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Hosting an industry conference? Ask us about including it in this ticker? Trending Topics for ERISA Plan Sponsors: Week Ending 11/11/16 Trending Topics for ERISA Plan Sponsors: Week Ending 11/11/16
November 14
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:
Will the DOL’s New Fiduciary Rule Redefine the Role and Boundaries of Plan Recordkeepers?” (, November 1, 2016) Ultimately, it will be the tort bar that offers the enforcement and the subsequent consequence for poor decision making on the part of plan sponsors and service providers. Rest assured all sides will be discover the regulatory fence in their once open fields.

Compliance – Trump Resounding Election Victory Changes Everything:

Fiduciary – Will He or Won’t He:
Repeal the Fiduciary Rule, that is. It might not be on the top of his priority list, but it is on the top of the list for Congressional Republicans. That means it’s trade bait, but not before it’s effectively killed by administrative delays. Not that this changes anything.
A new president and fiduciary: What happens next?” (Financial Planning, November 7, 2016) Spoiler alert: Nothing.
The October Surprise and the Campaign for BICE,” (ThinkAdvisor, November 7, 2016) Knut Rostad expands on the “line in the sand” drawn by competing brokerages firms in their opposite responses to the DOL’s Fiduciary Rule.
401k advisers push for more general investment policies as fiduciary safeguard,” (InvestmentNews, November 8, 2016) The lesson here is: If you say you’re going to do it, you better do it.
The fiduciary rule won’t change under a President Trump,” (MarketWatch, November 9, 2016) Repealing the Fiduciary Rule, while promised by Trump’s campaign, probably doesn’t have a high priority for the Trump transition team (repealing ObamaCare would likely top that list). On the other hand, we know Trump’s a negotiator and we do know some members of Congress do feel repealing the Fiduciary Rule is a high priority, so, as they say, you never know.
Election Results May Not Trump The DOL Rule,” (Financial Advisor, November 9, 2016) Same story, same point of view.
Fiduciary rule ‘in jeopardy’ under Trump,” (Financial Planning, November 9, 2016) Same story, different point of view.
New Shade of Doubt Cast on DOL Fiduciary Rule Implementation,” (PLANADVISER, November 9, 2016) Same story, the squishy halfway-in-between compromise version.
Forget brokers: DOL’s fiduciary rule impacts recordkeepers more,” (BenefitsPRO, November 9, 2016) Getting back to the real world, we know that brokers are moving ahead on the Fiduciary Rule, but what about recordkeepers?
Another 401k record keeper sued over ‘pay to play’ scheme with Financial Engines,” (InvestmentNews, November 11, 2016) The “dirty little secret” of conflict-of-interest fees begins to seep into the undiscovered country of recordkeepers. This is only the tip of the iceberg.

Fees – To 12b-1 or Not to 12b-1:
It’s hard to believe 12b-1 fees will be with us much longer. They, along with commissions and revenue sharing, are ripe for a targeted guerilla marketing campaign. All that’s need is a human face to put on it.
Measured Use of 12b-1 Fees Will Continue,” (PLANADVISER, November 4, 2016) It’s in the best interests of the mutual funds that need distribution and the sales representatives that sell them to keep this infrastructure alive. Is it in the best interests of retirement savers? We’ll let the empirical studies answer that question.
New Rule Helps No-Load Funds—But Investors Still Need to Watch for Other Fees,” (Wall Street Journal, November 7, 2016) Nice for the Wall Street Journal to finally get on board. See our 2010 article “401k Fees That Matter,” (, April 27, 2010).
SEC scrutinizing two Ladenburg Thalmann firms for selling mutual funds with 12b-1 fees,” (InvestmentNews, November 8, 2016) You knew this day was coming. It should be obvious to everyone that 12b-1 fees are not consistent with one’s fiduciary duty.
JP Morgan Chase Latest to Cut Commission-Based Retirement Accounts,” (PLANADVISER, November 10, 2016) Isn’t it amazing that, before Trump is even inaugurated, his policies seem to be taking effect? Likewise, before the DOL’s Conflict-of-Interest Rule becomes effective, it’s already doing what it’s supposed to be doing.

Investments – It’s Complicated:
If you think investing other people’s money is easy, you should try it. The pressure to treat everyone equally, to avoid the unnecessary downside, and the hope you’re lucky enough not to catch a client on a “bad day” creates enormous demands – and that’s before you include the 24/7 of today’s security markets.
DOL Rule And The Rise Of Cookie-Cutter Portfolios,” (Financial Advisor, October 2016) This is the difference between portfolio managers and, well, “not” portfolio managers. A cookie-cutter portfolio is generally viewed as a bad thing, but there’s a problem with that way of thinking. In the world of portfolio managers, if an investment is good for one client, you need to make sure it’s not good for another client before you decide only the first client gets it. Financial planners, who merely allocated style boxes (i.e., mutual funds) rather than individual securities don’t have this same perspective.
Does a Simple 401k Portfolio Mean a Better 401k Portfolio?” (The 401(k) Specialist, November 2, 2016) This article both explains why there’s a sudden interest in index funds and why that might be dangerous.
What to consider when investing in target date retirement funds,” (Los Angeles Times, November 6, 2016) Here’s what the main stream is reporting to its readers. What do you think?
6 Key Points About Managed Accounts in 401k Plans,” (The 401(k) Specialist, November 7, 2016) A good review of all the options.
Portfolio Allocation Choices Help Institutional Investors Boost Returns,” (PLANADVISER, November 8, 2016) Ah, is there nothing asset allocation can’t do?
Don’t let election volatility sway your 401k investments,” (CNBC, November 9, 2016) There’s an old adage – “Never go food shopping on an empty stomach.” Likewise, never trade your retirement investments when you have too much emotion invested in the market. In other words, never make investment decisions when you’re too exuberant or too depressed. No tree grows to the sky and the world will end tomorrow. Besides, if you are so absolutely sure the world will end tomorrow, it’s best to err on the side of that other adage. You know the one: “Eat, Drink, and be merry, for tomorrow…” (Why is everything always about food?)
A fiduciary guide to target date funds,” (Financial Planning, November 10, 2016) A better title might have read “A due diligence guide for selecting 401k fund options,” but, then, how many people would have read it?

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.
Prepare clients now for fiduciary rule requirements,” (Employee Benefit Adviser, November 7, 2016)
The State of Retirement for Small Business Owners: Not Good, Says BMO,” (ThinkAdvisor, November 2, 2016)
Plan Document Best Practices Framework,” (PLANADVISER, November 8, 2016)
What Trump’s election really means to employees’ retirement plans,” (Employee Benefit News, November 9, 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.
Forget the 401k: Life Expectancy Falls,” (The 401(k) Specialist, November 1, 2016)
How retirement hurts living standards for boomers,” (CBS News, November 4, 2016)
18 scary retirement statistics,” (BenefitsPRO, November 4, 2016)
Readers: Tell Us What Surprised You About Retirement,” (Wall Street Journal, November 6, 2016)
6 ways to keep your dream retirement on track,” (MarketWatch, November 7, 2016)
Why the Average Family Has Only $5,000 for Retirement,” (Yahoo, November 7, 2016)
Should the Social Security retirement age be 76?” (MarketWatch, November 7, 2016)
How to Actually Get Excited About Saving for Retirement,” (MONEY, November 8, 2016)
Did you switch jobs mid-year? You may inadvertently mess up your 401k,” (MarketWatch, November 8, 2016)
Ask Larry: Should We Both File And Suspend To Get More Social Security?” (Forbes, November 9, 2016)
Before packing your bags to retire abroad,” (CBS News, November 9, 2016)
Inherited IRAs come with RMD strings attached,” (USA Today, November 9, 2016)
Tips on the best way to pass your IRA down to your child,” (USA Today, November 9, 2016)
10 retirement realities you may not have realized,” (BenefitsPRO, November 9, 2016)

Wisdom from Some of Our Favorite Blogs:
Nerd’s Eye View: Broker-Dealer Recruiting Deals Shattered By DOL Fiduciary |
Boston ERISA Law Blog: A Tale of Two Cases, or Why Bad Facts Make Bad (Stock Drop) Law |
Boston ERISA Law Blog: DOL 1, Critics of New Fiduciary Regulations 0: Comments on NAFA v. Perez |
Ary Rosenbaum: 401k Plan Providers’ Behavior To Avoid That Loses Clients |
Fred Reish: Interesting Angles on the DOL’s Fiduciary Rule #27 |
Scholarly Financial Planner: The Future of Fiduciary, Post-Election |
The Chicago Financial Planner: The Election and Your Financial Plan |
Behavior Gap: Preload Your Spending to Avoid Buyer’s Remorse Later |
Squared Away Blog: Wyoming Retirement Education on Point |
Nerd’s Eye View: President Trump And The DOL Fiduciary Rule |
The Rosenbaum Law Firm P.C. Blog: All points lead to more index funds in 401k plans |
The Rosenbaum Law Firm P.C. Blog: President Trump and The Fiduciary Rule |
Ary Rosenbaum: The To-Do List For 401k Plans Now: 2016-2017 Edition |
Scholarly Financial Planner: The Fiduciary Standard Likely Stalls in D.C., But New Directions Are Possible |

Hot Tips from Popular Web Resources:
NAPA Net: DOL Wins First Round of Fiduciary Regulation Litigation |
NAPA Net: Move Toward Flat Fees Accelerated by DOL Rule |
NAPA Net: Blatant Disregard of Plan Document and Fiduciary Duties Costs Plan Fiduciaries |
The Motley Fool: Why Retirees Should Own Stocks |
NAPA Net: NAFA Down, Not (Yet) Out in Fiduciary Litigation Challenge |
NAPA Net: Who’s More Likely to Value an Advisor’s Services? |
NAPA Net: What Are 401k Participants Doing? |
Kiplinger: 7 Tips to Get You Through a New Age of Retirement Planning | Roth vs. Traditional IRA: Which Retirement Plan Is Better for You? |
NAPA Net: Could the Fiduciary Regulation Be Trumped? |
NAPA Net: Study: Participants Defaulted Into Managed Accounts Save More Than TDFs |
NAPA Net: Case of the Week: Required Minimum Distributions and More Than 5% Owners |
NAPA Net: Cormier: Boosting ‘Financial Courage’ of Participants Leads to Greater Engagement |
The Motley Fool: Are There Special Tax Breaks for Retirees? |
NAPA Net: Ready to Rumble on Tax Reform? |
NAPA Net: Another Firm Clips Commissions on Retirement Accounts |
NAPA Net: Does the Fiduciary Rule Change the Definition of Compensation? |
Kiplinger: Last-Chance Moves to Cut Your Taxes |
NAPA Net: Participants Sue Recordkeeper for Advice ‘Kickbacks’ |
NAPA Net: Report Finds Small Businesses Impacted by Employees’ Financial Woes |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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