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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 6/5/15

June 08
00:03 2015

1020805_25983300_Trending_Topics_2015.06.08_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
5 Dramatic Ways 21st Century 401k Plans Differ from the Original 1980s Version,” (, June 2, 2015) The 21st Century 401k is certainly not your father’s 401k – but is that a good or a bad thing?

Compliance – Just Because Your Paranoid…:
…doesn’t mean they’re not out to get you. Take a look at some of these stories. Several of them talk about policy makers continuing to promote demonstrably failed ideas. If they know these ideas are bound to fail, why do they continue to advocate them? What could their real objective be?
DOL outlines benefit plan audit deficiencies,” (Benefit News, May 28, 2015) Here we go, this is something for everyone to read.
The Public Pension Funding Trap,” (Wall Street Journal, June 1, 2015) Bad news for those who think all is well in the public pension world – they’re still not working.
Playing with fire on the retirement age,” (MSNBC, June 2, 2015) It’s probably good to expose yourself to the politics of retirement every once in a while, just so you have some context of things. We don’t usually put partisan pieces in Trending Topics, but this one is worth the read. If you weren’t worried before, you’ll be worried after reading this article.
IRS modifies rules on 401k elective deferral failures,” (Benefit News, June 4, 2015) A very important read.
Why are regulators targeting 401k rollovers?” (BeAdvised, June 5, 2015) While you might not agree with the motives of this writer, you cannot argue with his basic premise – in many cases retirement savers are better served rolling their money out of their 401k plan and into a personal IRA. This is the only way to build a customized portfolio that is in the best interests of the retirement saver. It’s also a convenient way to sell products in the best interest of the service providers.

Fiduciary – Now Things Really Start to Get Interesting:
Once we get beyond this silly Fiduciary Rule/Standard regulatory mess, we can see there are real fiduciary questions still waiting to be answered.
Why plan sponsors should support harmonization of fiduciary regulations,” (Employee Benefit News, June 2, 2015) More thoughts from Brian Hamburger.
Why It’s So Hard for Brokers to Act in Clients’ Best Interests,” (ThinkAdvisor, June 3, 2015) Bob Clark is at it again.
Solicitor General says high court shouldn’t hear RJR 401k case,” (BenefitsPro, June 4, 2015) This case actually needs to go to the Supreme Court to resolve the lower court’s continued squabbling over burden of proof.
GOP Lawmakers Demand More Info on DOL, SEC Fiduciary Collaboration (Again),” (ThinkAdvisor, June 4, 2015) What’s old is new again.

Fees – We can Lead a Horse to Water…:
…but we can’t get him to write his name. If you think this confuses you, just imagine how confused retirement savers are about the fees they’re seeing disclosed.
Don’t Know Much About … Retirement Plan Fees,” (PLANSPONSOR, June 2, 2015) Is this a surprise to anyone? More to the point, has the focus on fees been a detriment to retirement savers real goals?

Investments – Every Once in a While…:
…the investing world “gets it.” There’s some good honest news in several of these articles, even if that wasn’t the original intent of the author.
Target-Date Funds: Look Under the Hood,” (Wall Street Journal, May 29, 2015) A new study reveals fund managers might not be making the best choices. As The Who might have said, “New study, same as the old study.” We’ll leave it to Peter, Paul & Mary to wonder “When will the ever learn?”
Helping employers choose qualified default investments,” (Benefit News, June 1, 2015) A quick read about the types of QDIOs.
Why ETFs Can’t Crack the Retirement Market,” (ThinkAdvisor, June 1, 2015) Those pesky target date funds are just sucking the air out of all the other fad products.
Which Asset Allocation Mix Outperforms?” (Financial Planning, June 1, 2015) If an asset allocation mix outperforms in the forest, does it make a noise? This is an interesting article for those who still believe asset allocation matters, but the first comment is most telling. Why didn’t the author include that particular “mix” in his analysis?
Why that ‘guarantee’ on your annuity might be a red flag,” (MarketWatch, June 2, 2015) Worth the read, and not just because of the great pop culture allusions that every baby boomer will love.
DOL’s proposal significantly affects annuities,” (BenefitsPro, June 4, 2015) You would have thought  the 2012 Fee Disclosure Rule would have all but eliminated these annuities for price competitive reasons alone.
Fiduciary safe harbor for index funds faces uphill battle,” (InvestmentNews, June 5, 2015) Once again, the DOL thinks it should give investment advice to retirement plans. Actually, we can call this “back-door” investment advice, since it falls under the guise of providing a “safe harbor” for plans that use “low cost” mutual funds (i.e., index funds). In this sentiment, the DOL falls prey to its own advice to avoid using fees as a singular metric by neglecting to look at the value derived from those fees. Indexing is merely an investment style, with the same ups and downs as any other investment style. In other words, sometimes passive investing performs better than active investing, and sometime active investing performs better than passive investing. This proposed “low fee” index fund safe harbor will harm investments during periods when passive investing performs poorly compared to active investing (like we are seeing this year and throughout the first decade of this century).

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.
Retirement is Dying,” (WealthManagement, May 29, 2015)
Longevity: The New Paradigm In Retirement Planning,” (Financial Advisor, June 2015)
Study shows feds shorting retirement income estimates,” (BenefitsPro, June 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 advisers need to stop scaring pre-retirees,” (InvestmentNews, May 28, 2015)
Student loans threaten retirement savings,” (BenefitsPro, May 29, 2015)
Retirement: Leaving work leaves some vulnerable,” (USA Today, May 30, 2015)
It’s OK. Live a little in retirement,” (MarketWatch, May 30, 2015)
A Better Way to Tap Your Retirement Savings,” (Wall Street Journal, May 31, 2015)
Early Retirement Not Just for the Wealthy,” (ThinkAdvisor, June 1, 2015)
Two Big Ways To Enrich Your 401k,” (Forbes, June 1, 2015)
Are retirement needs overstated?” (BenefitsPro, June 1, 2015)
How early retirees are different from the rest of us,” (CNBC, June 1, 2015)
The Obvious Retirement Risk That’s Not in the Models,” (ThinkAdvisor, June 1, 2015)
Here’s the Unsettling Truth About the Retirement Crisis,” (Money, June 1, 2015)
Proactive financial habits can guarantee early retirement success,” (Benefit News, June 2, 2015)
Your retirement or your life,” (MarketWatch, June 2, 2015)
More Older Americans Are Being Buried by Housing Debt,” (New York Times, June 2, 2015)
More people feel like they might actually have enough money in retirement,” (The Washington Post, June 2, 2015)
Few savers have a plan for stretching retirement income,” (BenefitsPro, June 3, 2015)
4 Savings Strategies for Peace of Mind in Retirement,” (U.S. News, June 3, 2015)
5 Times When You Can Get a New Social Security Number,” (Money, June 4, 2015)
New retirement age is not 65, not 80, not 95: It’s higher,” (CNBC, June 4, 2015)
Financial stress carries over into retirement,” (Benefit News, June 4, 2015)

Wisdom from Some of Our Favorite Blogs:
Data “Points”: 5 Investment Committee Lessons Learned From Tibble |
Squared Away Blog: Teenagers Today Work Less |
The 401k Plan Blog: Mailbag: Q&A with The 401k Study Group |
Fred Reish: Fiduciary Challenges for Evaluating Plan Fees: Investment Expenses and Revenue Sharing |
Behavior Gap: Your Neighbor’s Business Isn’t Your Business |
Boston ERISA Law Blog: What Would William Shakespeare Say About Tibble v. Edison? |
The Retirement Plan Blog: How the re-proposed Fiduciary Rule came to be |
The Trust Advisor: Financial Incompatibility Can Cost You |
Boston ERISA Law Blog: The Intersection of the ACA, ERISA Litigation and Insurance Coverage |
Squared Away Blog: Workers See Regular, Roth 401ks as Same |
Pension Risk Matters: National Doughnut Day and Retirement Plans |

Hot Tips from Popular Web Resources:
NAPA Net: A Memorable May For Younger 401k Participants |
NAPA Net: The Dominance of DC And What it Means for Advisors |
NAPA Net: Bad Breaches of Business Etiquette? |
NAPA Net: Survey Says Americans Are Saving, But Without a Strategy |
Motley Fool: Is a Self-Employed 401k Better Than a Roth IRA? |
Kiplinger: Learn to Plan for Retirement Like a Pro |
NAPA Net: 7 Common Retirement Plan Mistakes |
NAPA Net: Retirements Create a Bull Market for Young Brokers |
NAPA Net: 401k Plans Got Short Shrift in Census Bureau Data |
NAPA Net: Less is (Apparently) More for 401k Plans |
NAPA Net: Many Clueless About Payout Options |
NAPA Net: The Ideal Plan — And Why Plan Sponsors Still Resist It |
NAPA Net: Case of the Week: Brother-Sister Controlled Groups |
NAPA Net: What Do Early Retirees Have in Common? |
NAPA Net: A Battle of ‘Best Interest’ Proposals |
NAPA Net: Family Ties: Do Fund Family Record Keepers Favor Their Own? |
NAPA Net: The Fiduciary Proposal — What Are People Saying? |
NAPA Net: Trone: As TDFs Grow, Advisors Must Adapt |
NAPA Net: DOL Posts Public Comments on Proposed Fiduciary Rule |
NAPA Net: What’s the Worst Business Etiquette Breach?

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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