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Hosting an industry conference? Ask us about including it in this ticker? Trending Topics for ERISA Plan Sponsors: Week Ending 7/22/16 Trending Topics for ERISA Plan Sponsors: Week Ending 7/22/16
July 25
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:
Exclusive Interview with Michael Kitces: DOL Fiduciary Rule a ‘Pivotal Moment’,” (, July 19, 2016) “The SEC systematically failed to enforce for the past two decades, and now the DOL has by necessity forced the issue.”

Compliance – Stop Making Sense:
The dirty little secret is that it’s too hard to make up new reasons to run for re-election of you solve all the problems you promised to solve. It’s better to promise you’ll “keep working on it” than to actually solve the problem.
How to Save Public Pensions, No Federal Bailout Needed,” (Wall Street Journal, July 17, 2016) This is the usual refrain repeating the need from public retirement plans to shift away from defined benefits to defined contributions. While this makes unquestionable sense, the political price to pay for such a move is too great for most career politicians.

Fiduciary – Uh, Houston? Plan Sponsors have a Problem:
We warned this was coming. It’s just surprising it’s happening so soon.
DOL Fiduciary Guidance Coming Soon,” (ThinkAdvisor, July 18, 2016) Help is on the way!
Money managers with in-house 401k plan options at risk of employee lawsuits: lawyers,” (InvestmentNews, July 20, 2016) Is this a simple twist of the “company stock” liability? Not so fast, as, unlike with publicly traded stock, there are other benefits employees derive from investing in their own company’s funds.
Consultant Who Relayed Incorrect Benefit Info Not a Fiduciary,” (PLANADVISER, July 21, 2016) This could be a harbinger to potential liability increases to plan sponsors as a result of BICE. While the BICE will name the service provider as a fiduciary, it will also contain disclosures that may in effect indemnify that service providers from what heretofore has been legally classified as an unindemnifiable fiduciary duty. Only time – and the progression of case law – will determine this for certain.

Fees – They’re Coming After Index Funds:
We warned this was coming. It’s just surprising it’s happening so soon. Wait? Didn’t we just say that?
SEC to examine RIA share-class conflicts,” (BenefitsPro, July 18, 2016) The SEC doing its best impersonation of Captain Renault in Casablanca (“I’m shocked, shocked to find that gambling is going on in here!”)
401k fees are attracting more attention — from lawyers,” (On Wall Street, July 19, 2016) Ever wonder what information lawyers go trolling for when they’re looking for a class action case to pursue. Read here and enlighten yourself.
New York Life sued by employees claiming excessive 401k fees,” (InvestmentNews, July 20, 2016) Win or lose, this might be bad news for New York Life. NY Life might win for reasons implied about in the “Fiduciary” section, but if that’s the only reason it wins, those reasons won’t apply to non-employee retirement investors. Which actually leads to an interesting question: Does suing your own employer for investing in your own employer’s funds represent a form of a fiduciary breach – or at least willful sabotage? Granted, this is an index fund, so there’s a higher burden of proof on the part of the plan sponsor.
The SEC Investor Advocate’s View Askew: The Illusion of Fee Disclosure,” (ThinkAdvisor, July 21, 2016) It looks like the SEC will have to undertake the same learning curve the DOL did regarding fees. They’ll have to discover that trying to make any sense of fees without first determine how to measure value is bound to fail.

Investments – Changing Times:
This is why it’s important to always pay attention to what’s going on.
60-40 Is Looking Tired,” (Wealth Management, July 14, 2016) It’s not just that it was tired. It was a myth all along.
That ‘safe’ retirement investment is about to change,” (CNBC, July 18, 2016) It’s all about the new rules for money markets and the potential impact on 401k plans that hold them. Read it if you got ‘em.
Investors Miss Much of the Subtlety in ‘Active vs Passive’,” (PLANADVISER, July 18, 2016) Apparently investors are confused. This think index funds are less risky, when the opposite is true. (John Bogle has said one of the reasons why actively managed funds perform better in falling markets is because they can reduce equity exposure.) This portend ill for index funds the next time we see a market correction (which may then negatively enhance that correction), with disappointed investors fleeing them in droves.

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.
Jim Cramer’s Bad Take on 401ks — Again,” (The 401(k) Specialist, July 11, 2016)
401k Participant Sues Target over Company Stock,” (PLANADVISER, July 15, 2016)
Sexes approach retirement differently,” (BenefitsPro, July 15, 2016)
Berkshire Hathaway ERISA Suit Sent Back to District Court,” (PLANADVISER, July 17, 2016)
401k plan advisers take more of an interest in record keepers’ cybersecurity practices,” (InvestmentNews, July 18, 2016)
Baby Boomers Need Help with Retirement Risks and Fears,” (PLANADVISER, July 18, 2016)
Participants in the Dark on a Myriad of Financial Topics,” (PLANADVISER, July 18, 2016)
Cetera, plan sponsor sued for excessive fees in $25 million 401k,” (InvestmentNews, July 19, 2016)
401k Investors Feel Confident, Know Little About Their Investments,” (Wealth Management, July 19, 2016)
U.S. workers planning on 7 extra work years before retirement,” (BenefitsPro, July 19, 2016)
Money managers with in-house 401k plan options at risk of employee lawsuits: lawyers,” (InvestmentNews, July 20, 2016)
Time to rethink the retirement paradigm,” (BenefitsPro, July 20, 2016)
New Cetera headache: Lawsuit alleges breach of duties,” (Financial Planning, July 20, 2016)
Target Faced With Another Stock Drop Compliant,” (PLANADVISER, July 20, 2016)
How a prep school readied its staff for retirement,” (Employee Benefit Adviser, July 20, 2016)
Why Doesn’t Your Company Want You To Put More In Your 401k?” (Financial Advisor, July 21, 2016)
How Are People Who Retired In The Year 2000 Doing Today?” (Forbes, July 21, 2016)
Plan sponsor fiduciary and co-fiduciary advisor to a $25 million 401k plan sued,” (BenefitsPro, July 22, 2016)
Investors Are Getting Ripped Off On Index Fund Fees, Lawsuits Say,” (Financial Advisor, July 22, 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.
Millennials Ditch 401k Advisors for 401k Apps,” (The 401(k) Specialist, July 12, 2016)
Did I just get a raw deal from my deferred-compensation plan?” (MarketWatch, July 15, 2016)
Retirement puzzle: Find out what your 401k costs, and how to make it work for you,” (CNBC, July 17, 2016)
Thinking of buying your dream home for retirement? Do your homework first,” (The Washington Post, July 18, 2016)
Wanting to Work Longer Doesn’t Mean It’s Possible,” (PLANADVISER, July 18, 2016)
Saving Early No Longer Enough for Retirement Success: Survey,” (ThinkAdvisor, July 18, 2016)
How early retirement affects Social Security benefit,” (USA Today, July 18, 2016)
4 Questions Retirees Should Ask Before Moving,” (Yahoo, July 18, 2016)
Is This What You Had in Mind for Retirement? Here’s What Actual Retirees Found Out,” (Bloomberg, July 18, 2016)
No bump likely in Social Security checks next year,” (CNBC, July 18, 2016)
Retirement planning for women,” (MarketWatch, July 19, 2016)
Retirement Involves Supporting More Than Just Yourself,” (TheStreet, July 19, 2016)
15 Retirement Investing Mistakes to Avoid,” (US News, July 19, 2016)
Rethinking Conventional Wisdom on Retirement Withdrawals,” (Wall Street Journal, July 19, 2016)
Retirement readiness at top of plan executives’ concerns — report,” (Pensions & Investments, July 21, 2016)
Before you retire make a leisure plan with purpose,” (USA Today, July 21, 2016)
Jagger’s changing diapers at 72. How to manage that,” (CNBC, July 21, 2016)

Wisdom from Some of Our Favorite Blogs:
Pension Risk Matters: Emojis and Workplace Communications |
ERISA Lawyer Blog: Fifth Circuit Rules That Contractual Claims Restricting Reduction In Pension Benefits May Be Enforced |
The Trust Advisor: DOL Tweaks Fiduciary Rule; Plan Sponsors Struggle To Comply |
Behavior Gap: Talking About Money, Part 4 |
Proskauer’s ERISA Practice Center Blog: Pension Consultant Found Not to be an ERISA Fiduciary |
Nerd’s Eye View: The End Of History Illusion And Goal Based Investing |
ERISA Lawyer Blog: First Circuit Holds That Float Is Not A Plan Asset, So A Trustee Does Not Breach ERISA Fiduciary Duty By Retaining Interest Earned On the Float |
The Trust Advisor: Avoid These 8 Common IRA Mistakes |
The Trust Advisor: How Much Do You Really Need To Save For Retirement? You Be The Judge |
The Trust Advisor: Savvy Retirement Moves For Women |
The Trust Advisor: Why Don’t Millennials Contribute To IRAs? They Say They Don’t Understand Them. |
The Trust Advisor: Delayed Retirement Is Both A Symptom And A Cause Of A Troubled Economy |

Hot Tips from Popular Web Resources:
NAPA Net: Providers Stepping Up Their Game; Sponsors Taking Note |
NAPA Net: When You ‘See Something’ – What Do You Do? |
NAPA Net: Bay State Pushes New Robo Disclosures |
NAPA Net: 4 Legal Implications of 2016 Trends to Look For |
The Motley Fool: 3 Reasons It’s Smart to Take Social Security Benefits at 62 |
NAPA Net: 401k Expense Ratios Trending Lower |
NAPA Net: A Pension Protection Perspective |
NAPA Net: 4 Myths About Automatic Enrollment |
NAPA Net: Michigan Lawmakers Introduce Auto-IRA Bill |
The Motley Fool: Should You Buy an Immediate Annuity? |
NAPA Net: Report: Referrals Provide 75% of New Assets for RIAs |
NAPA Net: Advisors Could Be the New Small Market Providers |
NAPA Net: Small Plan Sued Based on ‘Astronomical’ Active Management Fees |
NAPA Net: Double Trouble With Second Stock Drop Suit |
NAPA Net: Provider Sued for Using own Fund as Default in 401k Plan |
NAPA Net: Case of the Week: Controlled Group Rules and Tax-Exempt Organizations |
NAPA Net: Workplace Education = More Retirement Savings and Confidence, Less Stress |
NAPA Net: ‘Nothing’ Doing: Court Blocks Participant ESOP Stock Sale |
NAPA Net: Democrats’ Platform Stakes Out Retirement Priorities |
NAPA Net: When You ‘See Something’ – Do You Say (or Do) Something? |
NAPA Net: Automatic Enrollment: What’s in it for Plan Sponsors? |
NASDAQ: 5 Steps to Get the Most Out of a Retirement Calculator |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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