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Hosting an industry conference? Ask us about including it in this ticker? Trending Topics for ERISA Plan Sponsors: Week Ending 8/26/16 Trending Topics for ERISA Plan Sponsors: Week Ending 8/26/16
August 29
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:
How the 401k Fiduciary Can Help Retirement Savers Make Better Decisions (Part I),” (, August 23, 2016) “The want/should dichotomy addresses headed on the conflict between the instantaneous gratification derived from buying something today and the delayed gratification inherent in saving more for retirement.”

Compliance – How’s this for a Conspiracy Theory:
So, the states get to compete with private industry for lucrative retirement savings dollars. Only they don’t need to worry about abiding by ERISA. Which means they can avoid some of the infrastructure costs private industry must endure. Guess who can get away with charging a lower fee. Now add the new Fiduciary Rule on top of this. Can private industry compete for business if its higher fees create a conflict-of-interest?
Advisors Cry Foul Over Mandated Auto-IRAs,” (InsuranceNewsNet, August 19, 2016) At least some see the camel’s nose for what it is. But, are they arguing against state-sponsored private employee retirement plans for the correct reason?
ICI voices misgivings about California’s Secure Choice retirement plan,” (BenefitsPro, August 22, 2016) And California workers should have misgivings, too. Unless they’re alert enough to stop it, $1 for every $20 they earn will be placed in a state-sponsored “retirement” account that invests in – get this – Treasuries! Now that’s a great long-term investment! Worse for those workers, thanks to the DOL and the White House, fiduciary protection has been turned “off.” Way to go California.
DOL opens floodgates for state-run retirement plans,” (Financial Planning, August 25, 2016) After reading the article, we can start to connect some dots no one else is connecting. Consider this: Some leading ERISA attorneys are suggesting the new Fiduciary Rule will make asking to get paid for giving advice to be considered a conflict-of-interest, intimating it might represent a fiduciary breach – the higher your fees versus the competition, the greater the conflict-of-interest. Now comes the twist: If the government offers a “low cost” (albeit non-ERISA protected) retirement account, is the private provider always going to be in a “fiduciary breach” position when a state-run retirement plan is available?
IRS offers reprieve for taxpayers who miss IRA rollover deadline,” (Financial Planning, August 25, 2016) Big whoop. So they cut you a break for “forgetting” to rollover after 60 days. It still doesn’t make up for the silly 365 rule interpretation.

Fiduciary – Been There, Done That:
If people could take responsibility for their own well-being, we would need corporations to sponsor retirement plans. We also wouldn’t need participation trophies. But you see where we’re going with this.
The conflict at the heart of U.S. retirement plans,” (Employee Benefit Adviser, August 17, 2016) This is a good breakdown of the history of retirement plans and why 401k 2.0 might be a good idea. Don’t remember 401k 2.0? You can read about it here: “401k 2.0 – A Proposal,” (, December 7, 2010).
How Are Rollovers Treated Under the DOL Fiduciary Rule?” (ThinkAdvisor, August 19, 2016) Marcia Wagner offers her insight on the impending change in the compliance regime.
How to roll out the best-interest contract exemption,” (Financial Planning, August 22, 2016) Some basic interpretations for one particular law firm.
3 IRA Transactions Exempt From DOL Fiduciary Level Fee Rule,” (ThinkAdvisor, August 22, 2016) It seems odd that asking for the business is a conflict-of-interest, but Fred Reish makes the case that it is.
A DOL Fiduciary Rule Compliance Checklist,” (ThinkAdvisor, August 25, 2016) It’s a start.

Fees – Target in Site:
We all knew this day would come. Why doesn’t anyone believe it when it’s here?
Law Firms Risked It All on 401k Fee Suits, and It’s Paying Off,” (ThinkAdvisor, August 23, 2016) As Willie Sutton once said of bank robbing, “You go there because that’s where the money is.”
R6 Shares Popularity Reveals Revenue-Sharing Concerns,” (PLANADVISER, August 23, 2016) Ya think?
Study Finds Small Business 401k Fees Top 2%,” (PLANSPONSOR, August 25, 2016) But we already knew that. And we already know the answer (401kMEPs). So, why hasn’t Congress acted?

Investments – A Beacon of Light:
In a sea of ignorant darkness, every once in a while a beacon of light appears. Trouble is, the darkness blinds most to the obvious. And that’s why we need professionals. Real professionals. Not the ones trained in the marketing of things, but the ones trained in the things themselves.
The problem with investing 100% of retirement savings in stocks,” (CNN, August 24, 2016) Tsk, tsk, where to begin? First, there’s the premise itself. Who in their right mind would place all their retirement savings in stocks as they near retirement and even into retirement? But to end with a “risk tolerance” questionnaire to help readers determine their “asset allocation”? Oh, what tangled webs we weave…
The dynamic duo: Help clients understand risk and return,” (Financial Planning, August 24, 2016) A fairly good article explaining historical market returns. There’s a bit of a fail, though, at the end, when it uses rolling ten-year periods from the “lost decade” to show how balanced portfolios do better than all stock portfolios. Other studies show using index returns from that era downplayed typical investor returns since actively managed all-equity funds performed much better during this period.
Are Index Funds Communist?” (ThinkAdvisor, August 25, 2016) We’re not saying it’s aliens, but… For more on this idea, see an oldie but goldie “3 Reasons to Outlaw Index Investing Right Now (and One Selfish Reason Not To) in 5 Acts,” (, May 12, 2010).

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.
2016 PLANADVISER Recordkeeper Services Guide,” (PLANADVISER, August 2016)
Regulatory changes in the retirement industry impact plan adviser role,” (Employee Benefit Adviser, August 17, 2016)
No. 1 Reason 401k Plan Sponsors Are Hiring Advisors,” (The 401(k) Specialist, August 17, 2016)
HSAs: The Retirement Savings Tool Most Clients Aren’t Using (Yet),” (ThinkAdvisor, August 18, 2016)
Lawsuit Accuses Morgan Stanley of Self-Dealing in 401k,” (PLANADVISER, August 19, 2016)
Morgan Stanley hit with $150 million 401k lawsuit for self-dealing and excessive fees,” (InvestmentNews, August 19, 2016)
How a Roth 401k can provide clients with opportunity,” (Financial Planning, August 19, 2016)
Flurry of 401k suits over excessive fees have put employers on notice,” (InvestmentNews, August 19, 2016)
Attack Against Large University Retirement Plans Continues,” (PLANADVISER, August 19, 2016)
Employers offer flexible retirement options to keep older workers,” (CNBC, August 21, 2016)
401k fee litigation finds new targets,” (Employee Benefit News, August 21, 2016)
Edward Jones faces proposed class action lawsuit over excessive 401k fees,” (InvestmentNews, August 22, 2016)
More workers are saving more for retirement, study says,” (BenefitsPro, August 22, 2016)
Nudging employees toward retirement success,” (Employee Benefit News, August 22, 2016)
Is it time for 403(b) plans to evolve?” (BenefitsPro, August 22, 2016)
Workers still lack confidence they can retire,” (Employee Benefit News, August 22, 2016)
SunTrust Stock-Drop Challenge Certified As Class Action,” (PLANADVISER, August 22, 2016)
How a retirement plan option can keep executives accountable for life,” (Employee Benefit Adviser, August 22, 2016)
DOL Complaint Alleges Fiduciary Failures by Adviser,” (PLANADVISER, August 22, 2016)
What’s on workers’ retirement bucket list? Work,” (CNBC, August 23, 2016)
Mastering the rollover process for retirement plans,” (Financial Planning, August 24, 2016)
Here Are the Ways Employers May Be Shortchanging Your 401k,” (Retirement Plan Advisor, August 24, 2016)
Helping Clients Put Retirement Savings and Investing on Auto-Pilot,” (Wall Street Journal, August 24, 2016)
Use of Float Income Questioned in New Fidelity Lawsuit,” (PLANADVISER, August 24, 2016)
The 401k is wreaking havoc on retirement,” (Employee Benefit Adviser, August 24, 2016)
Developing good habits early trumps urge to make ‘want’ decisions,” (BenefitsPro, August 24, 2016)
Don’t let clients miss out on back Social Security benefits,” (Financial Planning, August 25, 2016)
How to Build Tax-Efficient Withdrawal Strategies for Retirement,” (ThinkAdvisor, August 25, 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.
Kitces: How to navigate inherited retirement accounts,” (Financial Planning, August 19, 2016)
Cutting Kids Off Can Boost Retirement,” (PLANADVISER, August 19, 2016)
Be sure to know how IRA contribution and conversion deadlines differ,” (MarketWatch, August 19, 2016)
How Your Housing Choices Can Save Your Retirement,” (Forbes, August 19, 2016)
Dead or alive? Social Security misclassified some,” (The Washington Post, August 19, 2016)
Retirement stress spans generations,” (Employee Benefit News, August 21, 2016)
The Longevity Paradox: As Americans live longer, they run the risk of outliving their money,” (InvestmentNews, August 22, 2016)
Millennials seriously saving for retirement,” (BenefitsPro, August 22, 2016)
Finding the Best Options for Lump Sum Pension Buyouts,” (ThinkAdvisor, August 22, 2016)
College Savings Decisions Can Impact Retirement Savings,” (PLANADVISER, August 22, 2016)
Millennials may be headed toward their own retirement crisis,” (MarketWatch, August 22, 2106)
How to Retire Without a Mortgage,” (MONEY, August 22, 2016)
Average retiree will see Social Security benefit decrease,” (CNBC, August 22, 2016)
Roth IRA Does Double Duty As Emergency Fund and Retirement Account,” (Forbes, August 22, 2016)
Why You Need to Double-Check Social Security Advice,” (MONEY, August 23, 2016)
Six Mistakes Expats Make With IRAs—And How to Avoid Them,” (Wall Street Journal, August 23, 2016)
Will Your Retirement Savings Withstand Rising Inflation Rates?” (Huffington Post, August 23, 2016)
Kitces: Why most retirement accounts never run dry,” (Financial Planning, August 24, 2016)
Pension payment: Lump sum or monthly check?” (CBS News, August 24, 2016)

Wisdom from Some of Our Favorite Blogs:
Fiduciary Matters Blog: Is the DOL Fiduciary Rule the End of Solicitor Arrangements? |
The Trust Advisor: Fidelity Voice: Longevity And Your Retirement |
Behavior Gap: Goals for Real Financial Advisors, Part 1 |
ERISA Lawyer Blog: Seventh Circuit Rules That Payments For Service On The Carpenter’s Executive Board Are Not Salary For Purposes Of Calculating His Pension Benefit Under The Carpenter’s Pension Fund |
ERISA Lawyer Blog: IRS Provides Advice To One-Participant Plan Sponsors – Avoid Orphan Plans |
Behavior Gap: Holding On and the Cost of Not Letting Go |
The Trust Advisor: Bernstein: Passive Investing Is Worse For Society Than Marxism
ERISA Lawyer Blog: California Court Of Appeal Rules That One Cause Of Action Is Preempted By ERISA, While Others Are Not, Depending On Whether A Federal Concern Is Implicated By The Cause Of Action In Question |
Data “Points”: A Pension Protection Perspective |
RetirementRevised: Heed the warning label on mutual funds – passive is better |
fi360: Cybersecurity: 6 Steps to Build Your Fiduciary Readiness |

Hot Tips from Popular Web Resources:
NAPA Net: Edward Jones the Latest 401k Litigation Target |
NAPA Net: B/D’s Proprietary Funds Draw Fiduciary Suit |
NAPA Net: Bloated Investment Lineups Invite Litigation |
Kiplinger: Trade Your Annuity for a Better One |
NAPA Net: Float Resurfaces as a 401k Litigation Point |
NAPA Net: How the Class of 2020’s Retirement Plans Will Be Different |
NAPA Net: Using Choice Architecture to Fight Asset Misallocation |
NAPA Net: 403(b) Sponsors More Focused on Outcomes, Expenses, Fiduciary Concerns |
NAPA Net: Cerulli Tracks Shift Toward R6 Shares |
NAPA Net: Stock Drop Suit Claims Fall Short |
NAPA Net: Why Don’t Participants Like Managed Accounts? | How the Wrong Choice Could Ruin Your Spouse’s Retirement |
NAPA Net: IRS Offers Some Help on Rollovers |
NAPA Net: To Roth or Not to Roth? |
NAPA Net: Generation X: The Struggling Retirement Savers |
NAPA Net: State Pension Funding Gap Narrows, But… |
NAPA Net: DOL Publishes Final Rule on State-Run Retirement Programs |
NAPA Net: California Secures State-Run Retirement Program |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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