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Hosting an industry conference? Ask us about including it in this ticker? Trending Topics for ERISA Plan Sponsors: Week Ending 9/9/16 Trending Topics for ERISA Plan Sponsors: Week Ending 9/9/16
September 12
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:
7 Deadly Sins Every ERISA Fiduciary Must Avoid: The 6th Deadly Sin – Not-So “Modern” Portfolio Theory,” (, September 7, 2016) What if I told you that something vital to top business schools, the financial services industry, your business and your clients’ success and satisfaction doesn’t work as advertised?

Compliance – Light at the End of the Tunnel?:
We know there’s a concerted effort to nationalize the retirement system. This is a several pronged attack. It started with an all-out blitz to impugn the credibility of 401k plans. At the same time, a nostalgic rewrite of history pining for the days when “everyone” was covered by pension plans began to take hold. This campaign was aided by a backdrop of the most extended economic slowdowns since the Great Depression. Finally, and most recently, we see Federal ERISA exemptions being granted to State governments who wish to sponsor private employee retirement plans. But now could we be seeing the pendulum swinging the other way?
Tenured Academic Elites Wrong on 401ks, Again,” (The 401(k) Specialist, August 29, 2016) This is a biting piece of criticism that successfully uses several rhetorical tropes to kneecap those who would have you believe 401k plans are the root of all evil. Seldom do we say “must read,” but this short article is definitely a must read.
9 Milestones in the Rise and Fall of American Pensions,” (ThinkAdvisor, September 6, 2016) The history of our world as we know it.
ERISA Advisory Council Strongly Focused on DC Portability,” (PLANADVISER, September 6, 2016) Simple solution: Convert all 401k participant accounts into IRAs. Now, we’re not saying the logistics are easy, but this is the eventual end game, so the sooner we figure out a way to get there the better.
Pension Plan Assets Fall as Payouts Rise,” (Wall Street Journal, September 7, 2016) This is precisely what happens in Ponzi Schemes.

Fiduciary – Is the Other Shoe About to Drop?:
Right on the tail of the above, we have these two articles, both suggesting there may be effective counter maneuvers to state-sponsored private employee retirement plans.
Government DC Plan Sponsors Have Fiduciary Responsibilities Too,” (PLANADVISER, September 7, 2016) But does it count if Jerry Schlichter can’t sue them?
Fiduciary September 2016: The Rise of Consumerism,” (ThinkAdvisor, September 7, 2016) Adding more fuel to the fire that, regardless of regulators, the market itself will demand a strict fiduciary standard.

Fees – Confusion in the Ranks:
Let’s go back to the days of Mayberry. Those were the days when common sense ruled and no one thought it was an honorable thing to exploit loopholes.
When Target-Fund Fees Are Off-Target,” (Wall Street Journal, September 5, 2016) This is the problem with any type of “fund of funds.” The underlying expense ratios add up to an amount that most would consider unreasonable.
Do retainers beat AUM-based fees under fiduciary rule?” (InvestmentNews, September 7, 2016) Well, retainer fees (which are really hourly fees) can get pretty expensive if you’re providing continuous management (which means the meter can never legally turn off). But the article is really about flat fees, which make sense for those who aren’t picking individual securities. Unless, of course, you consider the cost of fiduciary liability insurance, which increases as you manage more assets. Tough call, here.

Investments – No clothes, Emperor?:
It took long enough, but it looks like the shine is starting to come off of Modern Portfolio Theory. But, with no apparent consensus alternative, will people merely accept the exposed rust?
The subject no investment professional wants to discuss,” (BenefitsPro, September 9, 2016) OK, we’ll give you the spoiler – it’s about MPT. But, after reading the article, tell us you don’t agree with the feeling it conveys.

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.
401k Float: The Next Tort Lawsuit Target,” (The 401(k) Specialist, August 29, 2016)
Empower Sued for Another Company’s 401k Mistake?” (The 401(k) Specialist, August 31, 2016)
Free Agents, Small Business Owners Need A Plan,” (Financial Advisor, August 31, 2016)
Retirement Plan Sponsors Plan Move From Prime Money Market Funds,” (PLANADVISER, September 6, 2016)
Lost participants create pension plan audit risk,” (Employee Benefit News, September 7, 2016)
Boomer retirement plans: Good, bad and ugly,” (CBS News, September 7, 2016)
DOL fiduciary rule could cause half of potential IRA rollover assets to stay put: Report,” (InvestmentNews, September 8, 2016)
Why retirement portability should become employers’ next big focus,” (Employee Benefit News, September 8, 2016)
Study Finds 401k Plan Participants Want More Information,” (PLANSPONSOR, September 8, 2016)
Baby boomers, millennials value technology for checking 401k plans,” (Employee Benefit News, September 8, 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.
3 strategies for delaying taxable IRA distributions,” (CBS News, August 26, 2016)
Many 401k Participants Save Without Plan, Survey Says,” (Financial Advisor, August 31, 2016)
Is your retirement ready for a natural disaster?” (MarketWatch, August 31, 2016)
When Adult Children Wreck Parents’ Retirements,” (Financial Advisor, September 2016)
Beyond the Retirement Fund: When to Invest in the Stock Market,” (US News, September 1, 2016)
Are We Overdoing the Embrace of Delayed Retirement?” (MONEY, September 1, 2016)
How to improve your spouse’s chances of a well-funded retirement,” (Los Angeles Times, September 4, 2016)
Which Is A Greater Risk: Running Out Of Money While You’re Alive Or Dying?” (Forbes, September 6, 2016)
Paying your kid’s tuition may crush your retirement,” (CNBC, September 6, 2016)
Many Plan to Work Past Retirement Age for Enjoyment,” (PLANADVISER, September 7, 2016)
How to Survive an Unexpected Early Retirement,” (US News, September 7, 2016)
The Single-Worst Retirement Move,” (Forbes, September 7, 2016)
Consistent 401k Savers More Likely to Reach Savings Goal,” (PLANADVISER, September 8, 2016)
3 Questions That Can Help You Get the Most From Your 401k,” (MONEY, September 9, 2016)
Birthdays Trigger Retirement Planning,” (PLANADVISER, September 9, 2016)

Wisdom from Some of Our Favorite Blogs:
Chicago Financial Planner: 3 Financial Products to Consider Avoiding |
Pension Risk Matters: Employee Fun Factor and the Bottom Line |
Squared Away Blog: Wives Pay Price to Retire with Husbands |
ERISA Lawyer Blog: Seventh Circuit Finds That Plaintiffs Plausibly Allege That Defendant Engaged In Prohibited Transactions And Breached Fiduciary Duty When It Allowed An ESOP To
Purchase Company Stock.
Fred Reish: Interesting Angles on the DOL’s Fiduciary Rule #18 |
Squared Away Blog: Women Often Quit Work to Help Parents |
Behavior Gap: Becoming a Linchpin |
fi360: The Impact of DOL’s Fiduciary Rule on Suitability Requirements |
Boston ERISA Law Blog: Singing the Praises of ESOPs |
Proskauer’s ERISA Practice Center Blog: District Court Dismisses 401k Plan Investment Claims Against Chevron Fiduciaries |
Proskauer’s ERISA Practice Center Blog: Federal District Court Enforces Forum Selection Clause Contained in ERISA Plan |
fi360: Fiduciary Talk 36: Changes to the SEC Liquidity Rules for Money Market Funds |

Hot Tips from Popular Web Resources:
NAPA Net: Proprietary Funds Draw Another Suit – and a Separate ‘Investigation’ |
NAPA Net: An Educated ‘Guess’ |
NAPA Net: Baby Boomers: Trailblazers of the New Retirement |
NAPA Net: ‘BIC Lite’ and IRA Transfers |
Kiplinger: Financial Decisions That Will Haunt You in Retirement |
The Motley Fool: Some Friendly Retirement Tips for President Obama |
NAPA Net: Report: Wellness Boost Boosts Retirement Savings |
NAPA Net: Case of the Week: Who May Qualify for a 401k Hardship Distribution? |
NAPA Net: What the New Fiduciary Rule Means for Plan Committees |
Kiplinger: Steps to Take in the Year Before You Retire |
NAPA Net: Court Drops Two Stock Drop Cases |
NAPA Net: Are Index Funds Communist? |
NAPA Net: Are You More Financially Literate Than a 5th Grader? |
NAPA Net: Is Peer Pressure Pushing Participants into Company Stock? |
The Dough Roller: How to Save Money on Taxes By Retiring Early |
NAPA Net: Consistent Average 401k Balances More Than Doubled Since 2007 |
NAPA Net: Determining Reasonable Compensation |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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