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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 5/15/15

May 18
00:02 2015

1020805_25983300_Trending_Topics_2015.05.18_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
The Big 401k Fiduciary Question: Target Date or Target Risk?” (, May 12, 2015) Maybe marketing isn’t all that it’s cracked up to be – at least when it comes to the best interests of retirement savers.

Compliance – And One Ponzi to Control Them All:
Does this tale have a familiar ring to it? The promise of returns, but they’re dependent on new “investors”? That’s the definition of a Ponzi Scheme. It’s also the practical reality of Social Security.
Social Security May Be in Worse Shape Than We Thought: Study,” (NBC News, May 8, 2015) Saying “It’s too late to do anything about it” merely pushes the eventual solution to the problem further into the future. Yes, the 1980s were the perfect time to have weaned our nation off of this Ponzi Scheme, but the only solution now is a bail out, meaning it’s only a question of the cost. Will we pay a lot now or pay even more in the future?
SEC’s White Links Fiduciary to RIA Exam Initiatives,” (Financial Planning, May 8, 2015) Because this worked so well when her predecessor tried the same gambit. How could we have so many politically tone deaf people in charge of the SEC for so long?
House set to vote on easing TSP early withdrawal penalty,” (The Washington Post, May 11, 2015) Just as we’re getting news that “leakage” is a bad thing, here we have the government opening the spigot more.
Social Security forecasts ‘systemically biased’ to upside: study,” (MarketWatch, May 13, 2015) Yes. That’s what you often see in Ponzi Schemes.
New study confirms 401k limits not constraining,” (MarketWatch, May 14, 2015) The study confirms that people currently hitting the contribution limits for 401k plans will contribute more if those limits are raised – which is good because those people are the most likely to need to save more to maintain their current lifestyle. The study also confirms the obvious – those not hitting the limits are less likely to change their savings patterns if the contribution limits are increased. That’s a whole different kettle of fish.

Fiduciary – The Ents Continue to Meet:
With Treebeard (apparently) in charge, the DOL continues its lengthy (or at least 15 days lengthier) deliberation regarding what it calls a “fiduciary” rule. All the Merrys and all the Pippins just can’t seem to make these Ents decide any faster.
Moving Your Nest Egg to a Bed of Red Tape,” (Wall Street Journal, May 11, 2015) The industry appeals to consumers to forgo their best interests. And they make a compelling case. Why haven’t the pro-fiduciary standard lobbyists done the same thing? Oh. Wait. The pro-fiduciary standard side can’t afford lobbyists because they don’t generate over-the-top earnings.
NAIFA takes fiduciary fight to Washington, D.C.,” (Benefit News, May 12, 2015) Wow. These guys are going full bore into the DOL. They’re repeating the same line that’s been used by the brokerage industry since Day One. Nobody apparently listened then (although the DOL claims it did), so what makes them think people will listen to them now?
Top GOP senators pressure DOL on fiduciary-duty timetable,” (InvestmentNews, May 13, 2015) We know. We know.
More GOP Senators Press DOL to Extend Fiduciary Comment Period,” (ThinkAdviser, May 13, 2015)  Same story, different take.
9 FAQs about fiduciary responsibility,” (Employee Benefit News, May 13, 2015) A good overview for anyone interested.
Is Fiduciary Sales an Oxymoron?” (ThinkAdvisor, May 14, 2015) An excellent piece by Bob Clark that spells out as directly as possible why the DOL’s proposed Fiduciary Rule is a total win for brokers and will likely devastate the investment adviser business model.
An inside look at DOL chief Thomas Perez making the case for the fiduciary rule,” (InvestmentNews, May 14, 2015) What’s clear from this article are two things: 1) Just how naïve CEOs are when it comes to how they’re being taken to the cleaners on their retirement plans; and, 2) Just how naïve the DOL is to think their proposed rule will do anything to stop that. If anything, by relying solely on disclosure, the DOL green-lights the ongoing highway robbery of self-dealing transactions we currently see going on.
Forget Fiduciary: Real Battle Coming Over Harmonization,” (ThinkAdvisor, May 15, 2015) Pay no attention to the DOL behind that curtain, or so says Brian Hamburger in a way. He thinks the real story lies in the work the SEC needs to do, the work it has been totally lacking in doing.
DOL extends comment period on fiduciary duty proposal,” (InvestmentNews, May 15, 2015) The DOL blinks. Well, maybe with just one eye. The industry is not happy.

Fees – Whither Tom Bombadil?:
Nobody says anything this week as the talk of delaying the fiduciary standard steals the headlines.

Investments – Is This the End for Saruman’s Orcs?:
Not really, but the wind is definitely not at their backs. Will a flood of recent data drown them? Or will the reader miss this metaphor altogether?
When Is Risky Investing Safe and Safe Investing Risky? Now,” (ThinkAdvisor, May 7, 2015) When it comes to long-term investing (for example, retirement plans), the answer is “always.”
SEC slaps charges against ‘retirement planners’ for fraudulent life settlement sales,” (InvestmentNews, May 11, 2015) Sometime when it sounds too good to be true, it is too good to be true.
Why financial pros prefer target risk funds,” (BenefitsPro, May 13, 2015) This article explains why individual investors can allow themselves to “almost” do the right thing but professionals must always try to do the right thing.
How international small-caps spice up a retirement portfolio,” (MarketWatch, May 13, 2015) Actually, they can either “spice” up or down, depending on the strength of international markets.
Fidelity: How Big, Cheap and Active Beats Passive,” (ThinkAdvisor, May 14, 2015) Expect to see more articles like these as active investors start utilizing the same techniques as passive investors – making use of “long-term” performance data ending with time periods where their particular style is currently performing better than the other. Unlike the last five years, the active style is currently performing better than the passive style.

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.
Law Firm Investigating IBM 401k Plan,” (PLANSPONSOR, May 7, 2015)
Retirement Solutions for Small-Business Owners,” (ThinkAdvisor, May 11, 2015)
401k contributions up in 2013,” (BenefitsPro, May 12, 2015)
Help investors plug the $24 billion retirement savings leak,” (InvestmentNews, May 12, 2015)
Workers want more active employer role in retirement planning,” (Employee Benefit Adviser, May 12, 2015)
U.S. Workers Miss Billions in Retirement Matches,” (WealthManagement, May 12, 2015)
These Simple Moves By Your Employer Can Dramatically Improve Your Retirement,” (Money, May 12, 2015)
Washington event puts spotlight on retirement woes,” (Benefit News, May 13, 2015)
Employees Want More Retirement Guidance, Survey Says,” (Financial Advisor, May 13, 2015)
Women need employer help in brightening retirement prospects,” (Benefit News, May 14, 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.
Retirees Who Opt to Keep Mortgage Payments,” (Wall Street Journal, May 6, 2015)
Don’t Be Too Quick To Drop Life Insurance At Retirement,” (Financial Planning, May 6, 2015)
Reverse Mortgage Policy Leaves Widows, Widowers Homeless,” (DailyFinance, May 7, 2015)
5 ways to talk to parents about their retirement income,” (MarketWatch, May 7, 2015)
Social Security Q&A: Are Benefit Estimates from Social Security Accurate?” (Forbes, May 7, 2015)
Retiree Nightmare: When Clients Spend Through Their Savings,” (Financial Planning, May 10, 2015)
New Math for Retirees and the 4% Withdrawal Rule,” (New York Times, May 8, 2015)
They’re juggling a mortgage and college savings. Can they still retire early?” (The Washington Post, May 8, 2015)
Why you can’t trust those retirement calculators,” (CNBC, May 11, 2015)
Estate Planning an Essential Step for Every Retiree,” (ThinkAdvisor, May 11, 2015)
How to prioritize retirement versus college savings,” (US News, May 11, 2015)
Do renovations pay off during retirement?” (USA Today, May 12, 2015)
Small Companies Now Have No Excuse for a Lousy Retirement Plan,” (Bloomberg Business, May 12, 2105)
More Americans focus on 401k plans,” (USA Today, May 12, 2015)
How Americans miss out on $24 billion a year,” (CNN, May 12, 2015)
New Study: Baby Boomers Waiting Until Later To Claim Social Security,” (Forbes, May 12, 2015)
Retirement Investors Need Patience As Bond Market Wavers,” (Financial Advisor, May 13, 2015)
How to Save For Retirement When You Don’t Have a 401k,” (Money, May 13, 2015)
Almost half of retired boomers would work, but can’t,” (BenefitsPro, May 13, 2015)
Consider using your home to fund retirement plans,” (CNBC, May 13, 2015)
Using Debt in Retirement,” (WealthManagement, May 14, 2015)
Here’s how Americans are eating into their savings,” (MarketWatch, May 14, 2015)
Women need employer help in brightening retirement prospects,” (Benefit News, May 14, 2015)
Helping Clients Avoid Social Security Mistakes,” (Wall Street Journal, May 14, 2015)

Wisdom from Some of Our Favorite Blogs:
Data “Points”: 13 Things About Work You Probably Didn’t Learn in School |
The Trust Advisor: New Math for Retirees and the 4% Withdrawal Rule |
The Retirement Plan Blog: What We Can Learn From Australia’s Superannuation |
Behavior Gap: Just This Once |
Squared Away Blog: Rewriting the American Dream |
Fiduciary Matters Blog: First Church Plan Case Settles – Overall v. Ascension |
Behavior Gap: I Say Risk, You Hear Uncertainty |
Proskauer’s ERISA Practice Center Blog: Changes to the IRS Determination Letter Program |
fi360: What’s the difference between “sole” interests and “best” interests? |
Proskauer’s ERISA Practice Center Blog: Second Circuit Affirms Dismissal of ERISA Stock Drop Claims |
fi360: When does a client become a client? |
Squared Away Blog: Financial Ed in Schools Sometimes Works |
Fred Reish: Navigating Retirement Risks: Creating Sustainable Retirement Income |
Behavior Gap: Ideas for People Who Use Money: Buying for Status or Need? |

Hot Tips from Popular Web Resources:
NAPA Net: Warning: RIAs Could Get Snagged by Fiduciary Reproposal |
NAPA Net: Illinois Supremes Unanimously Reject Pension Reform Law |
NAPA Net: Which Words of Wisdom Inspire You Most? |
NAPA Net: 18 House Dems Seek Longer Comment Period for Fiduciary Rule |
NAPA Net: The ‘New Math? |
NAPA Net: Allianz Study Reports More Bad News for Gen Xers |
NAPA Net: Another Bill Backing S-ESOPs Introduced |
Motley Fool: 5 Steps You Should Take Within 10 Years of Your Retirement |
Morningstar: It’s Time to Raise IRA Contribution Limits |
Kiplinger: Retirement Savings Plan Rules, Working Past Age 65 |
NAPA Net: Advice: Man Versus Machine? |
NAPA Net: Motivating Millennial Savers |
NAPA Net: Obama Administration (Still) Eyeing Retirement Reforms |
NAPA Net: Lessons To Be Learned from Revenue Sharing Litigation |
NAPA Net: Case of the Week: Suspending Loan Payments |
NAPA Net: Gallagher Set to Resign from SEC |
NAPA Net: House, Senate Bills Would Require Lifetime Income Disclosures |
NAPA Net: ‘A Wise Man Will…’ |
NAPA Net: New Fallout from Illinois Pension Reform Ruling |
Kiplinger: Life Insurance to Help Heirs Pay Bills | Social Security is in Worse Shape Than Originally Thought! What a Surprise…Or is It? |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


  1. Robb Smith
    Robb Smith May 19, 12:37

    (My) DOL’s Top 5 Bucket Wish List….

    Now that we’ve ensured the proverbial dead horse (DOL re-proposal) has been beaten, it is time to get serious about what should be the most significant issues that the DOL address to actually move the needle in a positive way for plan participants.

    Here are my top 5 issues (by importance):


    (this area intentionally left blank to illustrate just how important the #1 top issue really is)

    2. DO NOT allow ANY type of state-sponsored retirement plans – not now, not ever! The White House and POTUS are flat out wrong on this issue. If the DOL really cares about a semblance of order in this industry, they must not allow states to continue to develop ANY type of retirement plan for their private sector employees. What a mess this would create!

    3. Get behind and fully support the open MEP concept – Multiple Employer Plans, when done correctly, are a great option for sponsors in the start-up, micro, small and mid-size plan arena. The DOL needs to expeditiously develop safe harbor guidance and relief to promote the open MEP concept.

    4. Constructive fee disclosure guidance and procedures – Is it possible that we could expect the DOL to provide a set of standardized directions and simplified reporting templates for covered service provider reporting to plan sponsors?

    5. Offer guidance on fee DISCRIMINATION – this may rapidly move up the food chain if we see litigant attorneys and activist plan participants begin to realize just how much fee discrimination is happening currently in plans that offer brokerage accounts and/or allow revenue sharing. Do we have to wait for unsuspecting small and mid-size plans to be dragged through unnecessary litigation before the DOL reacts? How does this positively serve plan participants and workplace fiduciaries?

    It might be surprising or be considered an oversight by some that the DOL’s re-proposed fiduciary rule did not make it in the top 5 priorities. Not so. It’s just not considered as important as the five items listed above, particularly item #1. It is said that if one criticizes a proposal, one should also provide a suggestion for improvement. Here are five for starters.

    Robb R. Smith, AIFA
    RS Fiduciary Solutions & (k)Plan Innovations

  2. Christopher Carosa, CTFA
    Christopher Carosa, CTFA Author May 19, 21:29

    I like it!

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