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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 7/17/15

July 20
00:02 2015

1020805_25983300_Trending_Topics_2015.07.20_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
Time for Naïve 401k Millennials Opting for “Safe” Investments to Stop Hurting Themselves,” (FiduciaryNews.com, July 14, 2015) Why have these people failed to learn from history and what can be done to prevent them from hurting themselves?

Compliance – If You Liked Social Security…:
…you’ll love the idea of the government taking over the rest of your retirement assets. Regulators seem to be intent on turning back the clock and revisiting those happy times when all retirement income was annuitized. Apparently, the long decade of low inflation has lulled those with short memories into a false sense of security – or is it “of securities.”
Treasury Nixes Some Lump-Sum Pension Payouts,” (Wall Street Journal, July 9, 2015) Here’s a case of the government telling you that you don’t know what’s best for yourself. The GAO claims the lump sum recipients won’t get as much as those who stay in the pension plans. Really? What if the recipient dies prematurely? What if the pension plan goes belly up? What if the lump sum is invested in a more profitable manner than the pension plan is invested? This sounds like the choice only a free citizen can be allowed to make. Oh, wait, about that “free citizen” thing, we forget…”
Billy Joel: Poster child for the Viagra college fund?” (InvestmentNews, July 12, 2015) Here’s the problem with Social Security. Here’s why Social Security needs to be changed now.
Obama Seeks to Expand State-Run Retirement Plan Program,” (WealthManagement,” July 13, 2015) Because just imagine the largess when the public retirement plan corruption model is used for private retirement plans.
Obama encourages statewide retirement plans,” (InvestmentNews, July 13, 2015) Funny how “states’ rights” is a good thing if it happens to coincide with the particular political favor of certain people, but not a good thing if they don’t like the cause. George Orwell must be smiling, but Ayn Rand has already said, “I told you so.”
Obama Wants More State Laws to Make Retirement Saving Easier,” (The New York Times, July 13, 2015) We said it before and we’ll say it again, “If you like Social Security, you’ll love this idea.”
DOL clarifies annuities in 401k plans, kind of,” (BenefitsPro, July 14, 2015) Further proof of the danger plan sponsors get themselves into when they start playing the annuity game.
Legal requirements compel most IRA withdrawals,” (BenefitsPro, July 14, 2015) Could it be because many of them were good savers to begin with?
State pension funds face $1 trillion funding gap,” (Yahoo, July 15, 2015) Could this be why the states want to get their hands on private employees’ retirement money?
Social Security Cuts Punish Middle Class,” (Financial Advisor, July 16, 2015) Well, maybe we need to see which middle class we’re talking about – the ones above 50 or the ones younger than 40. It’s probably unfair to change the rules so late in the game for those eligible for AARP membership (although a case might be made that spousal benefits might no longer apply to dual-income households). On the other hand, millennials aren’t counting on Social Security anyway, so changes the rules probably won’t change their expectations.
How to clarify the murky regulations governing IRA rollovers,” (InvestmentNews, July 16, 2015) Not a bad idea. After all, why, if the DOL is focusing on conflicts-of-interests caused by self-dealing transactions, would they want to include RIAs, who by definition don’t engage in self-dealing transactions, in a rule designed specifically for brokers?
Pension de-risking now has IMF’s attention,” (BenefitsPro, July 16, 2015) Throw another log in the :Let’s Outlaw Pensions” movement. Although this is a logical move by companies, it just shows the level of risk associated with pensions.

Fiduciary – Is it Opposite Day or What?:
The White House making Tea Party arguments? Conservatives siding with the folks who brought you TARP? What can the world be coming to?
Dodd-Frank might neuter SEC’s fiduciary rule,” (BenefitsPro, July 2, 2015) This is news now? A few of us (at least) have been saying this from the moment the debacle of Dodd-Frank passed. It was a silly law, ineffective in its own special way, but successful in proving to the public “that something should be done right away.” Ben Franklin was right when he said “Haste makes waste.” Dodd-Frank probably is best assigned to the ash heap of history.
Business group launches attack on Obama’s proposed fiduciary regs,” (TheHill, July 7, 2015) This is an establishment conservative group being used by big business to attack big government. That message, no matter how disingenuous, will resonate with a lot of folks. Except for Tea Party folks. They don’t like big government. They don’t like big business. They don’t like the establishment (no matter what they party). They just want to be left alone. Which is why this campaign’s “Hands Off” message just might get to them. When given the choice between “big government” and “big business,” they, like many Americans will always pick the latter.
Obama doubles down on DOL fiduciary rule,” (BenefitsPro, July 13, 2015) Three thoughts: 1) Why do articles like these continually repeat industry talking points without fact checking or getting quotes from other industry sources that can offer evidence that shows the industry talking points are all wet; 2) Why do articles like these continually repeat DOL talking points without fact checking or getting quotes from other industry sources that can offer evidence the DOL talking points are all wet; and, 3) Why can’t Obama just keep his mouth shut? Doesn’t he understand he’s a lightning rod (and not in a good or particularly useful way)?
Fiduciary Rule Will Be a Vital Consumer Protection, Obama Says,” (OnWallStreet, July 14, 2015) Only two problems with this claim. First, the DOL proposal is more about loopholes that brokers can get around than about “vital consumer protection.” Second, if he thinks this is such a good idea why is he promoting state-sponsored retirement plans? If you like broker conflict-of-interest, you’ll love state corruption!
FSI Says Costly DOL Fiduciary Rule Affects RIAs Too,” (WealthManagement, July 14, 2015) This one is good just for the snarky comments.
CalPERS returns fall short,” (BenefitsPro, July 14, 2015) When you invest in a virtual index fund, does it surprise you to earn virtually the same as the index?
FSI Confident Final Fiduciary Rule Will Be Workable,” (OnWallStreet, July 15, 2015) Wait!? Didn’t they just say…? Oh, forget it!
Fiduciary Advocates Drop 230,000 Signatures At DOL’s Doorstep,” (Financial Advisor, July 16, 2015) One hundred thousand, two hundred thousand, now you’re talking some real numbers.
Labor Department official promises ‘changes’ to fiduciary rule,” (InvestmentNews, July 16, 2015) Yes, but will that make it better or worse?
DOL Fiduciary Redraft Will Be Changed, Top Official Says,” (ThinkAdvisor, July 16, 2015) A more comprehensive article compared to the above.
DOL to Industry: Tell Us How to Fix Fiduciary Proposal,” (OnWallStreet, July 17, 2015) Will this mean finally outlawing conflicted advice? Also, Janney says they’ll quit the business if the proposal goes through as it stands. With 137,000 IRA clients, competitors of Janney may have just been given the green light to start poaching.

Fees – More Zweig Fee Follies:
There’s a lesson from a 1970s “docudrama” on Watergate. It’s the old “Give them something to deny” political strategy. Here’s how it works: If you want someone to appear guilty – especially when they’re innocent – give them something to deny. It doesn’t matter how silly it is. It doesn’t matter how untrue it is. It doesn’t matter if no one pays attention to the charge. Once the denial occurs, the target loses all credibility. That’s when they start paying attention.
No, Jason Zweig, Advisor Fees Are Not Too High,” (Financial Advisor, July 16, 2015) The author takes the bait and falls for Zweig’s “Methinks the lady doth protest too much” trap. When will folks learn. Yes, sometimes, maybe most times, it makes sense to fight fire with water. Every once in a while, though, you’ve got to be able to fight fire with fire.

Investments – Investing is Hard. It’s Harder When You’re Stupid:
John Wayne never said that. He never even said something similar about life. But it sounds so much like John Wayne people sweat he said it.
Why Investing Is So Complicated, and How to Make It Simpler,” (The New York Times, July 11, 2015) The author takes a lot of words to say this: Make mutual fund names make sense. To prove his point, he only invests in target date funds. This actually proves several points. We wonder if the author is aware of that.
Revenge of the Stock Market Challenge game,” (BenefitsPro, July 15, 2015) Should adolescent “Stock Market Challenge” games be banned from schools? How can someone learn the important lessons of investing for a lifetime if they’re rewarded for playing a short-term trading game? Are there better ways to simulate long-term investing in a gamified form?

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.
Good News: Retirement Income Still Being Undercounted,” (Forbes, July 9, 2015)
Do You Have the Right 401k?” (Fox Business, July 14, 2015)
Tailoring Retirement Plans to Companies With a Handful of Workers,” (The New York Times, July 15, 2015)
Retirement Planning Puzzle: When Clients Keep Working,” (Financial Planning, July 15, 2015)
Boomers unrealistic about post-retirement work,” (Employee Benefit News, July 15, 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.
Advisors ease emotional hurdles of retirement,” (CNBC, July 9, 2015)
Unlocking Retirement’s Door,” (Financial Advisor, July 9, 2015)
When is a surviving spouse subject to RMD from an IRA?” (MarketWatch, July 10, 2015)
How to turn assets in your 401k into income,” (USA Today, July 11, 2015))
7 Simple Strategies to Retire Early,” (Forbes, July 12, 2015)
Smart Strategies for Tax-Free Roth IRA Conversions,” (OnWallStreet, July 13, 2015)
Here’s What You Can Really Expect from Social Security,” (Money, July 13, 2015)
Money Minute: What happens when you take out a 401k loan?” (Yahoo, July 13, 2015)
There is no ‘right’ answer on when to claim Social Security,” (MarketWatch, July 14, 2015)
Social Security Strategy: How to Boost Spousal Benefits,” (OnWallStreet, July 14, 2015)
Are Kids Causing A Retirement Crisis?” (Forbes, July 14, 2015)
Mum’s The Word For Many On Retirement, Study Says,” (Financial Advisor, July 14, 2015)
Why the last check you write before you die should bounce,” (MarketWatch, July 14, 2015)
How to retire early without giving up what you love,” (CNN, July 14, 2015)
Why you should save Roth IRA and HSA distributions for 2016,” (MarketWatch, July 15, 2015)
Why scam artists love the elderly,” (CBS News, July 15, 2015)
Reducing all that IRA paperwork,” (USA Today, July 15, 2015)
Planning To Work Longer Before Retiring? Not The Best Idea, Experts Say,” (Forbes, July 15, 2015)
How A Harvard Economist Screwed Up – And Then Saved – Her Retirement,” (ThinkAdvisor, July 16, 2015)
Retirement Income: Planning for Pensions and Social Security,” (OnWallStreet, July 16, 2015)
What you need to know about your Social Security benefits,” (CNBC, July 16, 2015)
Social Security Q&A: At Who’s Full Retirement Age Should I File and Suspend?” (Forbes, July 16, 2015)
Is postponing retirement bad for your health?” (BenefitsPro, July 16, 2105)
Smart Strategies for Required Distributions,” (OnWallStreet, July 17, 2015)
Why Working Past 70 Pays Off,” (OnWallStreet, July 17, 2015)

Wisdom from Some of Our Favorite Blogs:
Data “Points”: 5 Things You Should Know About Target-Date Funds |
Behavior Gap: The True Cost of Time Management |
Business of Benefits: DOL Provides Key ERISA Guidance on QLAC/DC Lifetime Income |
The Retirement Plan Blog: Who do you trust: the institution or the individual? |
Behavior Gap: Ignore the Noise & Focus on Your Personal Signals |
The Trust Advisor: J.D. Power 2015 U.S. Financial Advisor Satisfaction Study |
The Trust Advisor: What the IRS is Doing to Catch Taxpayers Who Fail to Take Required Minimum Distributions From Their IRAs |
Behavior Gap: Ideas for People Who Use Money: Drinking Fountains, Handwriting & New Investments |

Hot Tips from Popular Web Resources:
Motley Fool: 3 Habits That Are Killing Your Chance of Retiring Early |
NAPA Net: Court Finds Tibble No Precedent for Stock Drop Case |
NAPA Net: The Most Likely Outcomes of the DOL’s Fiduciary Proposal, Take 2 |
NAPA Net: Are Your Plan Documents in Shape? |
NAPA Net: The Role of Workplace Financial Education |
The Motley Fool: 3 Solutions to Financial Insecurity in Retirement |
NAPA Net: Obama Tells DOL to Clear a Path for State-Based Plans |
NAPA Net: 5 ‘Little’ Things That Can Become Big 401k Problems |
NAPA Net: NAPA Net Updates Record Keeper List |
NAPA Net: DOL Seeks to Boost DC Lifetime Income Annuities |
Kiplinger: 3 of the Worst States for Retirement |
NAPA Net: NAPA Announces 2015 Top Plan Advisors Under 40 |
NAPA Net: The Expanding Role of Rollovers |
NAPA Net: Do Auto-Enrollees Really Save Less? |
Motley Fool: 3 Hidden Risks of Buying an Annuity |
NAPA Net: Retirement’s Good for You — Eventually |
NAPA Net: Robo-Advisors: A Millennial Perspective |
NAPA Net: Focus: Participant Outcomes |
NAPA Net: Is Your TPA Partner ‘Out of Sorts’? |
Motley Fool: Is a 401k Loan Ever A Good Idea? |
NAPA Net: Fewer Advisors to Deal With a Watered-Down Version of the Fiduciary Proposal? |
NAPA Net: Clinton Details Proposal for Profit-Sharing Plans |
NAPA Net: Saving Leads to Happiness, Yet Many Americans Don’t Seek Advice |
Motley Fool: The Biggest Threat to Your Retirement Number |
Motley Fool: Roth 401k vs. Roth IRA: Which Is Best for You? |
Motley Fool: Baby Boomers May Be in More Financial Trouble Than Previously Believed |

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Christopher Carosa, CTFA

Christopher Carosa, CTFA

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