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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 7/31/15

August 03
00:02 2015

1020805_25983300_Trending_Topics_2015.08.03_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
When Must a Fiduciary Just Say ‘No’ to a Client?” (, July 28, 2015) When it comes to being a fiduciary, the customer is, most assuredly, not always right.

Compliance – Would You Bet Your Retirement on a Ponzi Scheme? Part Deux:
This must have been a popular meme for the end of July – and not without good reason!
Is Social Security Really Going Broke?” (Fox Business, July 23, 2015) The short answer is “yes, but…” The author claims all we need to do is to put another 2.38% into the pot (split between employees and employers) and everything will be fine. Isn’t that the lament of all Ponzi Schemists?
Here’s how Social Security can be fixed,” (CBS News, July 24, 2015) Same story, different take.
PBGC proposes limiting filing waivers for underfunded plans,” (BenefitsPro, July 28, 2015) OK, this could go either one of two ways. Either it’s the first step towards the government finally smartening up by discouraging the continued use of Ponzi Schemes – er, defined benefit plans – and their eventual ban; or, it could be the government being too smart by half and taking the first step towards eliminating corporate pension plans and replacing them with state-run pension plans for private employees. Which do you think is more likely?
Corporate pension funding not expected to improve much,” (BenefitsPro, July 29, 2015) This has those savvy state comptrollers salivating over the prospect of luring that retirement money into the state coffers. Pity the poor private employees who fall prey to that scam.

Fiduciary – Hey, It Worked for ObamaCare:
Do the states have rights or don’t they? Well, the constitution says they do, but the Supreme Court recently said they didn’t. This is a fundamental question that goes back to the founding of the republic. Let’s keep talking. In the meantime, it looks like the administration would like the states to have rights when it suits its needs, but not when it doesn’t.
State Leaders at Odds With Securities Regulators on Fiduciary Rule,” (Bloomberg, July 27, 2015) As you might suspect, this applies to red states. Blue states are generally in favor of what has become an increasingly partisan Rule.
Is the Department of Labor killing you with kindness?” (MarketWatch, July 30, 2015) Not sure this is 100% correct. It doesn’t make sense that the DOL would prevent you from unilaterally deciding to roll over your 401k into an IRA and then, after the fact, independently decide what investment adviser to hire. That would be way too Big Brotherish if true.
Indie Advisors Say DOL Fiduciary Has Minimal Impact,” (Wealth Management, July 30, 2015) It’s about time someone admitted this. Well, it might have a minimal impact on compliance, but it is a threat to their business model, whether they know it or not.

Fees – Eventually, All Food is Free and No One is Served:
This is more of a question of economics than of anything else. The market will ultimately decide, but the market will also take what you give it. If you give it away for free (or for too low of a price), the value diminishes correspondingly and, pretty soon, no one will want it anymore.
RIA sees emerging conflict of interest for fee-only advisors,” (BenefitsPro, July 24, 2015) Harold Evensky telling it like it is.
The Case for Charging Both AUM and Flat Fees,” (ThinkAdvisor, July 28, 2015) This is less novel than it first appears. Those veterans in the business have long called these flat fees “minimum fees.”

Investments – What is it about “Long-term” that Millennials Don’t Get?:
We can’t believe an entire generation is simply that dumb. Maybe it was all those “participation” trophies that lulled their common sense.
Weighing the pros and cons of custom target-date strategies,” (Employee Benefit News, July 28, 2015) Not sure what to make of an article that talks only in generalities and fails to provide concrete examples.
Top Mutual Funds in 401k Retirement Plans: BrightScope,” (ThinkAdvisor, July 29, 2015) We said it before and we’ll say it again: These lists are less instructive regarding investment performance and more instructive about successful distribution techniques. So, if you don’t see you’re fund on this list, that doesn’t mean it’s a worse fund, it just means the fund family probably invests less in distribution.
The million-dollar investing mistake,” (MarketWatch, July 29, 2015) This article is about how investors – especially younger ones – suffer poorer returns by buying too many bonds at too young an age.
Millennials choose—annuities?” (BenefitsPro, July 30, 2015) Well, this is bad news and good news. The bad news is that those that don’t learn from history are condemned to repeat it. How many baby boomers who, when they were in their 20s and 30s, overweighted in stable income options and now find themselves behind the eight ball when it comes to retirement savings? The good news? At least annuities are a step above the mattress pad their equally naïve great grandparents used to save their retirement money in following the Great Depression.
Are Retirement Plans Overexposed To Stocks?” (Financial Advisor, July 30, 2015) Only if you’re planning to spend it all in the next two years then die. What? You can’t predict when you’re going to die? Well then the prudent thing to do is to plan on living for as long as your actuarial table suggests, and then invest wisely. And by “invest wisely” more often than not, that means stocks – no matter where we are in the short-term market cycle. BTW, why do this articles appear like so many dandelions whenever the market takes a dramatic dip?

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.
3 ways to save beyond the 401k,” (CNBC, July 23, 2015)
Communicating about retirement in multicultural markets,” (BenefitsPro, July 24, 2015)
Small employers lag in offering retirement plans,” (BenefitsPro, July 27, 2015)
3 Retirement Problems and Solutions That Millennials Face Today,” (US News, July 27, 2015)
Kitces: Smart Fix for the 4% Rule,” (Financial Planning: July 28, 2015)
Roth IRA Holders A Younger Crowd Than Traditional Market, Study Says,” (Financial Advisor, July 28, 2015)
BLS data highlights retirement disparities between public, private sectors,” (Employee Benefit News, July 28, 2015)
Americans Left $24 Billion in Retirement Money on the Table Last Year,” (Money, July 28, 2015)
Retirement communications beyond the boomers,” (Employee Benefit News, July 29, 2015)
Employer matches can motivate retirement plan saving,” (BenefitsPro, July 29, 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 Roth IRAs will stay tax-free for years to come,” (MarketWatch, July 20, 2015)
When $1.5 Million Isn’t Enough for Retirement,” (Money, July 23, 2015)
Investors Gain Flexibility As Money Flows Out Of 401k Plans And Into IRAs,” (Forbes, July 23, 2015)
Jefferies: Baby Boomers Will Spend Their Retirement Money on Golf and Travel,” (Bloomberg Business, July 23, 2015)
Social Security Benefits You Don’t Know About,” (OnWallStreet, July 24, 2015)
401k Or Roth IRA: Which Is Best?” (Forbes, July 26, 2015)
Afraid your retirement nest egg won’t last long? You’re not alone,” (The Washington Post, July 27, 2015)
Taking Social Security Benefits Early When You Have Kids Under 18,” (Money, July 27, 2015)
Economists Want You To Stop Borrowing From Your 401k,” (Financial Advisor, July 28, 2015)
Don’t Make This Mistake With Your 401k This Summer,” (Forbes, July 28, 2015)
Have a plan when tailoring retirement draws to your income,” (MarketWatch, July 28, 2015)
For most U.S. workers, retiring at 65 is no longer an option,” (LifeHealthPro, July 28, 2015)
More American savers skimp on retirement plans,” (CNBC, July 29, 2015)
People are saving more for retirement — but they’re still making one big mistake,” (The Washington Post, July 30, 2015)
Social Security: The Best Cheap Annuity Option,” (OnWallStreet, July 30, 2015)

Wisdom from Some of Our Favorite Blogs:
ERISA Lawyer Blog: DOL Provides Guidance ON Selection And Monitoring Under The Annuity Selection Safe Harbor Regulation For Defined Contribution Plans |
Behavior Gap: Can You Complete One Important Priority Before Labor Day? |
ERISA Lawyer Blog: Eleventh Circuit Rules Against Imposition Of Statutory Penalty Under ERISA For Failure To Furnish Documents |
Boston ERISA Law Blog: Baseball, Hot Dogs and Class Action Lawyers |
Fred Reish: What Was Hot in the Second Quarter of 2015 |
ERISA Lawyer Blog: IRS Announces That It Will No Longer Permit Use Of Lump Sums To Replace Life Income From A Defined Benefit Plan |
The Chicago Financial Planner: What Should I Write About? |
Squared Away Blog: College Funds Depend on Family Income |
Behavior Gap: What’s On Your Emotional Balance Sheet? |
Proskauer’s ERISA Practice Center Blog: No Damages Awarded for ERISA Plan Fund Mapping Claims |

Hot Tips from Popular Web Resources:
NAPA Net: Withdraw Flawed Fiduciary Rule, GOP Reps Urge Perez |
NAPA Net: Robo-Record Keepers: Back to the Future? |
NAPA Net: Reader Poll: Working 9-to-5? |
NAPA Net: DOL to Issue Guidance on State Retirement Plans |
Kiplinger: Avoid These Costly Social Security Mistakes |
Motley Fool: 2015 SEP Retirement Contribution Limits |
NAPA Net: Cost Estimate of DOL’s Fiduciary Proposal Flawed, SBA Advocacy Office Finds |
NAPA Net: Are You Exploiting Naïve Myopic Workers With That Employer Match? |
NAPA Net: Outsourcing: The Wave of the Future for Advisors |
NAPA Net: IRS Curtails Determination Letter Program |
The Motley Fool: 6 Social Security Withdrawal Strategies Everyone Should Know |
Kiplinger: 3 Great States for Retirement |
NAPA Net: Does the Employer Match Matter? |
NAPA Net: Case of the Week: SEC’s ReTIRE Initiative |
NAPA Net: Financial Preparedness: Whose Job Is It? |
NAPA Net: Study Finds Link Between Financial and Physical Wellness |
NAPA Net: When Should You Fire a Client? |
NAPA Net: What Martha Stewart Can Teach Financial Advisors |
NAPA Net: ‘Skilled Active Management’ the Solution to Volatility |
NAPA Net: Americans Want More Retirement Income Help — And They’re Not Getting It |
NAPA Net: Reish Flags the Hot Issues in the DOL’s Fiduciary Proposal |
NAPA Net: Working 9 to 5? Not NAPA Net Readers! |
NAPA Net: Are 403(b) Plans More Receptive to Financial Wellness? |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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