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Hosting an industry conference? Ask us about including it in this ticker? Trending Topics for ERISA Plan Sponsors: Week Ending 2/12/16 Trending Topics for ERISA Plan Sponsors: Week Ending 2/12/16
February 16
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:
Fact or Fiction: Are Small to Mid-Sized Businesses Reluctant to Start 401k Plans?” (, February 9, 2016) Time constraints, compliance complexity, and costs impede the creation of 401k plans in smaller businesses.

Compliance – Workers Love It So Washington Hates It:
The logic is sometimes mind bending. If you’re job depending almost exclusively on satisfying customers, why would you even think of doing the opposite? Wasn’t there a Sponge Bob episode on this?
State-Run Retirement? Better to Go Private,” (Wall Street Journal, February 7, 2016) Another piece in favor of the 401k MEP route.
Why retirement portability is desperately needed,” (Employee Benefit News, February 8, 2016) There’s a lot of different ways to do this.
Majority of U.S. workers view 401k plans favorably,” (BenefitsPro, February 8, 2016) A word of warning before lawmakers and regulators get too far into changing a good thing.
Obama takes aim at retirement policy in latest budget,” (BenefitsPro, February 9, 2016) The president finally jumps on board the 401k MEP bandwagon.
The real reason for the ‘retirement crisis’,” (BenefitsPro, February 10, 2016) There’s only a crisis for people who work for a company that employs less than 100 people.
Obama proposes curbs to retirement-savings tax incentives for wealthy, heirs,” (InvestmentNews, February 10, 2016) Ironically, in the midst of complaining about low savings rates, the White House again proposes removing incentives.

Fiduciary – Long Knives Aimed at Insurance Industry:
Whoa, maybe the pendulum is finally swinging in the other direction. Let’s see what happens once the shoe is on the other foot.
Variable Annuities Face New Test From the Government,” (Wall Street Journal, February 8, 2016) The question is: Can the variable annuity satisfy the new Fiduciary Rule?
Sen. Warren, Rep. Cummings accuse financial industry of crying wolf on DOL fiduciary,” (InvestmentNews, February 11, 2016) The usual story.

Fees – The World is Changing:
While the regulators joust with industry lobbyists, the market is moving forward on its own. Well, maybe the trial lawyers are pushing it along just a tad.
Are Too Many Choices Costing 401k Holders?” (Wall Street Journal, February 7, 2016) Looks like this is an “incomplete” at best. The article doesn’t identify much in terms of worker actually moved from and into. In fact, it looks like it was the actual need to re-select funds that led to whatever shift the study is identifying, not the size of the menu. Furthermore, even the study’s authors can’t explain the reason for the shift. A lot more work is required before we can really conclude anything on this.
How should retirement plans pay their 401k fees?” (InvestmentNews, February 10, 2016) As the realization that revenue sharing is a thing of the past hits plan sponsors, many have decided to avoid regulatory scrutiny altogether by paying fees out of corporate coffers rather than plan assets.

Investments – Common Sense Returns:
It’s funny, but when the market hits the skids, fad talk evaporates and attention reverts back to blocking and tackling.
It’s Time to Rethink Asset Allocation,” (Wall Street Journal, February 4, 2016) There are plenty of other articles that do a much better job explaining the “assigned asset” or “bucket” approach towards investing. What this article fails to do is compare and contrast the “assigned asset” approach to the prevailing “total return” approach and, specifically, explain why the latter replaced the former in the 1960s.
Annuity up-front bonuses are not what they appear to be,” (MarketWatch, February 9, 2016) An annuity insider spills the beans.
Are Retirement Plan Sponsors Too Afraid of Longevity Annuities?” (Wealth Management, February 10, 2016) This same article seems to be written anew every six months.
The 10 toughest investment decisions,” (MarketWatch, February 10, 2016) Do you agree with this list?

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.
How to fill gaps in 403(b) plan moderating,” (Employee Benefit Adviser, February 5, 2016)
Are Too Many Choices Costing 401k Holders?” (Wall Street Journal, February 7, 2016)
401k Custodial Contracts Must Be Disclosed, Judge Says,” (Bloomberg BNA, February 8, 2016)
Who’ll Pay For Americans To Live To 100?” (Forbes, February 8, 2016)
Small Business Owners Say Retirement Crisis Looms, Except…,” (Financial Advisor, February 9, 2016)
Employers keen to add managed accounts to 401k plan lineup,” (Employee Benefit News, February 9, 2016)
Higher ed institutions use plan advisors to boost retirement results,” (BenefitsPro, February 10, 2016)
Renewed Focus On Retirement Income Planning,” (Financial Advisor, February 12, 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.
How To Continue Living At Home In Your Old Age,” (Forbes, February 4, 2016)
Tips to Withdraw Wisely From Your Nest Egg,” (Fox Business, February 4, 2016)
Here’s the toll that student debt can take on retirement,” (Employee Benefit News, February 4, 2016)
3 mistakes to avoid in your first 3 years of retirement,” (MarketWatch, February 4, 2016)
Money Advice for Women in their 60s,” (Money, February 5, 2016)
When should a widow start taking Social Security payments?” (USA Today, February 7, 2016)
How to Protect Clients’ 401k plans in Messy Markets,” (ThinkAdvisor, February 8, 2016)
Why China won’t derail your retirement,” (MarketWatch, February 8, 2016)
Fewer Retirement Savings Options Can Save You Money,” (Time, February 9, 2016)
3 key moves for boomers facing longer lives,” (CBS News, February 9, 2016)
Should You Downsize in Retirement?” (Forbes, February 9, 2016)
College Debt Follows Clients Into Retirement,” (Financial Advisor, February 10, 2016)
How Much of My Retirement Savings Can I Safely Spend?” (Time, February 10, 2016)
11-Step Guide To IRA Distributions,” (Forbes, February 10, 2016)

Wisdom from Some of Our Favorite Blogs:
Data “Points”: 4 Things That Make Me Go ‘Huh?’ |
The Chicago Financial Planner: Denver Wins! Time to Go to Cash? |
Nerd’s Eye View: CFP Board Updating Standards Of Professional Conduct |
Behavior Gap: Is It Worth It? |
Scholarly Financial Planner: FINRA’s Illusionary “Best Interests” Standard |
Squared Away Blog: Could Social Security Statement Do More? |
Behavior Gap: Surprise! Uncertainty is Reality |
Nerd’s Eye View: Summary Of President’s FY2017 Budget Proposal – Treasury Greenbook |
The Trust Advisor: Sen Warren “Bombshell” Letter Tries to Bluff DOL that Advisors Actually Support Proposed Fiduciary Rule |
ERISA Lawyer Blog: Eighth Circuit Upholds Plan’s Determination Of The Amount Of A Participant’s Pension Benefit |
The Trust Advisor: DOL’s Fiduciary Rule and Annuities: The End of 7% Commissions |
Pension Risk Matters: Romance and a Good Pension Plan |

Hot Tips from Popular Web Resources:
NASDAQ: 5 Reasons to Consider a MyRA Account |
NAPA Net: Senate Makes Moves to Block Fiduciary Rule
NAPA Net: Highlighting Fiduciary Status Can Lead to Distrust |
NAPA Net: TDF Holders Do Better, But… |
The Motley Fool: 3 Smart Ways to Maximize Your Roth IRA |
NAPA Net: 15 (More) Retirement Plan Points to Ponder |
NAPA Net: The Tax Reform Plan That Could Kill the 401k |
Kiplinger: Pros and Cons of 401k Loans |
NASDAQ: 6 Secrets to Saving More for Retirement |
NAPA Net: Obama’s Final Budget: What’s in it for Retirement Plans? |
NAPA Net: Referral Fees in DC Plans and Fiduciary Duty |
NAPA Net: Auto Enrollment Patent Suit Dismissed — With Prejudice |
Morningstar: Preparing for Lower Long-Term Returns |
Kiplinger: Convert a Traditional IRA to a Roth in Retirement |
NAPA Net: TDF Performance Gap Narrows |
NAPA Net: Cross-Tested Plans in the Crosshairs (Again) |
NAPA Net: Americans Like Their 401k Plans — Even if They Don’t Have One |
NAPA Net: DC Assets Flat, DB Assets Slip |
NAPA Net: Warren Calls Out Financial Services Firms on Fiduciary Rule Claims |
NAPA Net: Banks Exiting Mutual Fund Business, Citing Conflicts |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA

1 Comment

  1. Jack Towarnicky
    Jack Towarnicky February 16, 10:08

    Back in 2006, in a plan sponsor role, we became hyper sensitive to fees:
    Reduced investment options from 47 to 15,
    Changed almost all investment options to separate accounts to minimize expense,
    Eliminated all other fees,
    Changed plan administration from an asset management to a per capita fee (2008).

    The result dramatically reduced the cost for those with a lifetime of savings.

    A recent article from Stephen Miller confirms that more plans are shifting to fixed dollar, per capita fees for recordkeeping services according to the NEPC 2015 Defined Contribution Plan & Fee Survey: What a Difference a Decade Makes. That study showed that 47% of surveyed plans now have fixed dollar fee arrangements. The survey also revealed a steady decline in overall plan fees, including record-keeping fees and investment fees. The per capita average fee in the survey was $64 in 2015, down from $70 in 2014 and down significantly from $118 in 2006.

    From Vanguard’s How America Saves, 2015, – in 2014, 52% of Vanguard plans offered an “index core”. Over the past 10 years, the number of plans offering that lineup grew 90%. Today, 82% of participants hold equity index investments.

    Given this is Vanguard, chances are these percentages are much higher than an average of all 401(k) plans – but the trend is clear over the past 20 years, fewer funds, more index funds.

    So, seems clear that the litigation and fee disclosure rules have contributed to this shift among plan sponsors.

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