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What do you think of our site upgrade? Trending Topics for ERISA Plan Sponsors: Week Ending 9/23/16 Trending Topics for ERISA Plan Sponsors: Week Ending 9/23/16
September 26
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 Phyllis C. Borzi: Independent “Business Decisions” May Lead Companies to Apply Fiduciary Standard Broadly,” (, September 20, 2016) The DOL’s Assistant Secretary reveals how she and her staffed learned from initial attempts and why it led to a much stronger Conflict-of-Interest Rule.

Compliance – A New Hope:
It’s always darkest before the dawn, and it’s certainly been dark for those who belief the free market is the best answer as state-sponsored retirement plans seemed to be the new “It Girl.” But now bipartisan legislation promises a lame duck prize for what ails all.
7 Changes to 401ks GAO Wants from the Department of Labor,” (The 401(k) Specialist, September 13, 2016) Judging from the list, it appears the insurance lobby is well acquainted with the GAO.
Why State-Sponsored 401ks Don’t Stack Up,” (The 401(k) Specialist, September 20, 2016) An articulate and common sense argument against state-run private employee retirement plans.
Bills Supporting Small Employer 401k Plans Move Through Congress,” (Financial Advisor, September 21, 2016) This is it. This is the one we’ve been waiting for. It’s moving forward in both the House and the Senate with bipartisan support (unlike some of the other newsmaking proposals you may have seen). This is the one that allows Open 401kMEPs. MEPs have the potential to change the industry as we know it. The also represent the industry’s best alternative to state-run private employee retirement plans.
Legislation supporting multiple employer plans could become reality by year-end,” (InvestmentNews, September 22, 2016) More on the above.

Fiduciary – The Market Strikes Back:
Rules! We don’t need no stinkin’ Rules! That appears to be what the free market is saying as the concept of “fiduciary” begins to work itself into marketing campaigns.
Referrals Under the Final Fiduciary Rule,” (PLANADVISER, July/August 2016) Yep, this might be an issue.
Self-Directed IRAs: Avoiding DOL Fiduciary Rule Liability,” (ThinkAdvisor, September 20, 2016) Here “self-directed” means IRAs that invest in alternative investments. This has long been a potential problem. The author seems to feel the new Fiduciary Rule will increase that potential.
What if President Trump rescinded the fiduciary rule?” (BenefitsPRO, September 21, 2016) Has the free market finally begun to recognize the value-added importance of serving as a fiduciary? If so, will it accelerate changes within the industry? Indeed, will it move faster than regulators?
History Provides Hope for Institute for the Fiduciary Standard’s New Best Practices,” (ThinkAdvisor, September 21, 2016) Good run-down of Knut Rostad’s press conference.

Fees – The Returns of Fees:
It turns out fees become much more important – and apparent – when investment returns wane. And that makes sense, doesn’t it? After all, who isn’t more than willing to pay higher fees in an environment of double digit returns? But once those returns fall to lower digits (or no digits), well, what are you paying for?
3 Reasons 401k Investment Costs are Rising,” (The 401(k) Specialist, September 18, 2016) The title is a bit misleading as only one sentence in the entire article is devoted to it. On the other hand, if you can read between the lines, the article does imply something interesting. Despite stable or even lower fees, the long period (since 2000) of historically low investment returns (based on index returns and including low interest rates) make all fees seem higher even if they’re not.

Investments – Use the Value:
It’s an old, almost ancient, philosophy, but it’s a consistent winner. It may not be exciting, it may not be novel, it may not be hip, but it works.
The value of dividends in retirement,” (InvestmentNews, September 9, 2016) Nothing new here but it is a refreshing dip in some traditional thinking.
8 Facts and Fictions of Momentum and Value Investing,” (ThinkAdvisor, September 9, 2016) Speaking of traditional thinking, how about revisiting this classic debate. Ah, what nostalgia it beckons…
When A Retirement Fund Isn’t ‘Safe’,” (Forbes, September 14, 2016) Oddly, this isn’t about the dangers of what many consider “safe” funds (i.e., bond funds), it’s about “low-volatility” equity funds.

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.
For Family Offices, Fiduciary Rules Mean Thinking About Clients—and Heirs,” (Wall Street Journal, September 18, 2016)
Antioch Company Cleared of Wrongdoing in ESOP Transaction,” (PLANADVISER, September 19, 2016)
Seismic Shift! Complete Change in How 401ks are Positioned,” (The 401k Specialist, September 19, 2016)
What do lawn mowers and retirement plans have in common?” (Employee Benefit Adviser, September 19, 2016)
PBGC Proposes Expansion of Missing Participants Program,” (PLANADVISER, September 19, 2016)
Get some retirement help at work,” (Chicago Tribune, September 20, 2016)
Think a 401k Is Not a Sexy Benefit? Competition May Change That,” (The New York Times, September 21, 2016)
DOL Sues Nursing Home for Mismanaging Retirement Plan Assets,” (PLANADVISER, September 21, 2016)
How to hire a 401k investment adviser,” (Employee Benefit News, September 21, 2016)
Help clients take advantage of new IRS rollover rules,” (Financial Planning, September 22, 2016)
Why helping employees review 401k plans isn’t a mission impossible,” (Employee Benefit News, September 22, 2012)

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.
How to tell if you’re on track to a secure retirement,” (CNN, September 14, 2016)
Market Trends Buck Traditional Retirement Planning Rules,” (Financial Advisor, September 15, 2016)
Is It Ever a Good Idea to Borrow From Your 401k?” (TheStreet, September 15, 2016)
How to decide where you should retire,” (Business Insider, September 15, 2016)
How Supporting Adult Children Can Flat Out Ruin Your Retirement,” (Forbes, September 17, 2016)
Why surviving spouses aren’t always entitled to Social Security benefits,” (Los Angeles Times, September 18, 2015)
What Social Security isn’t telling you,” (CBS News, September 18, 2016)
Lost Track Of An Old 401k? Here’s How To Find It,” (Financial Advisor, September 19, 2016)
Three Best Ways To Pump Up Your 401k,” (Forbes, September 19, 2016)
4 of the Fastest Ways to Go Broke in Retirement,” (MONEY, September 19, 2016)
Build Your Retirement Fund by Changing Your Car-Owning Habits,” (US News, September 19, 2016)
Yes, You Can Start A Business In Retirement,” (Forbes, September 19, 2016)
5 American Cities Where You Can Retire On Just Social Security,” (MONEY, September 20, 2016)
More Retirees Turning To Multifamily Homes For Income,” (Financial Advisor, September 21, 2016)
Millennials’ Most Valuable Asset: Time,” (PLANADVISER, September 21, 2016)

Wisdom from Some of Our Favorite Blogs:
Data “Points”: Retirement Plans and Retirement Income: It’s Complicated |
ERISA Lawyer Blog: Second Circuit Affirms That Plaintiff’s Complaint, Alleging Breach Of Fiduciary Duty Under ERISA, Was Wholly Conclusory And Must Be Dismissed |
four01k: 401k Marketing. It’s all about the climb. |
Fred Reish: Interesting Angles on the DOL’s Fiduciary Rule #20 |
Behavior Gap: Fine Line Between Humility and Overconfidence |
Nerd’s Eye View: Financial Literacy Effectiveness And Just-In-Time Training |
ERISA Lawyer Blog: DOL Announces Two Month Extension For The Public To Submit On The Form 5500 Modernization Proposals |
Squared Away Blog: Seniors Enjoy More Disability-Free Years |
Behavior Gap: Confirmation Bias Makes Practicing Humility Tricky |
Fiduciary Matters Blog: Education Isn’t a Best Practice It Is A Requirement |
Scholarly Financial Planner: Consulting Engagements Available to Wealth Management / Financial & Investment Consulting Firms |

Hot Tips from Popular Web Resources:
NAPA Net: Mixing it up: Report Finds Preference for Robo-Human Advice |
NAPA Net: How Much Does it Cost to Start up a Retirement Plan? |
NAPA Net: Got the Determination Letter Program Blues? |
NAPA Net: DOL Gives La. Storm-Affected Sponsors, Providers Some Breathing Room |
NAPA Net: Retirement Bills Set for Senate Finance Committee Markup |
NAPA Net: The Fourth Quarter |
NAPA Net: What’s Holding Back Retirement Income? |
NAPA Net: Got Missing Participants? Pension Insurer Wants to Help |
Morningstar: A Moderate Mutual Fund Retirement Portfolio in 3 Buckets |
NAPA Net: Will Contribution and Benefit Limits Increase in 2017? |
NAPA Net: A Little More Time to Consider DOL’s Big 5500 Proposal |
NAPA Net: Case of the Week: What is the Definition of Compensation for Plan Purposes? |
NAPA Net: Fortune 500 Plans in the Crosshairs |
NAPA Net: MEPs Resurface as ‘PEPs’ as Senate Finance Approves New Retirement Bill |
NAPA Net: Will the DOL Rule Offer Elite Plan Advisors More Small Plan Opportunities? |
NAPA Net: Fall Foliage? Fiduciary FAQs |
NAPA Net: Does Student Debt Affect Retirement Saving? |
NAPA Net: Survey Finds Shift to Fixed-Fee RK Arrangements |
NAPA Net: The Costs to Small Businesses of Starting Up a Retirement Plan |
NAPA Net: Reish: Best Interest Isn’t ‘Single Best’ |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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