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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 6/26/15

June 29
00:03 2015

1020805_25983300_Trending_Topics_2015.06.29_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
Asset Allocation’s Greatest Failure: Short-Term Investing,” (, June 23, 2015) There’s a reason why short-term asset allocation is doomed to disappoint. You can find it in every SEC-mandated performance disclaimer.
Why Asset Allocation Doesn’t Matter In the Long Run,” (, June 24, 2015) The results are in. Asset allocation doesn’t work in the long run. Rebalancing doesn’t produce better returns in the long run. In short, asset allocation as popularly practiced is myth.

Compliance – Uncle Sam Wants You!:
And you’re probably not going to like what he’s going to do to you, your profession, and your investments. The question is: Can you do anything about it?
States swoop in to help boost employee retirement prospects,” (Benefit News, June 22, 2015) The is, in part, because the MyRA has been such a dismal failure. But there’s another reason for this, and it doesn’t bode well for private industry.
SEC to Scrutinize Retirement Advice,” (ThinkAdvisor, June 22, 2015) Looks like the SEC is focusing on dual registrants, which makes sense given what the DOL is doing.

Fiduciary – The Start of Summer Reruns:
Remember when Summer was the season of reruns? That was before the networks (and entertainment producers) discovered increased profits through Summer-time replacements.
DOL Secretary Perez touts Wealthfront as paragon of low-cost, fiduciary advice,” (InvestmentNews, June 19, 2015) Oops! Looks like the idea that small clients can’t be serviced in a fiduciary setting may be incorrect after all.
Fiduciary Rule Crucial for Protecting Middle Class: DOL Chief,” (ThinkAdvisor, June 23, 2015) While the “too big to fail” big city Goliaths cry wolf regarding small accounts, thousands of Davids across middle America stand at the ready to serve if called upon.
FPA: Changes Needed to Make DOL Fiduciary Rule Workable,” (WealthManagement, June 23, 2015) The FPA crosses over to the dark side of the broker empire as it takes a “we like it but we don’t like it” approach to the proposed rule. Yes, there are things in the rule not to like, but the FPA doesn’t list those. Instead, they parrot the complaints of the brokerage industry.
How to make mandatory distributions more fiduciary friendly,” (Employee Benefit News, June 24, 2015) Remember the days when articles about fiduciaries and 401k plans spoke about plan sponsors’ duties and responsibilities? This one harkens back to that era.

Fees – They’re Coming After You In More Ways Than One:
Maybe they’ll stop complaining if everything was given away for free. That might work if it weren’t so hard to sell “free” anymore.
Why You’re Paying Too Much in Advisory Fees,” (Wall Street Journal, June 19, 2015) Jason Zweig must be mad at somebody. But that only further dampens his already thin credibility.

Investments – TDFs Under Fire:
This is becoming a favorite sport. Still, the little profit engines that could keep plugging up that hill. Only the reality of a poor market will bring them down.
Stale TDF design is shorting participants,” (BenefitsPro, June 22, 2015) It’s really hard to tell if this article is about fixing target date funds or pushing a product. That’s never good news in a piece of reporting. It hurts that the primary source appears to be a product vender.
Despite go-to status, TDFs remain an investment mystery to employees,” (Employee Benefits News, June 22, 2015) The only mystery is why anyone would think employees would even look into default funds. After all, the definition of default is “never having to look into it.”
How To Defuse A 401k Bomb,” (Forbes, June 22, 2015) An expose on TDFs. Not good news for all the lemmings jumping on the target date fund bandwagon – or the plan sponsors so willingly allowing them to.
Why Higher Interest Rates Could Hurt Retirees,” (US News, June 22, 2015) But mostly if you own bonds or annuities.
3 Myths of Retirement Investing,” (ThinkAdvisor, June 23, 2015) Don’t let the headline fool you, this article is more about financial planning (specific to retirement) than about investing.
Asset allocation misused and abused,” (BenefitsPro, June 24, 2015) Are you being victimized by asset allocation? Or are you not even aware you are a victim of asset allocation?
Can Active and Passive Management Co-exist?” (Financial Planning, June 25, 2015) As implied by the headline, the answer is “Yes!” But so said an award winning paper – published in 2005!

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.
Top 10 401k plans among the biggest S&P 500 companies,” (InvestmentNews, June 19, 2015)
9 industries and how they match up with retirement plans,” (BenefitsPro, June 23, 2015)
Client Wins $1.2M Arbitration Case Against Advisor & Firm,” (On Wall Street, June 23, 2015)
With the right retirement tools, an American dream is still possible,” (Employee Benefit News, June 24, 2015)
How Behavior Shapes Retirement Planning,” (On Wall Street, June 25, 2015)
Retirement Assets Continue Upward Trend in Q1,” (ThinkAdvisor, June 26, 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.
​“5 critical mistakes people make with Social Security,” (CBS News, June 17, 2015)
Did You Leave Money At Your Old Job?” (Forbes, June 19, 2015)
How to Budget for Savings,” (Wall Street Journal, June 19, 2015)
The key to making better Social Security decisions,” (CBS News, June 19, 2015)
When it comes to retirement savings, millennials blow past boomers,” (InvestmentNews, June 22, 2015)
Why you shouldn’t convert all of your IRA to a Roth,” (MarketWatch, June 22, 2015)
How 401k participants can avoid sabotaging their returns,” (Employee Benefits News, June 23, 2015)
Gen X Says: What Retirement?” (ThinkAdvisor, June 23, 2015)
How Saying ‘No’ Can Save Your Retirement,” (CNBC, June 23, 2015)
4 Ways to Bridge the Retirement Income Gap,” (Money, June 23, 2015)
How to Retire Before 50,” (GOBankingRates, June 23, 2015)
Retirement optimism running at 7-year high,” (BenefitsPro, June 23, 2015)
Older clients need more than a retirement plan,” (InvestmentNews, June 23, 2015)
Americans Note Improved Finances But Still Lack Retirement Savings,” (Forbes, June 23, 2015)
Your IRA could be the next target for hackers,” (MSNBC, June 23, 2015)
When an IRA Rollover Is a Bad Idea,” (ThinkAdvisor, June 24, 2015)
How Couples Delude Themselves About Retirement,” (Forbes, June 24, 2015)
To downsize or not to downsize: The retiree’s question,” (MSNBC, June 24, 2015)
Millennials Think They Have It Bad? Generation X Has It Worse,” (Financial Planning, June 25, 2015)
When Retirement Comes Early,” (WealthManagement, June 25, 2015)

Wisdom from Some of Our Favorite Blogs:
Pension Risk Matters: Union Plans and Politics |
The Trust Advisor: SEC Asks for Public Comments on Exchange-Traded Products |
Pension Risk Matters: De-Risking Slides Now Posted |
Behavior Gap: The Fish (or Investment) That Got Away |
Fred Reish: The Duty of Prudence and the Net Cost of Investments |
Data “Points”: A Preference on ‘Preferences’? |
The Trust Advisor: 15 Ways to Retire Early |
Behavior Gap: Financial Kayaking: Look Past the Obstacles & See the Opportunities |
ERISA Lawyer Blog: Sixth Circuit Rules That Equitable Relief Is Available When Plan And SPD Conflict |
fi360: Understanding Marketing Volume II: The Need to Knows |
Squared Away Blog: Avoidance Comes with Financial Anxiety |
Pension Risk Matters: Investment Fiduciary Monitoring, Economic Damages and Tibble |

Hot Tips from Popular Web Resources:
NAPA Net: The Portable Participant Profile |
NAPA Net: What’s on the Agenda for Your Next Client Meeting? |
NAPA Net: Oregon Legislation Readies State-Run Retirement Initiative |
Morningstar: New Retirement Landscape |
Motley Fool: More Than Half of Americans Get This Wrong About Social Security Benefits |
NAPA Net: 6 Questions to Ask at Your Next Investment Committee Meeting |
NAPA Net: Do You Know More Than a Fifth Grader — About Social Security? |
NAPA Net: What’s Holding Plan Sponsors Back? |
NAPA Net: Millennials Want to Save, But Many Lack Funds to Do So |
NAPA Net: Senate Appropriations Bill Targets Fiduciary Proposal |
NAPA Net: Case of the Week: Comparing IRA and Plan Distributions for Repairs to a Residence |
NAPA Net: Why Aren’t More Plan Sponsors Adopting the ‘Ideal Plan’? |
NAPA Net: Couples Conundrum: A Generational Gap for Advisors? |
Morningstar: How to Make Money Last in Retirement |
NAPA Net: Plan Sponsors’ Provider Loyalty Slips |
NAPA Net: Advisors Are From Mars, Plan Sponsors From Venus |
NAPA Net: Budget Bills Defunding Fiduciary Rule Approved by House, Senate Committees |
NAPA Net: IRS Updates NQDC Audit Guide |
Kiplinger: Childless Seniors Need to Build a Safety Net |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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