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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 8/28/15

FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 8/28/15
August 31
00:03 2015

1020805_25983300_Trending_Topics_2015.08.31_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:
How Should a Fiduciary Treat Social Security in Retirement Planning – A Generational Overview,” (, August 25, 2015) Perhaps, when planning for retirement, self-security is more important than Social Security.

Compliance – Celebrating Social Security:
The ultimate Rorschach Test. Your feelings on the sustainability of this Depression-era artifact reveal on which side of the Great Divide you fall.
You really want to privatize Social Security in THIS market?” (Los Angeles Times, August 24, 2015) Actually, this market would be the BEST time to privatize Social Security.
2016 Republicans Mum On Social Security Privatization,” (Financial Advisor, August 26, 2015) Interesting, not a word about Donald Trump’s ideas on this issue, or even Carly Fiorina’s. Ironically, they are the only ones in the crowded field with sustained experience as a retirement plan sponsor. Could it be this Bloomberg article omitted them on purpose?
Why millennials are right about Social Security,” (BenefitsPro, August 27, 2015) They’re on the right track on Social Security, but do Millennials have the guts to stick to it? Millennials aren’t the first generation of 20 year olds to “get” the problem of Social Security. In the early 1980s, their younger baby boomer cohort also had a chance to trade the Ponzi Scheme in for something they could really count on. Older politicians lured them away from their common sense notion, however, with a patchwork promise to “fix” Social Security. That “fix” only delayed the inevitable. Can today’s Millennials be bought off in the same way – or do they have that streak of independent self-confidence so missing from the bulk of their earlier counterparts?

Fiduciary – Did the DOL Just Do It Again?:
The DOL has been down this road before – inadvertently given investment advice by focusing on “low fee” mutual funds. It realized its error before and adjusted appropriately. Will it do so again? (It’s a rather simple fix, just replace “low fee” with “no 12b-1 fees, no commissions, and no revenue sharing fees” and everything will be all right.)
Analyst says DOL creates new conflict in its conflict of interest rule,” (BenefitsPro, August 24, 2015) This could be a real problem, enough to torpedo the whole thing. The DOL has foolishly included a “low fee” exemption in the proposed new Fiduciary Rule. This will be inappropriately encourage plan sponsors and professional fiduciaries to place index funds at the exclusion of actively managed funds. This would include index funds with conflicted fees over actively managed funds without conflicted fees. This is a bad idea, a very bad idea. Not only is it created a huge window to continue to allow conflicted fees, but it also has the dishonor of placing the DOL in the position to direct investment options. This will all end in tears.
Are EPS the next fiduciary frontier?” (Employee Benefit News, August 24, 2015) If you’re a portfolio manager, you’re probably thinking “What does Earnings Per Share have to do with one’s fiduciary duty?” Surprise! In this case, “EPS” mean “Education Policy Statement.”

Fees – Again, It’s Not the Expense Ratio that Matters:
When will we ever get this right?
Boeing blinks on eve of 401k fee trial,” (BenefitsPro, August 27, 2015)  Did they blink or did they just sit down and do the math?
Who gets a cut of your retirement plan fees?” (Employee Benefits News, August 28, 2015) Once again, the article was going great until it included mutual fund expenses as a “fee.” Do we need some sort of massive financial literacy effort to educate people –including professionals and journalists – on the difference between a fee and an expense?

Investments – Living the Vola-Tility:
Do you realize, if you were on vacation last week and looked at the current value of the market, you wouldn’t have noticed anything had happened.
Build a better retirement income strategy,” (CNBC, August 20, 2015) All about laddering.
Employees put off by complexity of asset allocation choices,” (Benefit News, August 24, 2015) Word to the wise – despite the headline, this article has nothing to do with investments. It’s all about plan design.
3 Steps to Protect Your Retirement Portfolio Against a Wild Market,” (Money, August 24, 2015) Not sure if you need more than one: Buy Low and Sell High.
Chart: Don’t freak out about your 401k,” (MarketWatch, August 24, 2015) We’re OK with the “Keep Calm” part, but what we’re really interested in is the “Pass the Ammunition” side of the equation.
Use The Correction To Make Money In Your Company Retirement Plan,” (Forbes, August 24, 2015) Now, that’s more like it!
RIA argues TDFs way too risky,” (BenefitsPro, August 25, 2015) In direct contradiction to a different article from a different author last week. This one makes more sense.
Young Workers in Target-Date Funds Hit Hard By Market Drop,” (WealthManagement, August 27, 2015) By the time you read this, that “drop” may have evaporated.

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.
Court Affirms Dismissal of Verizon Pension Risk Transfer Suit,” (PLANSPONSOR, August 21, 2015)
5 things employees say about 401k plans,” (BenefitsPro, August 24, 2015)
6 messages to reinforce for 401k plan participants during times of market volatility,” (Employee Benefit News, August 25, 2015)
Workers More Serious About Their 401k Plans Than Hitting the Gym: Schwab,” (ThinkAdvisor, August 25, 2015)
401k viewed as essential benefit,” (Benefit News, August 27, 2015)
Small-Business 401k plans Follow Large-Plan Trends: Vanguard,” (ThinkAdvisor, August 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.
How Retirees Can Make Money in the Sharing Economy,” (US News, August 20, 2015)
Post-retirement jobs: Would you consider an hourly wage gig?” (Fortune, August 20, 2015)
How to avoid penalties on early 401k distributions,” (MarketWatch, August 21, 2015)
Funding Retirement Without Breaking The Bank,” (Forbes, August 23, 2015)
Now is not the time to look at 401k plans,” (InvestmentNews, August 24, 2015)
Behavioral Finance: How You Are Being Fooled By Yourself,” (Forbes, August 24, 2015)
Look out for the ‘retirement danger zone’,” (CNBC, August 24, 2015)
Don’t worry about your retirement savings,” (CNN, August 24, 2015)
Top 5 dreams of workers planning retirement,” (BenefitsPro, August 24, 2015)
Advisors Spot Social Security Mistakes,” (Financial Advisor, August, 26, 2015)
Don’t let unforeseen costs destroy your retirement,” (MarketWatch, August 26, 2015)
Can Downsizing Save Your Retirement?” (Forbes, August 26, 2015)
Offering alternatives to lofty retirement dreams,” (CNBC, August, 26, 2015)
5 Pre-Retirement Mistakes Even the Smartest People Make,” (Time, August 26, 2015)

Wisdom from Some of Our Favorite Blogs:
Pension Risk Matters: Fiduciary Standard TV Ads |
The Chicago Financial Planner: What I’m Reading – Stock Market Correction Edition |
The Trust Advisor: Markets’ Selloff Reveals How You’ll React If Stocks Fall Further |
Data “Points”: 7 Things Every ERISA Fiduciary Should Know |
Nerd’s Eye View: Are The Licensing And Other Requirements To Become A Financial Advisor Too Easy? |
ERISA Lawyer Blog: District Court Discusses Whether A Business Owner Is An Employee Under ERISA |
Behavior Gap: Emergency Episode: On Scary Markets |
Behavior Gap: Focus On the Next Step |
Squared Away Blog: This Retiree Is a Lucky Dog |
Behavior Gap: You Are Not Crazy |
The Chicago Financial Planner: Annuity Sellers Love Stock Market Turmoil |
Behavior Gap: The Process of Aligning Our Values & Actions |
RetirementRevised: Why haven’t 401k managed accounts gained more traction? |

Hot Tips from Popular Web Resources:
Motley Fool: How to Inherit a 401k |
NAPA Net: ICI: 401k Fees Continue to Fall |
NAPA Net: Making the Investment Menu Better |
NAPA Net: More Americans Upbeat About Retirement, But Most Still Aren’t |
Motley Fool: Medicare: What to Do If You Work Past Age 65 |
NAPA Net: Fiduciary Proposal Opponents Turning Up the Heat |
NAPA Net: ‘Tipping’ Points: 4 Ways to Tell a Fad from a Trend |
NAPA Net: DOL Set to Boost State-Run Plans |
Morningstar: 5 Things to Do in a Market Meltdown |
NAPA Net: Will the Fiduciary Rule Make Selling Impossible? |
NAPA Net: Quick Poll Results: Are Participants and Plan Sponsors Responding to Markets? |
NAPA Net: Case of the Week: The End of Certain Lump Sum Windows |
NAPA Net: A Fast Track for New Cash Balance Plans |
Kiplinger: The Age of Longevity: How It Impacts Investing for Retirement |
NAPA Net: Health Versus Wealth: Which Do Participants Choose? |
NAPA Net: What’s the Alternative to the ‘Ideal Plan’? |
NAPA Net: Social Selling to Rock Your Sales |
NAPA Net: Reenrollment into TDFs a Worthy Investment |
NAPA Net: BlackRock Goes Robo |
NAPA Net: Multiple Factors Underlie Menu Moves |
NAPA Net: Boeing Lands a Deal in 401k Lawsuit |
Motley Fool: Statistics Show What Retirement Is Really Like – and Why We’re Not Ready |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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