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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 5/8/15

May 11
00:03 2015

1020805_25983300_Trending_Topics_2015.05.11_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 does Retirement Plan “Best Interests” Really Mean for the 401k and IRA Fiduciary?” (, May 5, 2015) There are good examples of “best interests” and bad examples of “best interests,” but the ugly truth is we won’t know the practical definition of “best interests” until the courts decide.

Compliance – If It’s Not One Thing It’s Another:
It’s no use. It’s like they’re in a different universe.
Borzi: Updated Form 5500, fiduciary hearings on DOL summer calendar,” (Pensions & Investments, May 4, 2015) Borzi speaks, but in a much more understated tone.
Blame the 401k for the wealth gap,” (BenefitsPro, May 7, 2015) It’s amazing how fast we’ve gone from “the 401k isn’t working” to “the 401k is working too well.” Dick the butcher was right: “The first thing we do, let’s kill all the lawyers.”
Illinois bid to solve historic pension shortfall dies,” (BenefitsPro, May 8, 2015) Can’t help but keep seeing the image of the Empire’s battle cruiser smashing into the Death Star after reading this. Only, in this case it wasn’t Han Solo and the Millennium Falcon that downed the ship, but errant “friendly fire” from Darth Vader’s little Tie Fighter that brought the whole thing down. That being said, there is an alternative to cutting retirement benefits: Illinois can tax them out of existence.

Fiduciary – Seriously, Can We Talk?:
Too bad Joan Rivers is dead. We’d love to hear her take on this whole fiduciary fiasco.
FINRA’s Ketchum Criticizes DOL Fiduciary Plan,” (ThinkAdvisor, May 1, 2015) Rule #1 in negotiating: Always ask for more than what you want. Rule #2: If you’ve already got more than what you want, ask for more.
Killing the clock on fiduciary proposal,” (InvestmentNews, May 3, 2015) Rule #3: Be careful about continually asking for more, because you might lose everything you’ve gained if the counter party walks away in frustration.
Experts Take Aim at DOL Fiduciary Redraft,” (ThinkAdvisor, May 4, 2015) An interesting review from the eyes of ERISA attorneys and a big-time industry lobbyist.
Study says DOL rule could muddle already confused investors,” (BenefitsPro, May 4, 2015) Here’s a survey whose results shouldn’t surprise anyone.
Investor confusion about fiduciary duty not likely to be resolved by proposed DOL rule,” (InvestmentNews, May 6, 2015) Different take on the same survey reported in the story above.
Toward a Workable Fiduciary Standard for Brokers: The 7 Questions,” (ThinkAdviser, May 6, 2015) The usually on target Bob Clark writes a fine preamble here but misfires on the first two questions.
Schwab CEO Bettinger: Better for SEC to follow DOL fiduciary than diverge,” (InvestmentNews, May 6, 2015) In yet another sign the industry is more than satisfied with the DOL’s solution.
Retirement plan pornography,” (BenefitsPro, May 6, 2015) The DOL’s proposed rule offers no better description of “best interests” than Potter Stewart once famously did for pornography: “I’ll know if when I see it.”
Democrats Seek More Time on DOL Proposal,” (WealthManagement, May 7, 2015) We think we have discovered the secret code name of the uniform fiduciary standard. It’s “Godot.”

Fees – Does it Really Matter?:
It makes wonderful content, but why does the discussion of fees end up sounding so hollow?
Let’s be honest,” (BenefitsPro, May 4, 2015) There’s only one way to really improve 401k fee disclosure and this is it. But, here’s the catch – and why this proposal might be a tad controversial – it has nothing to do with fees.

Investments – The Brick Wall Develops a Crack:
Interesting. Very interesting. Could it be the truth will finally seep out?
Active or passive target-date funds have similar returns, Morningstar finds,” (InvestmentNews, May 4, 2015) If you’ve been paying attention, this shouldn’t surprise you. Neither should Morningstar’s conclusion that – surprise! – not all index funds are “low cost.”
Many Millionaires Say No to Advisors on Retirement Planning,” (ThinkAdvisor, May 5, 2015) Uh, oh… Headlines like these usually precede a market top.
Using Fixed Indexed Annuities for Retirement Income,” (ThinkAdvisor, May 5, 2015) Sure, but what’s the catch?
Who Wins ‘Passive vs. Active’ Institutional Debate? Pt. 1: U.S. Large Cap Blend,” (ThinkAdvisor, May 6, 2015) Double uh, oh… Bogle’s minions are not going to like this.
Interest rate liability important to retirement conversation,” (Benefit News, May 6, 2015) This is all about reinvestment risk – a classic risk that has long been forgotten because all those high yielding bonds we had in the 1980s have matured for the most part.
The downside of passively managed funds,” (Employee Benefit Adviser, May 6, 2015)

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.
401k savings rates of 3% not doing the job for workers,” (InvestmentNews, May 4, 2015)
Small biz owners lack retirement confidence,” (BenefitsPro, May 4, 2015)
The do’s and don’ts of retirement planning,” (InvestmentNews, May 4, 2015)
Employee 401k and IRA Contributions Rising,” (CFO, May 4, 2015)
Retirement is changing to—working?” (BenefitsPro, May 5, 2015)
Small business partnerships could be retirement’s silver lining for many,” (Benefit News, May 6, 2015) This article focuses on bond funds, which is the chink in the armor of index fund advocates.
These retirement saving ‘rules’ just don’t add up,” (CNBC, May 6, 2015)
Most twenty-somethings are actually saving for retirement,” (CNN, May 6, 2015)
Millennials Bring New Expectations for Retirement Planning,” (Financial Planning, May 7, 2015)
Plan sponsors taking action in wake of Fifth Third decision,” (Benefit News, May 7, 2015)
Financial Education Over Time Improves Savings Behaviors,” (PLANSPONSOR, May 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.
4 things I wish I’d known before retiring abroad,” (MarketWatch, May 2, 2015)
Retirement, ready or not,” (InvestmentNews, May 3, 2015)
Don’t let a common mistake sideline retirement goals,” (USA Today, May 3, 2015)
How to Avoid the Retirement Tax Cliff,” (Financial Planning, May 4, 2015)
Advisers ramp up efforts to create tax-conscious retirement withdrawal strategies,” (InvestmentNews, May 4, 2015)
Your 401k Plan May Be Selling You Short,” (Bloomberg Business, May 4, 2015)
‘You can’t always get what you want’ with IRA transfers,” (MarketWatch, May 4, 2015)
When You Should Flee Your 401k,” (Forbes, May 4, 2015)
How to Reboot Your Retirement,” (Yahoo, May 4, 2015)
Should your Social Security be garnished for student loan debt?” (MarketWatch, May 4, 2015)
How to Avoid Running Out of Money in Retirement,” (US News, May 4, 2015)
Social Security Q&A: Can I Still Collect if My Ex Wants Me to Get Nothing?” (Forbes, May 4, 2015)
Today’s employees concede working longer will help fund their retirement,” (Benefit News, May 5, 2015)
Gen X dreads retirement,” (BenefitsPro, May 6, 2015)
Don’t count on inheritances to save your retirement,” (MarketWatch, May 6, 2015)
Social Security Q&A: Can I Switch to Full Spousal after Collecting Early Retirement?” (Forbes, May 6, 2015)
Rethink retirement, says director of U.S. aging institute,” (InvestmentNews, May 7, 2015)
All Age Groups May Have Misguided Retirement Ideas,” (PLANSPONSOR, May 8, 2015)


Wisdom from Some of Our Favorite Blogs:
Behavior Gap: Worry Isn’t Something We Value |
ERISA Lawyer Blog: Ninth Circuit Finds No Breach Of ERISA Fiduciary Duty Stemming From Failure To File Form 990 (TEO’s Tax Return) |
Business of Benefits: ERISA and Mom |
Behavior Gap: Not My Way, Not Your Way. Pick a Third Way |
ERISA Lawyer Blog: Ninth Circuit Rules That Assets Held In A Savings Account May Be Considered To Be Held In Trust For Purposes Of ERISA |
ERISA Lawyer Blog: Tenth Circuit Discusses Statute Of Limitations For Bringing A Claim Of Breach Of Fiduciary Duty Under Section 413 of ERISA |
fi360: 401k plan fees: Three fundamental questions every advisor should be prepared to answer |
Fred Reish: The Essence of the Fiduciary Proposal… for Advisors |
Behavior Gap: Ideas for People Who Use Money: Thinking About Retirement |
RetirementRevised: Are we headed for a one percent phenomenon in longevity? |


Hot Tips from Popular Web Resources:
NAPA Net: Is the Status Quo a Good Thing for DC Plans? |
NAPA Net: What Would You Like to Know About the Fiduciary Reproposal? |
NAPA Net: Some Help from the IRS for Small Retirement Plans |
NAPA Net: 13 Things You Probably Didn’t Learn in School |
NAPA Net: Bill to Boost S Corp ESOPs Introduced |
Motley Fool: Social Security: The Biggest Threat to Your Benefits (Hint: It Isn’t Claiming at 62) |
Kiplinger: Retirement Savings in an Immediate Annuity? |
NAPA Net: 7 Steps To Reduce Fiduciary Exposure |
NAPA Net: Case of the Week: Roth IRA vs. Designated Roth IRA |
NAPA Net: How Far Will Participants Stretch for the Match? |
NAPA Net: Around the World, More Choose a Semi-Retired Kind of Life |
NAPA Net: QLAC Interest Varies by Age, Income |
NAPA Net: Wary of Social Security’s Future, Young Workers Turn to Advisors |
NAPA Net: Don’t Get Orbitz-ed |
Motley Fool: How to Shift from Saving to Spending Your Retirement |
NAPA Net: What’s ‘Reasonable’ Compensation in an IRA? |
NAPA Net: American Retirement Association Supports Rhode Island Auto-IRA Bill |
Kiplinger: Fund a Roth IRA for Your Grandchild |


Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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