdom from Some of Our Favorite Blogs:
ERISA Lawyer Blog: IRS Reminds Us To Follow Up On VCP Corrections That We Agreed To |
Proskauer’s ERISA Practice Center Blog: The U.S. DOL’s New Proposed Rules Defining Fiduciary Investment Advice |
RetirementRevised: Survey finds an unfounded rise in retirement confidence |
The Trust Advisor: Why Paying for Financial Advice Makes Sense |
Behavior Gap: Do Your Values Align with Your Money & Time? |
Squared Away Blog: Late-Career Job Changes Reduce Stress |
The Trust Advisor: Here’s Who Wins The Battle Between Human And ‘Robo’ Advisers |
Behavior Gap: Ideas for People Who Use Money: We May Be Hurting Ourselves |
Business of Benefits: DOL’s Proposed Fiduciary Rules May Unexpectedly Open Lifetime Income Door, If… |
Data “Points”: On Retirement Plans and Plans for Retirement |

Hot Tips from Popular Web Resources:
NAPA Net: TDFs Still a Mystery to Most Participants |
NAPA Net: 7 Signs You’ve Lost Your Nerve |
NAPA Net: On Retirement Plans and Plans for Retirement |
NAPA Net: Having a Retirement Plan Trumps Having a Plan for Retirement |
NAPA Net: Case of the Week: Investment Advice Fiduciary |
NAPA Net: Will Roll-ins Take Off? |
NAPA Net: If They Could Do It Again, 46% of Retirees Would Retire Earlier |
Motley Fool: Social Security Is Late Again – Should You Worry? |
NAPA Net: A House Divided… |
NAPA Net: Survey: Large Employers Lead the Way on Financial Wellness |
NAPA Net: Advisors Don’t Need Newton’s Law to Help Beat Plan Sponsor Inertia |
Kiplinger: 3 Great Freebies for Retirees |
Motley Fool: An Audacious Retirement Goal: Upsize Your Home |
NAPA Net: Custom TDFs: When to Use Them and Why |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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