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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 8/14/15

FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 8/14/15
August 17
00:03 2015

1020805_25983300_Trending_Topics_2015.08.17_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
Summer Blockbusters: Movies that Teach Rights and Wrongs of Financial Literacy,” (, August 11, 2015) Sometimes we learn about money in the strangest of ways.

Compliance – The Government Giveth…:
…and the Government taketh away. But, can it truly be called “taking away” if it never giveth in the first place?
Minimizing Excess Roth IRA Contribution Penalties,” (ThinkAdvisor, August 10, 2015) It’s always wise to know how to undo an innocent mistake before the actual error occurs.
Should Gen Y count on Social Security?” (CNBC, August 11, 2015) Seriously, if it comes down to them counting on Social Security, they may have bigger concerns to worry them.
The biggest obstacle for states looking to launch auto-IRAs,” (InvestmentNews, August 13, 2015) Blaine Aikin does a fabulous job bursting the bubble of the various States’ attempts to take over the private retirement plan business.

Fiduciary – Welcome to the Show:
It was a big week as the DOL paraded a series of combatants on its stage in a fiduciary showdown. Despite the valiant attempts by the press, there was no breaking news. But, then again, there hasn’t been breaking news for quite some time now.
Fiduciary Advocates, Critics Clash as DOL Hearings Kick Off,” (OnWallStreet, August 10, 2015) A pitch for the coming bloviation that Washington DC so enjoys. File under “Because Talking is So Much Better than Doing.”
DOL Tackles Key Fiduciary Plan Proposals at Hearings,” (ThinkAdvisor, August 10, 2015) One of the first eyewitness reports.
PSCA asks for model language in DOL fiduciary rule,” (Benefit News, August 11, 2015) Hmm, not sure if this won’t just end up creating a loop hole wide enough to drive a tractor trailer truck through.
12 lessons for fiduciaries from The Greatest Movie of All Time,” (BenefitsPro, August 12, 2015) In all the times you’ve watch the classic film Citizen Kane, did any of these strike you?
CFA criticizes 3 industry arguments against proposed DOL fiduciary rule,” (BenefitsPro, August 12, 2015) First, the “CFA” referred to here references the “Consumer Federation of America,” not the CFA most investment professionals (portfolio managers in particular) think of. Second, Barbara Roper does a stand up job trying to deflect flawed industry arguments. Will anyone listen?
Perez vows to finalize DOL fiduciary rule,” (BenefitsPro, August 12, 2015) There’s often a fine line between getting something done just to get something done and getting something done to get it done right. It’ll be interesting to see which side of the line Perez’ actions fall on.
If Obama holds firm, here’s what the DOL fiduciary rule will end up looking like,” (InvestmentNews, August 13, 2015) If the author is correct, why would any fiduciary advocate support the rule?
Photo Gallery: Fred Reish’s 10 Predictions for DOL’s Fiduciary Rule,” (WealthManagement, August 13, 2015) We generally don’t approve of link-bait multiple page content that tries to outsmart Google Analytics, but this is Fred Reish after all.

Fees – When Fees are not just Fees:
Is it all fees, or is it just certain fees? When will we ever learn?
The Hidden Reason Your 401k Fund Choices Are So Bad,” (Time, August 11, 2015) This article refers to a study that is years’ old. It’s being written about only because the DOL had hearings last week on their proposed conflict-of-interest rule.
Does DOL Fiduciary Rule Favor Fee-Based Brokers?” (OnWallStreet, August 11, 2015) Well, it was supposed to, but, as the article states, the “Best Interests Contract” (or “BIC”) merely replaces due diligence with disclosure. The BIC allows those infamous conflict-of-interest fees (e.g., commissions, 12b-1, and revenue sharing) to continue for the price of adding a simple one paragraph confession in existing contracts.

Investments – Has the World Gone Upside-Down?:
Some of the most staid investment adages are beginning to fall by the wayside. Is this a sign of maturity among investors?
A Simple Allocation Example,” (Forbes, August 6, 2015) A compelling argument to ignore bonds. One wonders if the argument will stand once interest rates rise substantially.
Surprise! Fees Not Reason Active Investing Loses vs. Passive,” (ThinkAdvisor, August 6, 2015) Ah, the folly of snapshot-in-time analysis. This report looks at the ten years ending December 31, 2014. Let’s try the ten years ending December 31, 2010 and see if we get the same result.
Greenspan: Be Afraid, Bond Bubble Is Bubbling,” (ThinkAdvisor, August 10, 2015) Geez, last week is was stocks, this week it’s bonds. Is there nothing safe?
Retirees, high-dividend stocks are no substitute for low-yield bonds,” (MarketWatch, August 10, 2015) And vie-versa. Actually, the article does a good job of explaining the risks of constructing income-oriented portfolios and advocates for the total return style of investing.
How to blend active and passive options in your 401k plan,” (Employee Benefit News, August 13, 2015) Very interesting. There has been a growing trend for index advocates to begin giving up some of the ground they’ve gained in the last few years. This article – whether purposely or not – represents a good example of this. Apparently, it is now accepted that it is “OK” to use active management for “inefficient” asset classes. This argument cedes the point that some markets are inefficient. But, what if they all are?

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.
Gen X retirement: Tick tock,” (USA Today, August 8, 2015)
African-American employees face greater retirement challenges,” (Employee Benefit News, August 10, 2015)
10 scary retirement statistics,” (BenefitsPro, August 10, 2015)
Practical ways to reach the retirement goal,” (Financial Planning, April 11, 2015)
Plan sponsors consider 401k reviews,” (Benefit News, April 11, 2015)
Are DB plans really more cost-effective than DC plans?(Benefit News, April 12, 2015)
DC plan participation rates, account balances increase,” (Benefit News, April 13, 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.
Retirees face double Social Security-Medicare whammy next year,” (MSNBC, August 6, 2015)
Are Baby Boomers too optimistic about retirement?” (Fortune, August 7, 2015)
Will Fixing Social Security Hurt Your Retirement?” (Fox Business, August 6, 2015)
Parent Education Loans Can Ruin Your Retirement,” (Money, August 10, 2015)
There’s a perfect storm brewing in the 401k space,” (Employee Benefit News, August 11, 2015)
‘Joint life’ may be the best gift you could ever give,” (MarketWatch, August 11, 2015)

Wisdom from Some of Our Favorite Blogs:
The Chicago Financial Planner: Reader Question: Do I Really Need a Financial Advisor? |
Nerd’s Eye View: Freemium Pricing Models For Financial Advisors |
ERISA Lawyer Blog: Seventh Circuit Rules That Defendant Could Be Liable For Withdrawal Liability As A Successor To Employer From Which It Purchased Assets, Since The Defendant Had Notice Of Potential Withdrawal Liability At The Time Of Purchase |
Boston ERISA Law Blog: Follow the Money: What Happens to the Proceeds of Class Action Settlements |
Behavior Gap: Do You Know What You Just Spent? |
Pension Risk Matters: Pension Plan Divestment and ESG Investing |
ERISA Lawyer Blog: IRS Discusses The Tax Treatment Of Contributions Made To An HRA Established For Retirees |
Scholarly Financial Planner: My Testimony Before the U.S. Dept. of Labor re: Conflicts of Interest Proposed Rule |
Boston ERISA Law Blog: The Problem with Providing Group Life to Employees |
Behavior Gap: The $70 Case Study: Your Values & Your Spending |
Pension Risk Matters: U.S. Department of Labor Hearings About Conflict of Interest and Fiduciary Role |
Nerd’s Eye View: How To Do A Backdoor Roth IRA Contribution While Avoiding The IRA Aggregation Rule And The Step Transaction Doctrine |
Behavior Gap: Where Do You Put Your Keys? |
ERISA Lawyer Blog: Ninth Circuit Holds That Employers’ Unpaid Contributions To Employee Benefit Funds Are Not Plan Assets, Even If the Plan Documents Label Future (Unpaid) Contributions As Such, So That The Failure By The Employer To Pay Is Not An ERISA Fiduciary Violation |
Squared Away Blog: Retirement: a Priority for Millennials? |
The Retirement Plan Blog: Employees contribute more to 401k plans, but number of new plans declines |

Hot Tips from Popular Web Resources:
NAPA Net: Dems Say Fiduciary Proposal Can Be ‘Improved and Enhanced’ |
NAPA Net: The Biggest Problem in the Retirement Industry Is… |
NAPA Net: DC Plan Loans Down in Q1 – Again |
Morningstar: Disclosure: The Riddle Wrapped in a Mystery Inside an Enigma |
Motley Fool: Regular or Roth? How to Pick the Right 401k for You |
NAPA Net: Conflicts of Interest Aired at the ‘Conflicts of Interest’ Hearing |
NAPA Net: Why the ‘Ideal’ Plan Isn’t |
NAPA Net: How Small Plans Are Different — And Not |
NAPA Net: Delta Fiduciaries Prevail in Stock Drop Case — Again |
Motley Fool: How to Apply For Social Security and When to Do It |
NAPA Net: Economic Analysis Drives Day 2 of Hearings on DOL’s Fiduciary Rule |
NAPA Net: Case of the Week: Selecting an Independent Qualified Plan Accountant |
NAPA Net: TDF Provider Sued for Excessive Fees |
NAPA Net: Are Advisors Worth the Cost? |
Morningstar: 7 Things Retirees Could Do More – and Less – Of |
NAPA Net: Supovitz Makes the Case for Level Playing Field with Rollovers |
NAPA Net: Will Plan Advisors Accelerate Record Keeper Consolidation? |
NAPA Net: Perez Says DOL Will Move Forward with Fiduciary Rule |
NAPA Net: Active vs. Index Not Always an Either/Or Choice |
NAPA Net: Fiduciary Hearings: The ‘After’ Math |
NAPA Net: AE Not So ‘Automatic’ |
NAPA Net: Deloitte: Robo Advice Is Here to Stay |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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