What do you think of our site upgrade?
Hosting an industry conference? Ask us about including it in this ticker? Trending Topics for ERISA Plan Sponsors: Week Ending 6/24/16 Trending Topics for ERISA Plan Sponsors: Week Ending 6/24/16
June 27
00:02 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:
Exclusive Interview with John Bogle: Industry ‘Crying Out for Change’; says Fiduciary Rule ‘a Turning Point’,” (, June 21, 2016) Here’s the raw, uncut interview with the straight talking industry giant who was on to “fiduciary” before we even knew what it was.

Compliance – Simpler is Better:
Why must we have complexity in government rules and regulations? Who benefits from this? Only legislators, regulators, and lawyers. OK, maybe accountants, too, but only as it pertains to tax issues. Why not make things simpler. Ron Rhoades has a brilliant essay on this (see “SFP” in the blogs section below).
In Two Social Security Reports, Ways to Reduce Senior Poverty Without Broad Benefit Cuts,” (Wall Street Journal, June 16, 2016) There’s a difference between patching up a broken system (which will ultimately fail because it’s built that way) and reimaging a wholly new paradigm that is truly sustainable.
DOL rule may underestimate 401k inflexibility for decumulation strategies,” (BenefitsPro, June 21, 2016) It turns out 401k plans are designed to maximum savings. They’re not efficient during the spending years of retirement. They’re not meant to be.
Elizabeth Warren Wants to Rescue Your Stranded 401k Plan,” (Bloomberg, June 21, 2016) The idea is to move stranded 401k accounts from cash as a default to long-term investments like target date funds. This may, in turn, lead to the concept of a “portable” 401k plan.
Hearing Witnesses Share Suggestions for Open MEPs,” (PLANADVISER, June 21, 2016) Here’s a more practical idea and effort from Washington. We’ve been waiting for legislation to allow unfettered MEPs for some time. In this session, we here of the greatest impediment of them all – the “one bad apple rule” and how eliminating it will help encourage the use of the MEP.

Fiduciary – The Coming Fiduciary Paradox:
If you don’t know what a “split-interest” trust is, look it up. Learn it. Embrace it. And also understand why there’s no correct answer when it comes to it. Once you do this, you’ll realize what the fiduciary paradox is.
Former Wells Fargo adviser suspended for recommending unsuitable investments,” (On Wall Street, June 17, 2016) Read this. It’s a classic case that demonstrates what happens when we have (and the need for) an enforceable fiduciary standard. The world just moved one step closer to “perfect.”
John Oliver’s criticism helps fiduciary duty go prime time,” (InvestmentNews, June 19, 2016) The most amazing thing about this article, given the publication it appeared in, is that there is nary a naysayer in it. The bigger news is that HBO has done more to help “fiduciary” go mainstream that PBS ever did.
Hackers, bank robbers, and mutual fund managers,” (BenefitsPro, June 22, 2016) Don’t read this before lunch. It’ll make your head hurt and your stomach hungry.
House upholds Obama ‘fiduciary rule’ on retirement savings,” (CBS News, June 23, 2016) Before we get too excited, the headline could also (and more accurately) read “House Dem Bloc Prevents Action on Fiduciary Rule.” In truth, while just under 60% of the House voted to reaffirm the law, Congress failed to obtain the necessary two-thirds required to override the President’s veto.

Fees – Because, in the End, Service Trumps Fees:
Once again we have a quiet week on the fee front. Maybe because everyone realized it was worth it to pay your adviser a higher fee for not being fully invested so there was extra cash laying around when Brexit caused the markets to crash.

Investments – Looks like ‘Risk’ isn’t What We Thought it was:
Risk means one thing to a portfolio manager and another thing to a client rep. And therein lies the problem.
Volatility doesn’t equal risk: The value investor’s perspective,” (Financial Planning, June 20, 2016) At first glance, this may appear to be an article all about the truth of statistics. In reality, except for a “regression to the mean” comment, it’s about the advantages of value investing compared to index fund investing. Aside from the various straw men offered by the author, his logic can be quite compelling.
401k Plans Ramp Up Passive Investment Options,” (CFO Magazine, June 22, 2016) Trying to avoid litigation can be a reason to litigate.

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.
Most Folks Okay With Their 401k,” (Financial Advisor, June 15, 2016)
Solving the Retirement Withdrawal Equation,” (Wealth Management, June 15, 2016)
Health savings accounts: A second retirement plan,” (CNBC, June 16, 2016)
How to Raise the Retirement Age for People Who Want to Work,” (Bloomberg, June 16, 2016)
Auto-enrollment just one solution to retirement security problem,” (Employee Benefit News, June 16, 2016)
401k Fee Fighter Jerry Schlichter Settles Another Case,” (The 401(k) Specialist, June 17, 2016)
Aging Committee Hearing: The latest ideas to raise retirement readiness,” (PLANADVISER, June 20, 2016)
Retirement calculators show ‘dramatically different’ results,” (InvestmentNews, June 20, 2016)
Auto-enrollment just one solution to retirement security problem,” (Employee Benefit Adviser, June 21, 2016)
How to make enrollment easy and efficient,” (Employee Benefit Adviser, June 21, 2016)
10 best practices in 401k plan design,” (Employee Benefit Adviser, June 21, 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.
Study Shows Millennials Better Than Boomers at Retirement Saving,” (Fox Business, June 16, 2016)
These Unexpected Costs Could Spoil Your Retirement,” (MONEY, June 16, 2016)
Couples need to build their retirement vision together. Here’s how.” (MarketWatch, June 17, 2016)
Retire early: 3 moves to boost your odds,” (CNBC, June 19, 2016)
Why Women are Excellent Investors!” (Huffington, June 20, 2016)
What should I do with my pension after I retire?” (CBS News, June 20, 2016)
Baby boomers reach required minimum distribution milestone for retirement accounts,” (InvestmentNews, June 20, 2016)
Pension Holders Need a New Retirement Plan, Not Stock Tips,” (The New York Times, June 21, 2016)
Do IRA distributions affect Social Security?” (MarketWatch, June 21, 2016)
10 best states to retire rich and stay that way,” (BenefitsPro, June 21, 2016)
Want to Retire Early Like Derek Jeter and Barack Obama? Do These 4 Things,” (MONEY, June 21, 2106)
Staying Fresh In Retirement,” (Forbes, June 21, 2016)
Could Retirement Eventually Be A Thing Of The Past?” (Huffington Post, June 21, 2016)
‘Five-Year Plan’ in College Could Cut Income and Retirement,” (The New York Times, June 21, 2016)
Taking the confusion out of the new Social Security spousal rules,” (MarketWatch, June 23, 2016)

Wisdom from Some of Our Favorite Blogs:
Business of Benefits: 403(b) and the Fiduciary Rule |
Business of Benefits: DOL and Lifetime Income |
Fred Reish: Interesting Angles on the DOL’s Fiduciary Rule #10 |
Data “Points”: Oliver’s ‘Twist’: 5 Takeaways |
Nerd’s Eye View: Tax-Efficient Retirement Portfolio Spending Strategies |
The Trust Advisor: Why Employers Don’t Offer Retirement Plans |
Behavior Gap: Redefining the Work of Real Financial Advisors |
RetirementRevised: New tools for tax-efficient retirement draw-downs coming into view |
fi360: Under new fiduciary rule, DOL has reason to pay attention to reverse churning |
Data “Points”: Your Plan Might Be an Excessive Fee Litigation Target If… |
Scholarly Financial Planner: Seeking … A Federal Government That Works, Not Wastes |

Hot Tips from Popular Web Resources:
NAPA Net: MassMutual Settles Excessive Fee Case |
NAPA Net: Are Roth Options Catching On? |
NAPA Net: ARA Leadership Converges on Capitol Hill |
NAPA Net: Philadelphia Plans to Examine Retirement Security | Lies, Damned Lies, and the 77 Percent Gender Pay Gap |
Morningstar: Making 401k Plans for Everybody |
Kiplinger: Lower Your Long-Term-Care Insurance Premiums |
NAPA Net: Parties Move to Combine Fiduciary Litigation in Texas |
NAPA Net: Your Plan Might Be an Excessive Fee Litigation Target If… |
NAPA Net: The Great Untapped 401k Buyer’s Market | Social Insecurity |
NAPA Net: How Do Employers Feel About Older Workers? |
NAPA Net: Kmak: Stop the Race to the Bottom on Fees |
NAPA Net: Senate Committee Examines Savings Innovations |
NAPA Net: Retirement Readiness Has a Gender Gap |
Kiplinger: 3 Most Dangerous Myths of Retirement Planning |
Kiplinger: Is This the End of Conflicted Financial Advice? |
NAPA Net: A Federal Lost and Found for Retirement Accounts? |
NAPA Net: The Brave New World of Value Add |
NAPA Net: House Interrupts Gun Control Sit-in for Fiduciary Veto Vote |
NAPA Net: DOL Rule to Spark More Tech Spending |
Morningstar: Bogle on Brexit and Other Threats to Global Markets |
NAPA Net: Court Holds Worker Liable as Fiduciary |
NAPA Net: Reader Poll: Roths Gaining Ground, But Not Much Traction |
NAPA Net: Forum Details Issues, Challenges With State-Run Retirement Programs |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


No Comments Yet!

There are no comments at the moment, do you want to add one?

Write a comment

Only registered users can comment. Login is sponsored by…

Vote in our Poll


The materials at this web site are maintained for the sole purpose of providing general information about fiduciary law, tax accounting and investments and do not under any circumstances constitute legal, accounting or investment advice. You should not act or refrain from acting based on these materials without first obtaining the advice of an appropriate professional. Please carefully read the terms and conditions for using this site. This website contains links to third-party websites. We are not responsible for, and make no representations or endorsements with respect to, third-party websites, or with respect to any information, products or services that may be provided by or through such websites.