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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 4/3/15

April 06
00:02 2015

1020805_25983300_Trending_Topics_2015.04.06_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
What is a ‘Collective Investment Trust’ and Does It Make Sense for a 401k Fiduciary to Use One?” (, March 31, 2015) Older than mutual funds, the dangers in them exposed by the crash of 1929 led to the creation of mutual funds. Can their modern descendants reclaim the mantle long held by mutual funds?

Compliance – The Government Yin vs. Yang:
On one hand they want to make it easier for private retirement plans to work. On the other hand, they want to nationalize the business.
Support grows for public pension for all,” (BenefitsPro, March 27, 2015) If this headline is true, then it shows you the success of a nearly six-year drip-drip-drip campaign against the 401k. That the campaign to replace private retirement accounts with public pensions in the face of ongoing public pension bankruptcy proves a free lunch is the best way to sell anything.
IRS, Treasury Pave Way for Easier 401k Auto-Enrollment,” (InvestmentNews, April 2, 2015) The best part about it, beyond facilitating the use of auto-enrollment, is the forgiving corrective actions to overcome compliance mistakes.

Fiduciary – Caveat Emptor!:
There’s a simple solution to this: Carpe Diem! Plan sponsors cannot and should not rely on regulators to help guide them. They’ve got to seize the initiative and take control of their own actions.
A surge in 401k managed account sign-ups,” (BenefitsPro, April 1, 2015) Ironically, the article starts by saying this is being done for fiduciary reasons, and ends by saying managed account relationships have been under investigations for fee-related issues.
Who oversees wealth advisers who guide investors on 401k plans? It depends,” (InvestmentNews, April 1, 2015) Well, if it does, it shouldn’t.
SEC’s commitment to tougher broker rules questioned,” (BenefitsPro, April 2, 2015) Only because, under the current rules of Washington, the side with the lobbyists carrying wads of cash is the winner.

Fees – How’s that Disclosure Workin’ for Ya?:
AARP says 71% of the people think their 401k is free. And this is two years after mandatory fee disclosure went effective. Still think disclosure is the answer?
Are you being hit with big 401k fees?” (CNBC, March 31, 2015) So what can plan participants do? The only viable option is to tell their employers.

Investments – Have Index Funds Jumped the Shark?:
Probably not. But they are lagging actively managed funds this year and that is bringing out the articles that question the validity of the “index only and every time” option.
ESOPs crush S&P 500 index returns,” (BenefitsPro, March 31, 2015) Given the inherent risk, one would expect nothing less.
Some Index Funds Are Bad Choices for Investors,” (US News, March 31, 2015) It’s about time someone spilled the beans on this.
The naked truth about collective trusts,” (BenefitsPro, April 1, 2015) That the market continues to resist broad approval of the use of common trust funds doesn’t mean common trust funds aren’t good, it just means they aren’t yet good enough.
Why REITs belong in your retirement portfolio,” (MarketWatch, April 1, 2015) Funny, but the author wholly ignores the real reason to put REITs in the retirement portfolio – because that’s where income producing securities go. Rather, the article focuses on why REITs are better than the S&P 500 through comparison of the usual MPT statistics.
TDFs leave young participants vulnerable,” (BenefitsPro, April 2, 2015) The premise of the article implies the young are too immature to weather a bear market; therefore, a high equity exposure is bad. The premise may be correct, but the conclusion is terribly, terribly wrong.

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.
Employer objections stand in way of 401k plan success,” (InvestmentNews, March 27, 2015)
9 hot trends in 401k plans,” (BenefitsPro, March 27, 2015)
Are brokers being branded with a scarlet ‘S’?” (InvestmentNews, March 27, 2015)
Repeated 401k lawsuits will end shady looking practice, experts predict,” (Employee Benefit News, March 27, 2015)
For millions, 401k plans have fallen short,” (USA Today, March 29, 2015)
Four Ways to De-Bug Your 401k,” (Forbes, March 30, 2015)
Who wants to service a tiny retirement plan? This guy,” (InvestmentNews, March 31, 2015)
Kraft-Heinz would create $13-billion retirement behemoth,” (BenefitsPro, April 1, 2015)
Retirement planning a significant hurdle for employees,” (Employee Benefit Adviser, April 1, 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.
Why you should put your IRA in a trust,” (MarketWatch, March 27, 2015)
Americans clueless about 401k plans,” (BenefitsPro, April 2, 2015)
Could these policy fixes help you save for retirement?” (CNBC, March 27, 2015)
The surprising amount retirees spend,” (MarketWatch, March 30, 2015)
Why Many Middle-Class Households Are Outsaving the Wealthy,” (Money, March 30, 2015)
7 habits of highly effective retirement savers,” (CNBC, March 30, 2015)
Ways to minimize taxes to maximize retirement savings,” (USA Today, March 31, 2015)
What are the Roth IRA rules?” (Yahoo, March 31, 2015)
From suits to the slopes: Retiree becomes a ski instructor,” (CNN, March 31, 2015)
Some Financial Advisers Hesitate with Roth IRA Conversions,” (Wall Street Journal, April 1, 2015)
3 Ways to Be Sure You’re Not Fooling Yourself About Your Retirement Readiness,” (Money, April 1, 2015)
Use tax time to focus on retirement,” (InvestmentNews, April 2, 2015)

Wisdom from Some of Our Favorite Blogs:
The Trust Advisor: Top SEC Cop Doubles Down on Fiduciary Fight: Why Keep FINRA Around? |
Pension Risk Matters: Investment Committee Teamwork |
The Trust Advisor: What Every Investor Needs to Know About Basis |
The Trust Advisor: 20 Questions You Should Ask Before Hiring a Wealth Manager |
Squared Away Blog: Tapping 401k, IRA Plans Early Is Costly |
Data “Points”: At Long Last, Retirement Confidence Surges |
RetirementRevised: What does the robo-advisor food fight mean for investors? |
Squared Away Blog: Grads With Student Loans: Rent or Buy? |
Behavior Gap: 12 Days of OPFP: It’s My Turn to Do Something for You |

Hot Tips from Popular Web Resources:
NAPA Net: With Court Date Approaching, Another 401k Revenue Sharing Case Settles |
NAPA Net: 7 Signs Your Best-Laid Plans Are About to Go Bust |
NAPA Net: Oregon Weighs State Retirement Savings Plan |
NAPA Net: How Do You Measure Retirement Plan Success? |
NAPA Net: Court Finds No Fiduciary Breach on Use of Float |
NAPA Net: At Long Last, Retirement Confidence Surges |
NAPA Net: DC Asset Rise Outpaced IRA Growth in Q4 2014 |
NAPA Net: 5 Plan Provisions That Can Reduce ERISA Litigation Risk |
NAPA Net: IRS Makes it Easier to Resolve Plan Loan Problems |
NAPA Net: HSA Contributions Drifting Lower: EBRI |
NAPA Net: 457s: More Coverage Than You Think |
Motley Fool: 82% Of Americans Are Making a Big Retirement Mistake. Don’t Be One Of Them! |
NAPA Net: Is Revenue Sharing a Dinosaur? |
NAPA Net: Leveraging the HR Gatekeeper |
NAPA Net: Levine: Beware of Risk Exposure in Policies, Disclosures and Documentation |
NAPA Net: March Markets Mixed for 401k Balances |
NAPA Net: 9 Key Trends for 2015 |
NAPA Net: Plan Sponsors, Advisors Differ on Plan Success Measures |
NAPA Net: IRS Provides Some Good News for Automatic Enrollment Plans |
Kiplinger: Retirement Security In a Single Number |
Gallup: Investors in U.S. With 401k Value One-on-One Advice Most |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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