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Hosting an industry conference? Ask us about including it in this ticker? Trending Topics for ERISA Plan Sponsors: Week Ending 8/19/16 Trending Topics for ERISA Plan Sponsors: Week Ending 8/19/16
August 22
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 Jack Towarnicky: Child IRAs will make ‘Middle Class Millionaires’,” (, August 16, 2016) “…just in case the politicians fail to act and have to scale back the [Social Security] promise, wouldn’t “middle class millionaire” status be a great gift of financial independence?”

Compliance – “Down Goes Frazier!”:
These immortal words of Howard Cosell describes the dramatic impact of “the bigger they are the harder they fall.” Nothing can be truer when applying this to public pension plans. But, is anyone paying attention to the thud?
Public Pension Plans’ Risky Investments Could Cost Taxpayers Billions,” (MONEY, August 11, 2016) The tab is so large people are experiencing psychic numbing. If you don’t know what psychic numbing is, you better look it up. It could lead to the ruin of the greater American experiment.
El-Erian: The Titanic Risks of the Retirement System,” (Wealth Management, August 12, 2016) Nary a word about the dangers of public pension Ponzi.
Once-celebrated Dallas pension fund runs risk of going broke,” (BenefitsPro, August 15, 2016) This is the public pension plan that prompted the MONEY story above.
DOL Rule Prompts Retirement Plan Concerns,” (Financial Planner, August 17, 2016) What’s missing from the headline is that this is about plan sponsors. It seems they’re maybe waking up to the fact that DOL regulations are written to protect the service providers, not the plan sponsors. Worse, in protecting the service providers, the DOL often places a greater onus on the plan sponsor.
Seriously? Office of Retirement Savings Lost and Found?” (BenefitsPro, August 17, 2016) The author explains how Elizabeth Warren may have just “jumped the shark.”

Fiduciary – The Fog of War:
In the midst of battle, sometimes you get confused, disoriented, and, well, things just don’t look good. That’s all going on right now, with different players acting in the role of the befuddled and the belligerent.
DOL fiduciary rule compliance: Advisors not sure about timeline, process,” (BenefitsPro, August 12, 2016) This pertains to those most impacted by the new Rule, which is all be assured to be revoked under a Trump administration.
Even popular changes to DOL fiduciary rule are proving problematic,” (InvestmentNews, August 15, 2016) Let the Great Unraveling begin. No, not in the Rule, but in the practical elements of the Rule. The industry is complaining that it’s “too hard” to comply with the provisions that allow them to continue to engage in conflicts-of-interest. Prediction: The DOL keeps the rule that provides exemptions for the biggest wheels that squeak the most, leaving the little guys at a competitive disadvantage.
Federal Court Broadens Investment Advisor Definition,” (ThinkAdvisor, August 15, 2016) Get this, the money you steal is considered “compensation” and you can’t be an investment adviser unless you receive compensation.
Fiduciary concern clients’ No. 1 reason for hiring 401k advisers: study,” (InvestmentNews, August 17, 2016)
Attorney Jerry Schlichter opens up about 403(b), 401k suits,” (InvestmentNews, August 18, 2016) Meet the reason for the concerns.

Fees – Not as Obvious as You Might Think:
The colleges have a viable defense. But the courts can just as reasonably add a new duty no one ever expected.
Suits Against NYU, Yale, Duke Over 403(b) Fees a ‘Sign of Things to Come’,” (ThinkAdvisor, August 15, 2016) “Things to come”? Sounds like they’re already here. There is something interest, though, that comes up in this article. It appears part of the suit involves a single plan hiring multiple recordkeepers. Not sure what the trustees were thinking on that one.
Lawsuits bring 401k fees into question,” (Employee Benefit News, August 16, 2016) Lest ye forget, before we witnessed this onslaught of institutions of higher learning falling into the crosshairs of class action attorney, we witnessed the onslaught of large financial service providers being sued by their own employees for high-priced retirement plans. Still, there is a fine line between high fees and conflict-of-interest fees. So far, the latter appears to be the greater issue than the former.
No such thing as a free retirement plan,” (Employee Benefit Adviser, August 19, 2016) Sometimes the truth hurts.

Investments – Simple Questions…:
…are often the best questions.
Where To Find Retirement Income That Rises With Inflation,” (Forbes, August 11, 2016) Just in case you forgot, a list of the usual suspects.

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.
Workers View 401ks As ‘Keys To The Kingdom’,” (Financial Advisor, August 11, 2016)
How to understand and prevent retirement plan lawsuits,” (PLANADVISER, August 11, 2016)
Schwab survey looks into the minds of 401k participants,” (BenefitsPro, August 12, 2016)
Late retirement windfall lays trap for plan sponsors,” (Employee Benefit News, August 12, 2016)
EBRI forum examines causes of retirement plan leakage,” (BenefitsPro, August 12, 2016)
Hundreds of thousands of 401ks up for grabs after DOL fiduciary rule,” (BenefitsPro, August 12, 2016)
Form 5500 changes could increase obligations for plan sponsors,” (Employee Benefit News, August 12, 2016)
Allianz Self-Dealing ERISA Suit Survives Dismissal Attempt,” (PLANADVISER, August 12, 2016)
Participants Would Welcome Automatic Enrollment at 6%,” (PLANADVISER, August 12, 2016)
When clients can’t afford to retire,” (On Wall Street, August 15, 2016)
Emory University sued in latest fiduciary-breach suit,” (InvestmentNews, August 15, 2016)
More 401k Plans Adopting 6% as the Default Deferral Rate,” (PLANADVISER, August 16, 2016)
Avoid a classic mistake when helping clients plan for retirement,” (Financial Planning, August 16, 2016)
DB and DC Live Side-By-Side in the Non-Profit Space,” (PLANADVISER, August 16, 2016)
The Death Of Traditional Retirement Planning,” (Financial Advisor, August 16, 2016)
For-Profit Private-Sector Employees Fully Embrace DC Plans,” (PLANADVISER, August 16, 2016)
One quarter of plan sponsors are looking to change advisors,” (BenefitsPro, August 17, 2016)
Columbia University targeted in $100 million lawsuit over excessive retirement plan fees,” (InvestmentNews, August 17, 2016)
Plan Sponsors Clearly Focused on Fiduciary DC Specialist Advisers,” (PLANADVISER, August 17, 2016)
Are you ready to help create ‘middle-class millionaires’?” (BenefitsPro, August 17, 2016)
403b Plan Sponsors Have Distinct Arguments in Excessive Fee Suits,” (PLANADVISER, August 18, 2016)
Deferral Rates and Matches on the Rise in 403(b) Plans,” (PLANADVISER, August 18, 2016)
Participants Active on Social Media and Mobile Apps,” (PLANADVISER, August 18, 2016)
Morgan Stanley, Board, Accused Of 401k Plan In Lawsuit,” (Financial Advisor, August 19, 2016)
Businesses Worried About Screwing Up Their 401k Plans,” (Financial Advisor, August 19, 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.
5 Times It’s Okay to Delay Retirement Savings,” (WiseBread, August 11, 2016)
Social Security Sign-Up Can Bring an Unpleasant Surprise,” (MONEY, August 11, 2016)
Parents say they’d sacrifice retirement to send kids to college,” (Employee Benefit News, August 15, 2016)
How one couple saved $1 million in 4 years to retire by age 43,” (CNBC, August 15, 2016)
Losing sleep over retirement worries?” (The Washington Post, August 15, 2016)
Social Security Drops Its Texting Requirement,” (MONEY, August 15, 2016)
Millennials Are Freaking Over Retirement, And Not Doing Much About It,” (Financial Advisor, August 16, 2016)
Don’t Let Boomerang Kids Sabotage Your Retirement,” (US News, August 16, 2016)
Is Social Security Going Broke?” (MONEY, August 16, 2016)
How to put off mandatory distributions,” (Financial Planning, August 17, 2016)
Maximize Early Social Security Benefits With Leverage,” (Financial Advisor, August 17, 2016)
Demand for Advice Strong Across Demographic Groups,” (PLANADVISER, August 18, 2016)
Strategies to Increase Retirement Income,” (Fox Business, August 18, 2016)
10 Nontraditional Ways to Fund Your Retirement,” (US News, August 18, 2016)
Stop using retirement accounts as emergency funds,” (CNBC, August 18, 2016)

Wisdom from Some of Our Favorite Blogs:
The Retirement Plan Blog: Inside the Cash Balance Plan Black Box |
ERISA Lawyer Blog: Ninth Circuit Holds That A Plan Will Not Qualify For the Church Plan Exemption From ERISA, Unless It Is Actually Established By A Church |
Squared Away Blog: Summer Suggestions |
Behavior Gap: Spending 20 Minutes Below the Waterline |
Fred Reish: Interesting Angles on the DOL’s Fiduciary Rule #16 |
fi360: Fiduciary Talk 34: Target Date Funds and How They Are Used in QDIAs |
The Retirement Plan Blog: Benefit Plan Regulators Have Been Busy – Very Busy |
The Trust Advisor: What Your Retirement Plan May Be Missing |
Proskauer’s ERISA Practice Center Blog: Update on Lawsuits Challenging the U.S. Department of Labor’s Fiduciary Rule |
Nerd’s Eye View: Financial Adviser vs Advisor – What’s The Difference? |
Squared Away Blog: How Many Years Can You Do Your Job? |

Hot Tips from Popular Web Resources:
Kiplinger: What to Do When You Have Employer Stock in Your Retirement Plan |
NAPA Net: Another Jumbo University Plan Gets Sued |
NAPA Net: DC 401k Heaven and Hell for Broker Dealers |
NAPA Net: Who’s Losing Sleep – Savers or Non-Savers? |
NAPA Net: Participants Back Bigger ‘Nudges’ |
NAPA Net: Boiling Points |
NAPA Net: Advisors Looking at Business Changes Ahead of Fiduciary Regulation |
NAPA Net: Is There a Seasonal Pattern to Participant Loans? |
Motley Fool: 4 ways seniors are leaving money on the table |
Kiplinger: Rethinking Your Retirement Nest Egg |
NAPA Net: Fiduciary Concerns Top Advisor Hiring Criteria |
NAPA Net: That’s Right – Another Multibillion-Dollar University Suit |
NAPA Net: Case of the Week: Rollovers as Business Startups (ROBS) |
Morningstar: Can 401k Lawsuits Help? |
NAPA Net: Retirement Health Cost Estimates Hit New High |
NAPA Net: Will 401k and 403(b) Litigation Turn Retirement Plans Into Widgets? |
NAPA Net: Is Self-Promotion a Fiduciary Act? |
NAPA Net: Promising Progress Post-PPA Puts Plans, Participants Ahead |
Morningstar: How Should Younger Investors Think About Social Security? |

Miss anything? Feel free to add a comment below.

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Christopher Carosa, CTFA

Christopher Carosa, CTFA


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