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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 9/18/15

FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 9/18/15
September 21
00:02 2015

1020805_25983300_Trending_Topics_2015.09.21_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:
Six Months Later and It’s Now Clear the Current DOL Fiduciary Proposal Worsens Investor Protections,” (FiduciaryNews.com, September 15, 2015) Is the DOL about to give brokers everything they want?

Compliance – The States Go Marching On:
While the industry soils itself in the circular firing squad known as the Great Fiduciary Debate, the government is slipping its nose under the tent of retirement plans. Soon, there will be no private providers, only Big Brother to look after all.
States helping workers save for retirement,” (Benefit News, September 14, 2015) According to one ERISA attorney, Obama unilateral rewrote ERISA to provide cover for the states to do this. Retirement savers might not want to risk getting involved in any state-run plans until it’s clear they’re legal.
Secure choice pension accounts move toward reality,” (BenefitsPro, September 15, 2015) The states are coming for your retirement plans. Get ready. If you’re a small employer, you better know your options.

Fiduciary – At This Point What Does it Matter?:
Ignore the machinations of the regulators. Embrace the honest truth of the buyer.
Proposed fiduciary rule won’t limit access to advice, says DOL,” (BenefitsPro, September 11, 2015) This sounds far too defensive than it needs to. Truth be told, the DOL should have simply responded to brokers who claim the new rules will limit access to advice by saying, “Well, that’s your decision. It has nothing to do with the rule because there are plenty of advisers serving that market who are already operating under the proposed rules.”
What fiduciary rules could mean for retirement investors,” (MarketWatch, September 15, 2015) The bottom-line: Nothing much, except now you’ll have a bunch of trial lawyers trolling the mutual fund shareholder lists and trying to call investors to convince them to participate in class action law suits.
It’s time to rebrand ‘true fiduciary’,” (BenefitsPro, September 16, 2015) Because, as the article states, “If everyone is a fiduciary, no one is.” The basic idea is this: Redefine “True Fiduciary” (as opposed to “fiduciary”) in a way that separates investment advice from product sales.
Fiduciary Advocates Want Dividing Line Between Advice and Sales,” (Financial Planning, September 16, 2015) And, by total coincidence with the above article, (seriously, it was a coincidence) here we have a coordinated effort to do precisely that.

Fees – “If It Bleeds, It Leads” Updated:
If its “Fees” it leads. No matter on the nonsense nature of the content. It’s the headlines that sell.
How Your Retirement Nest Egg Is Being Nickel-and-Dimed By Fees,” (US News, September 11, 2015) Well, well, well, it appears someone found the old “beware of fees” template. Of course, that template doesn’t distinguish between good fees and bad fees, it just lumps them all together. So, we’ll ask the question again: “What part of ‘you get what you pay for’ don’t you understand?” Even the DOL warns investors not to seek the lowest fee. Rather, they say, look for the best value. That’s the template reporters should be using. At least the article correctly says – albeit in the last paragraph – fees are less important than saving.
The retirement problem that costs Americans $17 billion a year,” (CNN, September 15, 2015) Except, the DOL proposal doesn’t eliminate the cause of that annual cost. Worse, it institutionalizes it.
Sponsors reveal DC plan fee structures,” (BenefitsPro, September 15, 2015) According to plan sponsors, everything is AOK. They feel they’re fees are competitive. Phew!
These retirement plans have the highest fees,” (CNBC, September 15, 2015) As David Spade might say, “And this is important why?” Remember, the DOL says it’s about value, not just the amount of fees you’re paying.
Cheaper Advice Isn’t Always Better Advice,” (ThinkAdvisor, September 16, 2015) It’s not clear what he means by “cheaper” here. What he does say, however, is that someone who doesn’t want advice is better off playing a one-time commission rather than an asset-based ongoing management fee.
DC plan sponsors hyper-focused on fees,” (Employee Benefit News, September 16, 2015) This is an excellent article that features the folly of focusing on the wrong fees. Specifically, it shows how plan sponsors mistakenly look at mutual fund expense ratios as a way to lower “fees” and have moved assets into passive funds. This is all well and good during extended bull markets (like we’ve seen), but the market is cyclical, and passive funds cost investors more money (in investment losses) at different times of the market cycle. Who’s minding that store?

Investments – It’s a Marshmallow World:
Well, isn’t that special.
Should strategic investors also be tactical investors?” (MarketWatch, September 10, 2015) It’s amazing how, in this day and age of modern science, so many otherwise smart folks still believe in horoscopes – er – market timing.
Plan sponsors: Investment menus are not designed in a vacuum,” (Employee Benefit News, September 14, 2015) We understand the article – but will plan sponsors?
Longevity annuities could boost retirement readiness, study finds,” (InvestmentNews, September 14, 2015) So would winning the lottery. Either way, you’re taking a chance.
Target-date assets continue push to $1 trillion,” (BenefitsPro, September 14, 2015) When you’re hot, you’re hot.
Diversification is even more important for retirees,” (MarketWatch, September 15, 2015) Yes, but only if you believe in timing the market. If you believe in solid, fundamental, security analysis, then it’s really not important at all for the long-term portion of your retirement assets.

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 Savers Are Losing Ground – and It’s Their Own Fault,” (DailyFinance, September 7, 2015)
Stay-at-Home Parents Lose Out on Retirement Savings,” (Fox Business, September 10, 2015)
3 easy ways to save for retirement,” (CNBC, September 10, 2015)
Which workers are happiest with their retirement plans?” (BenefitsPro, September 11, 2015)
Consistent savers have twice as much in 401k savings, says EBRI,” (BenefitsPro, September 15, 2015)
Here’s How Wide The Retirement Gap Is Between Men And Women,” (Financial Advisor, September 16, 2015)
Retiring And Living Well In An Age Of Longevity,” (Financial Advisor, September 16, 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.
Don’t drag a mortgage into retirement,” (The Washington Post, September 10, 2015)
These Millennials Are Socking Away 15% of Their Salaries,” (Bloomberg Business, September 11, 2015)
Five mistakes to avoid when planning for retirement,” (MarketWatch, September 11, 2015)
Can the ‘great wealth transfer’ save retirement?” (CNBC, September 11, 2105)
How to keep your retirement on track with a boomerang kid,” (USA Today, September 12, 2015)
How much should you set aside for retirement?” (CNBC, September 14, 2015)
Why Funding Retirement Is More Important Than Student Loan Repayment,” (Forbes, September 14, 2015)
Five money milestones to hit while you’re in your 40s,” (The Washington Post, September 15, 2015)
Should you ever spend your retirement money before you retire?” (CBS News, September 15, 2015)
The Grandma Decision: To Retire Or Not To Retire,” (Financial Advisor, September 16, 2015)

Wisdom from Some of Our Favorite Blogs:
Scholarly Financial Planner: FINRA Seeks the Death of the Fiduciary’s Duty of Loyalty |
Data “Points”: 10 Ways the Class of 2019’s 401k Will Be Different |
Pension Risk Matters: Fiduciary Education Considerations |
The Retirement Plan Blog: IRS provides key guidance on non-qualified deferred compensation plan audits |
Business of Benefits: A 403(b) Collective Trust? A Note of Caution….. |
fi360: Fiduciary Rule: DOL Counterpunches with New Analyses on Cost of Advice |
Behavior Gap: Complexity vs Simplicity |
The Retirement Plan Blog: Tempus fugit: October 1 deadline to set up new 401k plan fast approaching |
Nerd’s Eye View: Amended FAFSA Rules For Prior-Prior Year Income |
The Chicago Financial Planner: American’s Attitudes About Their Money |
Boston ERISA Law Blog: Co-Fiduciary Liability and, In Other News, Thoughts on the Evidentiary Status of Medical Reviewers in LTD Claims |
Proskauer’s ERISA Practice Center Blog: Ninth Circuit Applies “Successorship Doctrine” to Claim for MPPAA Withdrawal Liability |

Hot Tips from Popular Web Resources:
NAPA Net: The Value of Managed Account Advice |
NAPA Net: DOL: Small Savers Not Who You Think They Are |
NAPA Net: The Real Problem with DC Plans Today |
NAPA Net: A Different Kind of Retirement Gap |
NAPA Net: 5 Things Plan Sponsors Don’t (Always) Do — But Should |
NAPA Net: Suit Filed Against Pension Advance Firms |
Morningstar: A Moderate Mutual Fund Retirement Portfolio in 3 Buckets |
Motley Fool: Who Should Consider an Immediate Annuity? |
NAPA Net: EBRI: Consistent Participation Pays |
NAPA Net: Case of the Week: Plan Cash-outs and Automatic Rollovers |
NAPA Net: Report: Savings Gender Gap Persists; Advisors Can Help Close It |
NAPA Net: TDFs Take a Hit in August |
NAPA Net: Report: Plan Rules Influence Distribution Behaviors |
NAPA Net: Francis Challenges Advisors To Become Better Business Managers |
NAPA Net: Bramlett: DOL Push for Passive Indexing Leaves Investors Exposed |
NAPA Net: Do Employers (Think They) Have a Responsibility to Offer Benefits? |
NAPA Net: Plan Sponsor Engagement: A Work in Process |
NAPA Net: Cerulli: Insurance Advisors Are Largest Segment of DC Advisor Specialists |
NAPA Net: Hill Hearing to Focus on Fiduciary Rule’s Impact on Younger Savers |

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Christopher Carosa, CTFA

Christopher Carosa, CTFA

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