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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 10/9/15

FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 10/9/15
October 12
00:55 2015

1020805_25983300_Trending_Topics_2015.10.12_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:
DOL Fiduciary Rule as Proposed May Not Stop Investor Losses as Claimed,” (, October 6, 2015) The DOL is poised to endorse the continued use of the very fees it claims are costing retirement savers billions per year.

Compliance – The Camel’s Nose:
Do you understand? As comforting as it may sound to some, the idea that “Big Brother is watching over you” requires the very thing we’ve been taught to fear the most: Big Brother is watching you.
Kotlikoff: Government, Employers Should Butt Out of Retirement Planning,” (ThinkAdvisor, October 4, 2015) In a nutshell, he says, “since when can you trust the government to do anything right?”
Behavioral Economics Nudges Regulators to Err,” (Financial Advisor, October 8. 2015) Read this, and then weep. We’ve long warned of the Dark Side of behavioral economics, and this article confirms how an Orwellian government – even one in the United States – can avoid mandates by using behavioral psychology to nudge the citizenry towards actions the government deems preferable, without anyone questioning their motives. For years, thoughtleaders in the retirement arena have asked this of retirement laws. They are asking, “At what point do we cross into the evil of paternalism?”

Fiduciary – The Faustian Bargain:
Be careful what you wish for. You may get it. And when you do, there’s no giving back. It seems like a lot of people are beginning to have second thoughts about this DOL proposal.
For some, DOL fiduciary rule is proverbial road to hell,” (BenefitsPro, September 30, 2015) Surprisingly, even those pre-disposed to advocate for a uniform fiduciary standard are inclined to start thinking this way.
As DOL fiduciary heats up, both sides dig in,” (InvestmentNews, October 5, 2015) The politicians are slinging mud. Oh joy.
SEC Needs to Move on Fiduciary Rule, Ex-SEC Chiefs Say,” (ThinkAdvisor, October 6, 2015) As if…
Do brokers secretly like the DOL’s proposed fiduciary rule?” (BenefitsPro, October 7, 2015) The truth slowly seeps out.
How Robos Fall Short of Fiduciary Law,” (Financial Planning, October 7, 2015) It’s pretty simple. Robo advisors can’t look out for a client’s best interests if they require the clients to actually implement their suggestions. There is no limited power of attorney. There is merely software.
Robo Firms May Violate Investment Laws, Asset Manager Argues,” (Financial Planning, October 7, 2015) Well, if they aren’t fiduciaries, what’s the problem?
Hillary Clinton gives thumbs up to DOL fiduciary rule,” (InvestmentNews, October 8, 2015) A little late here for the Presidential wannabe, as this train has already left the station. With more and more fiduciary advocates realizing the DOL’s proposal in its current form merely gives brokers cover to continue charging 12b-1 fees, commissions, and revenue sharing fees, an enterprising “watchdog” reporter might want to follow the money and see how much Clinton is receiving from the usual Wall Street donors. A more impressive statement would have been to say she was in favor of merely enforcing the 1940 Investment Advisers Act.

Fees – Nobody Gets It, So Everybody’s Doing It:
Look, until people understand that only certain fees are bad, all this talk of fees will come to nothing.
Easily missed fee costs retirement savers billions,” (MarketWatch, October 1, 2015) Yes, we already know this. Too bad no one is doing anything about it. Like the DOL or the SEC. We mean “really” doing something about and not just saying they’re doing something about it.
Fiduciaries equate low cost with low risk in plan products,” (BenefitsPro, October 2, 2015) Maybe this is why, in announcing its Fee Disclosure Rule in 2012, the DOL insisted plan sponsors should look for the best value for the given fee, not the lowest fee.

Investments – Ode to an Annuity:
I think I shall never see/Anyone ever buy an annuity. / Annuity whose hungry fees are prest / Within disclosures we can only guess…
Can a high-dividend stock outclass an annuity?” (MarketWatch, October 5, 2015) The real answer is “it depends, but it shouldn’t surprise anyone.”
‘Stan the Annuity Man’: Avenging Advocate for Annuity Truth,” (ThinkAdvisor, October 6, 2015) According to the article, financial professionals don’t know what they’re selling and customers don’t know what they’re buying.
Why the hesitancy for income insurance?” (MarketWatch, October 6, 2015) Same thing as above, with a little more detail.

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.
Plan Sponsors Looking for New Advisors Despite Record Satisfaction: Fidelity,” (ThinkAdvisor, October 1, 2015)
Sponsors demanding much more from plan advisors,” (BenefitsPro, October 1, 2015)
Weak equity markets present 401k executive benefit opportunity,” (Employee Benefit News, October 2, 2015)
Let a roll-in help increase your retirement income,” (MarketWatch, October 2, 2015)
The 4 Things to Do Before Retirement,” (Wall Street Journal, October 2, 2015)
Small 401k plans have less access to educational support,” (Employee Benefit News, October 5, 2015)
Can robots close the retirement savings gap?” (CNBC, October 5, 2015)
3 steps to help fix the coming retirement crisis,” (BenefitsPro, October 6, 2015)
Most Americans have less than $1,000 in savings,” (BenefitsPro, October 6, 2015)
Cash Balance Plans A Piece to Consider for the Retirement Puzzle,” (OnWallStreet, October 7, 2015)
Recordkeeping costs hit all-time lows,” (BenefitsPro, October 7, 2015)
A blueprint for lifetime participation in 401k plans,” (Employee Benefit News, October 9, 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.
For Empty Nesters, Spending May Trump Extra Saving,” (Wall Street Journal, October 1, 2015)
The consequences of claiming Social Security too early,” (CNBC, October 1, 2015)
Maximizing Retirement Benefits of Spousal IRAs for Non-Working Spouses,” (ThinkAdvisor, October 2, 2015)
Four Must-Know Social Security Facts,” (Forbes, October 2, 2015)
Sidestep a Tax Hit by Reconstructing IRA Basis,” (Financial Planning, October 2, 2015)
Social Security Q&A: Do Early Spousal Benefits Mean Reduced Retirement Benefits?” (Forbes, October 5, 2015)
Seniors Dump Long-Term Care Insurance Just When They Need It Most,” (Money, October 6, 2015)
Nearly half of Americans have no savings: Survey,” (CNBC, October 6, 2015)
How To Retire Abroad And Make Money, Too,” (Forbes, October 6, 2015)
Why your retirement could cost you an extra $25,000,” (Fortune, October 7, 2015)
Senior finds new love but could lose ex’s Social Security,” (Yahoo, October 7, 2015)
3 Ways to Achieve a Satisfying and Secure Retirement,” (Money, October 7, 2015)
Reverse Mortgages Can Be A Retiree’s Saving Grace,” (Forbes, October 7, 2015)

Wisdom from Some of Our Favorite Blogs:
Data “Points”: 5 Things Millennials Need to Know About Saving for Retirement |
The Chicago Financial Planner: Discover the Secret to Living Tax-Free in Retirement |
Scholarly Financial Planner: Tax-Free Exchange of Life Insurance Policies Meant for Retirement? A Case Study |
Nerd’s Eye View: Solo RIA Advisors Are Serving The Mass Affluent |
Behavior Gap: Even Smart People Need Help Handling Money & Emotion |
fi360: GAO Says Clearer QDIA Guidelines Would Help Ease Sponsors’ Fiduciary Concerns |
RetirementRevised: QLACs: A New Tool for Retirement Income |
Squared Away Blog: Your Aging Parents or Clients: 7 Tips |
Nerd’s Eye View: IRS Cracks Down On Lump Sum Pension Buyouts |
Behavior Gap: 3 Ways to Trigger Your Financial Wake-Up Call |
Squared Away Blog: Blacks Invest Less Often |
fi360: Seven qualitative factors for evaluating investments |

Hot Tips from Popular Web Resources:
NAPA Net: September the Worst Month for Stocks — and 401k Balances? |
NAPA Net: Amid Widespread Uncertainty, Advisors Show Both Optimism, Unease |
Kiplinger: How to Make Market Volatility Work For You |
NAPA Net: 5 Reasons Why Your Small Business Should Offer a Retirement Plan |
NAPA Net: Still Waiting for That Internet Thing to Blow Over? |
NAPA Net: If They Only Knew… |
The Motley Fool: A Solo 401k Could Be the Best Way to Save for Your Retirement |
Morningstar: Does Downsizing in Retirement Still Make Sense? |
NAPA Net: A Robo by Any Name? |
NAPA Net: IRS Cuts Back on Access to Retirement Plan Technical Answers |
NAPA Net: Does Your Replacement Ratio Include Health Care? |
NAPA Net: House Hearing Ponders Alternatives to DOL’s Fiduciary Proposal |
Kiplinger: Asset Allocation Advice for Older Retirees |
NAPA Net: Survey Finds Growing Interest in Fixed-Dollar Participant Fees |
NAPA Net: Social Media Makes Inroads Among Advisors, But… |
NAPA Net: How to Plug Leaking DC Plans |
NAPA Net: Ex-Brookings Economist Litan Responds to Warren’s Conflict Accusation |
The Motley Fool: How Do YOU Want to Spend Your Money in Retirement? |
NAPA Net: Compliance Requirements: The Biggest Challenge |
NAPA Net: Fielding Miller: DOL Rule Among 5 Trends That Favor Elite Advisors |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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