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Hosting an industry conference? Ask us about including it in this ticker? Trending Topics for ERISA Plan Sponsors: Week Ending 1/29/16 Trending Topics for ERISA Plan Sponsors: Week Ending 1/29/16
February 01
00:03 2016

Welcome to 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. “When everybody’s a fiduciary…  no one is.”

FiduciaryNews Lead Story:
Retirement Planning Using Return Assumptions vs. Return Requirements – A Fiduciary Perspective,” (, January 26, 2016) The evolution towards more effective retirement planning is already underway, and many fiduciaries are breathing a sigh of relief because of it.

Compliance – Giving Credit Where It Isn’t Due:
So the president comes out with his annual budget proposal saying the same things he’s been saying for years and the mass media makes it sound like the second coming. Worse, in the process of this misplaced adulation they’ve ignored the people who are actually doing the behind the scenes work to move our retirement system to the next level.
Obama to Urge Easing 401k Rules for Small Businesses,” (The New York Times, January 26, 2016) The article doesn’t get into specifics, but it looks like the piece may be referring to the 401k MEP. It’s not clear, though, since, unlike what the article says, the administration has not been pushing this idea for years. Congress has. The DOL has been the one discouraging the MEP.
White House rolls out plan to boost retirement savings,” (The Hill, January 26, 2016) Ah, here’s a much clearer picture. Yes, the administration is finally touting the 401k MEP. This is just the tip of the iceberg, though. The broader effort shows the administration is also still on this IRA “open enrollment” kick and in favor of loosening ERISA restrictions to make it easier for states to compete with the private retirement plan market. There are a number of issues with this since it appears to create ERISA compliance questions and may not be in the best interests of private employees. Furthermore, much like the MyRA, the administration initiative reported in the article really isn’t offering anything new and fails to address the key issue (which isn’t the availability of retirement savings vehicles but the will of employees to save). That being said, there is currently bipartisan support in Congress to broaden the use of 401k MEPs (which will increase the availability of the most popular retirement savings vehicle to more employees and does so within the existing competitive private market), but the administration (through the DOL) has been the one dissuading Congress from passing the necessary legislation.
Obama Hopes To Broaden Retirement Plan Coverage For Small-Employer, Part-Time Workers,” (Financial Advisor, January 26, 2016) Here’s the trade journal view on the same story. The meme seems to be that Obama has been pushing this for years but that a Congress controlled by the opposition is unlikely to pass anything he proposes. It’s strange no one is mentioning the president doesn’t have a great track record of working with Congress, and that he has been especially stubborn when it comes to allowing Congress to suggest anything that isn’t exactly what he wants. This dysfunction is especially disappointing because, as we mentioned earlier, there’s bipartisan support for the 401k MEP.
Obama seeks to expand 401k use by letting employers pool plans,” (BenefitsPro, January 26, 2016) Finally, this article focuses just on the 401k MEP issue and rightly credits Orrin Hatch with first pushing the idea several years ago. In addition, it notes that the president is the one changing his posture by now signaling he’s willing to work with Hatch and others to push this legislation through.

Fiduciary – “It’s Here…”:
Well, only technically true. The reality is that the final version of the DOL’s proposed new Fiduciary Rule lies safely concealed being the curtains of the OMB, not doubt hermetically sealed inside Johnny Carson’s proverbial mayonnaise jar.
Will SEC Fiduciary Rule Address ‘Best Execution’ Quandary? Probably Not,” (ThinkAdvisor, January 25, 2016) The trouble with “best execution” is that it’s like pornography – you can’t really define it, but you’ll know it when you see it.
DOL’s Perez: Fiduciary Rule to Be Wrapped Up in ‘Coming Months’,” (ThinkAdvisor, January 26, 2016) Yesterday it was “a few weeks,” today it’s “coming months.” Will this thing ever get done?
IBDs trumped by Obama on DOL fiduciary, but vow to fight on,” (InvestmentNews, January 26, 2016) Have you ever seen the movie Groundhog Day? This DOL thing is our industry’s version of that Bill Murray classic.
Debate on Fiduciary Is Over; Battle for ‘Best Interest’ Rages On,” (ThinkAdvisor, January 27, 2016) Our good friend Knut Rostad explains why there can be no compromise when it comes to conflicts-of-interest.
Final Fiduciary Rule Sent To White House For Virtually Certain OK,” (Financial Advisor, January 29, 2016) Oh, so that’s it. It’s both a “few days” (the time it took to submit it to the OMB) and a “few months” (the time it will take the OMB to review it and then release it to the public).

Fees – Is There No Safe Haven:
Has Jerry Schlichter picked all the low hanging fruit, or is there more to be had. Stay tuned. Same court room drama. Different Fortune 100 company.
Oracle Corp. 401k plan targeted for excessive fees,” (InvestmentNews, January 27, 2016) This is about the recordkeeping and revenue sharing.

Investments – Bears Bring Out the Worst:
There’s an old saying: When the TV investment gurus tell you it’s time to shove your money in some mattress, the worst is behind us.
Target-Date or Target-Risk?” (Wealth Management, January 25, 2016) With data showing TDFs growing and TRFs losing market share, this article concludes the lemmings have won and TRFs, once the proud bastion of conservative investors, are headed for extinction.
How To Purge Your 401k Of Toxic Funds,” (Forbes, January 25, 2016) Which just goes to show you that even a venerable financial publication like Forbes can be just as naïve as any other mainstream media outlet. After blasting proprietary funds (that’s a good thing), the author offers the overly simplistic solution to replace them with index funds, as if there’s no such thing as a proprietary index fund.
You know what they say about return assumptions…” (BenefitsPro, January 27, 2016) If you’re a fan of the old TV series The Odd Couple, you’ll enjoy the opening to this article. It brings up some interesting questions about “generally accepted” practices.
Due diligence on mutual funds in a new era of ‘gates’,” (BenefitsPro, January 27, 2016) A warning to all those that use bond funds.
It’s time to protect your portfolio from volatility,” (CNBC, January 27, 2016) Headlines like this generally coincide with a market bottom.

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.
Stock market tumble could keep pension funds behind,” (CBS News, January 22, 2016)
Forced Savings of 401k Has Benefits,” (Financial Advisor, January 25, 2016)
Top 10 ERISA settlements of 2015,” (BenefitsPro, January 25, 2016)
How to fill the gaps in employee retirement education,” (Employee Benefit News, January 25, 2016)
Employers competing for employee retirement funds,” (BenefitsPro, January 25, 2016)
With Years For Planning, Investors Still Make Retirement Mistakes,” (Financial Advisor, January 25, 2016)
Financial stress forestalls retirement saving,” (BenefitsPro, January 25, 2016)
Oracle sued by 401k participants over ‘excessive’ record-keeping fees,” (Pensions & Investments, January 26, 2016)
5 retirement savings myths about Gen X and millennials,” (BenefitsPro, January 27, 2016)
Are your clients using the wrong account to save for retirement?” (InvestmentNews, January 27, 2016)
Why 401k loans aren’t always a bad thing,” (BenefitsPro, January 27, 2016)
How Auto-Escalation Can Help You Save More for Retirement,” (US News, January 27, 2016)
SCOTUS and 9th Circuit at loggerheads over Amgen stock-drop case,” (BenefitsPro, January 28, 2016)
Obstacles to flexible retirement lie with employers,” (BenefitsPro, January 29, 2016)

Trends and Truths 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.
New Rules for Reverse Mortgages,” (Money, January 21, 2016)
Should you claim Social Security early?” (CNBC, January 21, 2016)
Don’t limit your longevity protection to $125,000,” (MarketWatch, January 21, 2016)
Hybrid Long-Term Care Insurance Policies,” (Forbes, January 21, 2016)
10 retirement myths debunked,” (US News, January 22, 2016)
Easing The Financial Impact Of Divorce In Retirement,” (Forbes, January 22, 2016)
4 myths about Social Security,” (CBS News, January 25, 2016)
Social Security: The Hidden Risk of a Lump-Sum Payment,” (Time, January 25, 2016)
A new tool for retirees who expect to live long,” (CBS News, January 26, 2016)
Despite Goals, Few Retirees Start Businesses Or Change Careers,” (Financial Advisor, January 26, 2016)
What you should expect from a retirement planner,” (MarketWatch, January 26, 2016)
5 simple ways to catch up on your retirement savings,” (USA Today, January 26, 2016)
Panic is passe: investors stay steady on retirement savings,” (Miami Herald, January 27, 2016)
Social Security in the crosshairs: how large are benefits?” (MarketWatch, January 27, 2016)
When Not To Save For Retirement,” (Financial Advisor, January 28, 2016)

Wisdom from Some of Our Favorite Blogs:
Scholarly Financial Planner: How Can Broker-Dealer Firms Adapt to the New Fiduciary Regime? |
Behavior Gap: The Pain of Making a Change |
The 401k Plan Blog: “The Government Does Not Do It Better” – Brian Graff, and he’s dead on right about that! |
RetirementRevised: The 2016 Retirement Landscape: 5 Predictions |
Fiduciary Matters Blog: Oracle Sued by Schlichter Bogard & Denton After Recent Cases Against Anthem, Reliance Trust, and BB&T |
Nerd’s Eye View: Longevity Insurance Rates Compared To Stock & Bond Returns |
ERISA Lawyer Blog: IRS Allows An LLC To Adopt An ESOP |
Behavior Gap: Your Financial Plan Trumps the Financial Forecasters |
Pension Risk Matters: ERISA Investment Committee Governance |
The Trust Advisor: Fiduciary Retirement Advice Rule in Final Stages |
fi360: The DOL Sends Fiduciary Rule to OMB for Final Review |

Hot Tips from Popular Web Resources:
Morningstar: 6 Retirement Asset-Allocation Pitfalls to Avoid |
NAPA Net: How Much Difference Does an Advisor Make? |
NAPA Net: The Importance of Being Uncomfortable |
NAPA Net: SCOTUS Weighs in on ERISA Plan Overpayment |
The Motley Fool: Don’t Make This 401k Mistake in 2016 |
NAPA Net: Obama Administration Wants to Open Door for Open MEPs |
NAPA Net: Back in the Good Old Days… |
NAPA Net: CBO Puts a Figure on Tax Revenue Impact of Retirement Distributions |
NAPA Net: Two Better Off Than One With Retirement Health Care Costs |
Morningstar: How to Close a Retirement Savings Gap |
NAPA Net: Oracle Slapped with Excessive Fee Lawsuit |
NAPA Net: A Look at the Republican Presidential Candidates’ Positions on Tax Reform |
NAPA Net: Providers Need to Align Sales Strategies by Advisors, Not Plan Size |
NAPA Net: Supreme Court Sends Two ERISA Cases Back for Another Look |
Morningstar: Is Your Retirement Portfolio’s Asset Allocation on Track? |
Kiplinger: Taking Your First Required Retirement Distribution |
The Motley Fool: 20 Retirement Stats That Will Blow You Away |
NAPA Net: A Look at the Democratic Presidential Candidates’ Positions on Tax Reform |
NAPA Net: Knowledge of Fiduciary Duties Key for Advisors, Study Says |
NAPA Net: Retirement on the Rocks? |
Morningstar: Find the Right Investments for Your Retirement Portfolio |
NAPA Net: DOL’s Fiduciary Proposal Now at OMB |
NAPA Net: Bill Would Create New Savings Accounts with TSP Investment Options |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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