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Hosting an industry conference? Ask us about including it in this ticker? Trending Topics for ERISA Plan Sponsors: Week Ending 5/27/16 Trending Topics for ERISA Plan Sponsors: Week Ending 5/27/16
May 31
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:
Bogle: ‘New Fiduciary Rule is Just the Beginning’,” (, May 24, 2016) “There is no upside for an employer doing everything perfectly with their retirement plan. The downside risk, however, can be huge. It’s a risk that just isn’t worth the employer taking.”

Compliance – Grappling with the Inevitable:
We live in a regulatory world that at once promises better here-and-now solutions while at the same time thwarts meaningful long-term solutions.
DOL’s Best Interest Standard May Be Tougher Than It Looks,” (ThinkAdvisor, May 25, 2016) An interesting potpourri of thoughts from fiduciary leaders.
Retirement crisis happening in Philadelphia,” (BenefitsPro, May 26, 2016) The first shot is fired in the coming open-MEP battle as the City of Brotherly Love contemplates creating one to address the retirement “Crisis.”

Fiduciary – A Multi-Pronged Attack:
Have you ever heard of the term “functional redundancy”? Dilbert cartoonist Scott Adams has been leading the charge to shift the paradigm from setting goals to creating systems as if it were a new thing. “Functional redundancy” has been a term applied to ecosystems for some time. Think of what it means in the real world of regulation where diverse parties are all adding the same value to the overall system.
Err on the side of caution with DOL fiduciary rule, Phyllis Borzi advises,” (InvestmentNews, May 24, 2016) She tries to coax those in doubt to use the BIC while the industry is busy looking for ways to avoid its use.
What I can’t you about my dinner with Phyllis Borzi,” (BenefitsPro, May 25, 2016) Fortunately, what she said off the record the night before she said on the record the next day.
DOL Will Rely on Consumers, Advisors to Help Enforce Fiduciary Rule: Borzi,” (ThinkAdvisor, May 25, 2016) It’s all about aligning the interests of investors with the interests of advisers.

Fees – “Small” is no longer “Safe”:
Used to be there was a time when plan sponsors could safely fly under the radar, thinking their insignificance offered protection from regulators and wily class action attorneys. That time is now long gone. Caveat Emptor!
Investors Beware: Devil May be in Details of Annuities,” (Fox Business, May 19, 2016) The details here refer to the fees, how they’re hidden, and the best way to smoke them out.
401k Plans Tweak How They Charge for Expenses,” (Wall Street Journal, May 20, 2016) Ending the unintentional free-rider problem with 401k plans might be more fair, but it’s bound to confuse those who haven’t been asked to know what’s going on behind the curtain.
ERISA 403(b) Plan Costs Down Since 2009,” (PLANSPONSOR, May 23, 2016) Coincidence? Or is this related to the movement to make 403(b) plans more like 401k plans?
Excessive-fee suit targeting $9 million 401k plan could be ‘harbinger’ for industry,” (InvestmentNews, May 23, 2016) Besides the low asset value, the number of employees (114) would normally mean this plan would be too small to land on any attorney’s radar. So much for that theory.
Top 10 401k Providers That Offer the Most ‘Value’,” (The 401k Specialist, May 23, 2016) Once again, it’s not about low fees, but value for the fee paid.

Investments – Investments don’t matter, unless you’re…:
…held responsible for investing other people’s money. That’s good news for regular folks who need to focus on saving. It does, however, put a lot of pressure on all kinds of fiduciaries, including advisers, advisors, and plan sponsors.
Could annuities be more valuable when rates are low?” (MarketWatch, May 19, 2016) The article shows that self-funding can be a problem if you live longer than expected and earn only average returns. It doesn’t say what happens if you die before your actuarial assumption or if you earn above average returns.
The Single Biggest Problem with 401k Product Performance is …,” (The 401k Specialist, May 23, 2016) In case you’ve forgotten the issue of closet indexing, you should read this article.
Retirement Planning’s Hard Reality: Savings Trump Returns,” (ThinkAdviser, May 24, 2016) Just in case you still think investing is important.
Choosing default investment alternatives for 401k plans requires close due diligence,” (InvestmentNews, May 25, 2016) Before you totally toss away investments as a matter of import, remember, someone has to be responsible for them.

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 as an Outmoded Concept,” (Wealth Management, May 19, 2016)
Yes, 401k plans are badly broken: Let’s fix them now,” (BenefitsPro, May 20, 2016)
Plan participant attitudes changing – and plan provider roles,” (BenefitsPro, May 23, 2016)
Fidelity Faces ERISA Lawsuit Over 401k Brokerage Window,” (Bloomberg, May 23, 2016)
The brain of a 401k plan sponsor: 4 things to know,” (BenefitsPro, May 23, 2016)
2 allegations of self-dealing underscore fiduciary risk of proprietary funds,” (BenefitsPro, May 23, 2016)
Form 5500 updates coming ‘very soon,’ says EBSA’s Borzi,” (Employee Benefit News, May 25, 2016)
Americans have disparate access to retirement plans,” (Yahoo, May 25, 2016)
The Importance Of Retirement Plan Advisors,” (Forbes, May 25, 2016)
Institute for Fiduciary Standard Launches ‘Campaign for Investors’,” (Wealth Management, May 25, 2016)
403(b)s looking more like 401k plans,” (BenefitsPro, May 26, 2016)
Majority of millennials not participating in 401k plans,” (Employee Benefit News, May 26, 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.
Conventional Wisdom Can Cost A Retiree Money,” (Financial Advisor, May 17, 2016)
Millions of Americans regret not saving for retirement earlier. Don’t let it happen to you,” (Yahoo, May 18, 2016)
Rent or Buy? Tips for Retired House-Hunters,” (Wall Street Journal, May 18, 2016)
Will Millennials ever be able to retire?” (CNN, May 18, 2016)
Don’t lose out on this Social Security benefit,” (CNBC, May 19, 2016)
Work a Little, Play a Little: A New Retirement Strategy,” (The New York Times, May 20, 2016)
5 crucial retirement years for your money,” (CNBC, May 23, 2016)
10 Alternatives to Full-Time Retirement,” (US News, May 23, 2016)
Pitfalls Of The 401k Rollover,” (Forbes, May 23, 2016)
Retirees Have Adequate Income In Only 3 States,” (TIME, May 23, 2016)
Retirees need 70% of their pre-retirement income but most live on less: Bankrate,” (InvestmentNews, May 24, 2016)
7 Social Security tricks that can help you adapt to new rules,” (MarketWatch, May 24, 2016)
Small boost in millennials’ financial health has long-term effects,” (Employee Benefit News, May 24, 2016)
Retirees Want to Stay in Their Homes, Shun Reverse Mortgages,” (ThinkAdvisor, May 25, 2016)
10 worst states for retiree income replacement,” (BenefitsPro, May 25, 2016)
17 Unexpected Expenses in Retirement,” (ThinkAdvisor, May 25, 2016)
5 reasons why workers can’t even get access to retirement plans,” (BenefitsPro, May 26, 2016)

Wisdom from Some of Our Favorite Blogs:
Boston ERISA Law Blog: Excessive Fee Litigation Against Small Plans – Damberg v. LaMettry’s Collision |
Squared Away Blog: Find Best Job Market with Online Tool |
Behavior Gap: Why I Hired a Real Advisor – Part 3 |
Fred Reish: Interesting Angles on the DOL’s Fiduciary Rule #6 |
The Trust Advisor: Is The 4% Rule Of Retirement Still Good Advice? |
The 401k Plan Blog: Why would ANYONE want to self-trustee a 401k Plan? |
Squared Away Blog: Array of Financial Products is Dizzying |
Behavior Gap: Make It Simple |
The Trust Advisor: Cashing Out Your 401k: Why It’s A Bad Idea |
Pension Risk Matters: Corporate Finance and Pension Restructuring |
Boston ERISA Law Blog: A Busy ERISA Week in the Ninth Circuit: Moyle v. Liberty Mutual and Rich v. Shrader |
fi360: Choosing default investment alternatives for 401(k)s requires close due diligence |
A NEW WAY TO FOUR01K: Retirement Plan Advisor and Game Changer |
Pension Risk Matters: Investment Return Expectations and Wishful Thinking |
The Chicago Financial Planner: Offshore Financial Interests |

Hot Tips from Popular Web Resources:
The Motley Fool: Here’s How You Can Make More Money in Retirement |
Kiplinger: His Retirement Will Pay Dividends |
NAPA Net: Are Packaged Portfolios Built Better? |
NAPA Net: Who Says Only Big Plans Get Sued? |
NAPA Net: A New Measure of Financial Well-Being |
Kiplinger: Why Guaranteed Income for Life Doesn’t Always Offer the Best Retirement Options |
NAPA Net: SDBA Options, Advice Offering Draw Excessive Fee Suit |
NAPA Net: The Deification of DB-ification |
NAPA Net: Senate to Vote on Fiduciary Regulation Repeal |
NAPA Net: Second Thoughts About Retirement? |
The Motley Fool: Most Americans Forget to Plan for This Huge Retirement Expense |
NAPA Net: A Different Take on Replacement Rates |
NAPA Net: Fees Major Reason for Record Keeper Switch |
NAPA Net: Senate Joins House in Fiduciary Regulation Disapproval |
NAPA Net: Retirement Plans May Feel Effects of New Overtime Rules |
The Motley Fool: Is the 4% Rule of Retirement Still Good Advice? |
NAPA Net: AARP Plans to ‘Mystery Shop’ Advisors |
NAPA Net: Supreme Court Ruling on Non-ERISA Case Has ERISA Implications |
NAPA Net: Do First Visual Impressions Affect Financial Advisor Selection? |
NAPA Net: Do We Save More When the Kids Leave Home? |
NAPA Net: What Expenses Rise – and Fall – in Retirement? |
NAPA Net: And the Best Retirement Theme Song Is… |
NAPA Net: Orphaned DC Cases Growing — Where Are the Foster Homes? |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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