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What do you think of our site upgrade? Trending Topics for ERISA Plan Sponsors: Week Ending 6/30/17 Trending Topics for ERISA Plan Sponsors: Week Ending 6/30/17
July 03
00:01 2017

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:
The 3 Biggest Service Provider Mistakes 401k Plan Sponsors Make,” (, June 27, 2017) It’s understandable, given the many hats plan sponsors wear, that mistakes will be made. The challenge is to not dwell on them, but to have a reasoned and determined process to address and correct them.

Compliance – Now that’s the Spirit!:
Or, perhaps, “spiritual,” as in out goes the ERISA exemption for state-run retirement plans in in comes the ERISA exemption for church-based plans. There’s something awfully revolutionary about that concept. American Revolutionary.
Corporate pension relief: Who benefited most?” (CBS News, June 23, 2017) The company, not the employee. There, now you don’t have to read it. Unless you want to find out why.
Supreme Court rules church plans exempt from ERISA,” (Employee Benefit News, June 26, 2017) Does thing mean instead of state-run retirement plans we’ll see  church-run retirement plans?
The 401k MEP solves plan sponsors’ biggest challenge: Carosa,” (BenefitsPRO, June 26, 2017) Is it time we recognize and accept that, when it comes to overseeing their employees’ retirement plans, plan sponsors simply don’t have the comparative advantage?
State Pensions’ Shortfall Grew in Fiscal 2016,” (ThinkAdvisor, June 26, 2017) And they think they can run retirement plans for private citizens?
ERISA Safe Harbor for Government-Run Plans Officially Eliminated,” (PLANADVISER, June 27, 2017) Well, there’s always church plans…
Tort Terror Schlichter Sounds Off on DOL Rule,” (The 401(k) Specialist, June 29, 2017) Spoiler alert – no insider secrets revealed. On the other hand, if you like to see how the tort sausage is made, this made be of interest.

Fiduciary – Let the Fiduciary Fireworks begin:
Funny, we have a Rule (maybe), but the speculation remains rife. What’s more American than an ongoing debate?
Who will get fired because of the DOL fiduciary rule?” (BenefitsPRO, June 16, 2017) It’s not just brokers, but recordkeepers might also find themselves in the crosshairs.
3 Reasons DOL Fiduciary Rule Will Stay Intact: ERISA Attorney Wagner,” (ThinkAdvisor, June 21, 2017) Marcia makes the very good point that there’s no turning back. What she’s really saying is the spirit of the Rule will prevail whether or not there’s an “official” Rule.
Expect delay of fiduciary rule’s full implementation, Fred Reish says,” (BenefitsPRO, June 23, 2017) This won’t surprise anyone. Furthermore, it adds more weight to the theory that we don’t need to have an “official” Fiduciary Rule to benefit from the effects of an official Fiduciary Rule.
Other States Considering Their Own ‘Fiduciary Rules’ After Nevada’s Becomes Law,” (Wealth Management, June 26, 2017) This may not be as odd as it sounds. While most people immediate envision the regulatory morass caused by inconsistent state laws within the health insurance industry, the “fiduciary” equivalent has a long and not too controversial history. Long before we began applying ERISA to retirement plans (and remember, ERISA was initially targeting defined benefits plans), each state had its own series of trust laws. These defined the specifics of a “trust” relationship (for both corporate and individual trustee) including details such as the exact fees trustees could charge. It is from these laws that we compiled two centuries of trust case law that became the basis for our current understanding and definition of “fiduciary.” So, as long as individual state don’t attempt to circumvent this tradition of case law, we should be all right.
SEC Moving Forward on Fiduciary Rule, Clayton Says,” (ThinkAdvisor, June 27, 2017) How many times have we heard this before?
Investors Want Advisers Who Work in Their Best Interest,” (PLANADVISER, June 27, 2017) A survey shows nearly half the people would stop working with their financial service provider if they discovered the provider was not required by law to serve in their best interest. Get this, though. Only about a third of them were aware of the DOL’s Conflict-of-Interest Rule.
Secretary of Labor Gets Agreement from SEC to Review Fiduciary Rule,” (PLANADVISER, June 29, 2017) Is this the beginning of a beautiful relationship? Or at least some form of harmonization?
DOL Asks About Gutting The BIC, Extending Deadline,” (Financial Advisor, June 30, 2017) Because the thing about “the never ending story” is that it never ends.

Fees – An now, from the Tory Point of View…:
There are those that remain loyal to a cause long lost, in the face of a solid mathematical reality. They’re traditionalists, but they are our brothers, so be kind.
Low-cost 401k plan investment can deliver high gains,” (Employee Benefit News, June 23, 2017) This article is proof that regular folks need not be ashamed of making naïve cognitive mistakes. Even seasoned professionals can be duped by the most dangerous ad hoc fallacy in statistical analysis – the infamous “Snapshot-in-Time” anomaly.

Investments – Can this Unresolved Issue Only be Resolved by an Uncivil War?:
Irresistible force meets unmovable object. There’s no reason they can’t co-exist if they only accept each other’s differences. That’s a big if and odds are against it. Only the awful event of disaster will allow the opposing sides to understand the real meaning of their dissimilar philosophies.
If active managers are dead, their stocks haven’t heard about it,” (Financial Planning, June 21, 2017) You won’t really see active management shine until the broader market momentum breaks.
How much investing risk should you take in retirement?” (CNN, June 21, 2017) A considered debate on the merits of risk versus return in the post-retirement phase of one’s life.
Socially Responsible Investing Starts With the Bottom Line,” (ThinkAdvisor, June 21, 2017) It’s more than merely the bottom-line. More so than most plain-vanilla investments, fiduciaries have greater liability when offering “investments” that a primarily designed to make a political statement than to produce the best returns.
4 key differences between CITs and mutual funds,” (Employee Benefit Adviser, June 22, 2017) A good review of what one has and the other doesn’t.
Gold and silver IRAs: approach with caution,” (MarketWatch, June 23, 2017) This goes without saying.
Why Target Date Funds Aren’t All That, After All,” (The 401(k) Specialist, June 25, 2017) Finally we have academic support for what common sense has been telling us for some time now: TDFs are nothing more than packaged products sold by appealing to convenience, not because they actually achieve the desired results. These researchers conclude targeting your goal rather than your date is better. Hmm, where have we seen that before (“How Does Goal-Oriented Targeting Work?, July 15, 2014).
Index Target Date Funds Continue DC Gains,” (Wealth Management, June 27, 2017) Like lemmings to the sea, retirement savers are rushing headlong into index funds, including the popular target date fund versions.
New CFP Board Standards Are a Good Step, but What’s Next?” (ThinkAdvisor, June 28, 2017) Knut Rostad bluntly explains how the CFP Board got only one out of three things right. (OK, OK, they get partial credit on one of the two they missed, but only a small partial credit.)
More Investors Prefer Risk Protection Over Portfolio Growth,” (PLANADVISER, June 28, 2017) The heartening thing about this is we’re seeing this at market highs, so it actually might be healthy. We usually see this at market bottoms, the absolutely worst time for people to switch to “safe” mode.
Is Active Management Exodus Starting to Subside?” (The 401(k) Specialist, June 28, 2017) Active outflows “slowed” to $16.2 billion and passive inflowed dropped to “only” $13.1 billion. That may be the very definition of a “Pyrrhic Victory.”
Passive Investing May Be Nearing ‘Dangerous’ Levels: Portfolio Manager,” (ThinkAdvisor, June 28, 2017) On the other hand, “Pride goes before destruction, and a haughty spirit before a fall.” (Proverbs 16:18) Maybe those rushing to passive may be surprised to discover what happens to those aforementioned lemmings.
How many funds do you really need to diversify?” (CNN, June 28, 2017) Of course, our long-time readers already knew this, (see, “Overdiversification and the 401k Investor – Too Many Stocks Spoil the Portfolio,” FiduciaryNews, October 27, 2011)
Three Ways Traditional Risk Tolerance Assessments Fail Clients,” (Wealth Management, June 29, 2017) Of course, our long-time readers already knew this, (see, “Should 401k Plan Sponsors Ban Risk Tolerance Questionnaires?FiduciaryNews, August 13, 2013).

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.
HSAs and 401k plans are becoming more closely linked,” (Employee Benefit Adviser, June 19, 2017)
3 Big Trends Driving Retirement Planning in the ‘New Normal’,” (ThinkAdvisor, June 19, 2017)
Plan Sponsors Respond to Possible Pre-Tax Contribution Cutback,” (PLANADVISER, June 22, 2017)
Who really loses when a multiemployer pension plan fails?” (Employee Benefit Adviser, June 22, 2017)
The retirement savings deficit in America,” (BenefitsPRO, June 22, 2017)
Wow! 401k Plan Assets Hit $5 Trillion,” (The 401(k) Specialist, June 23, 2017)
Investors Question 401k Performance Data,” (PLANADVISER, June 23, 2017)
How to redesign employee plan contribution rates,” (Employee Benefit Adviser, June 26, 2017)
Roth Contributions on the Rise,” (PLANADVISER, June 26, 2017)
Only 53% of Small- to Mid-Sized Businesses Offer Retirement Plans,” (PLANADVISER, June 26, 2017)
10 Positive HSA Attributes Plan Sponsors Will Love,” (The 401(k) Specialist, June 26, 2017)
California judge says no quid pro quo between Chevron plan and Vanguard,” (BenefitsPRO, June 27, 2017)
Financial Help From Employers Desired by Majority of Employees,” (PLANADVISER, June 27, 2017)
7 Items in Every 401k Plan’s Investment Policy Statement,” (The 401(k) Specialist, June 27, 2017)
How employers can evaluate a 401k investment adviser,” (Employee Benefit Adviser, June 27, 2017)
Another Lawsuit Filed Against Washington University in St. Louis,” (PLANADVISER, June 27, 2017)
Small Businesses Increasingly Like, Use Roths,” (The 401(k) Specialist, June 27, 2017)
How Business Owners Can Make A Big Difference In The Lives Of Their Employees,” (Forbes, June 27, 2017)
Plan advisors most exposed during fiduciary rule transition period,” (BenefitsPRO, June 28, 2017)
401k Self-Dealing Suit Filed Against Waddell & Reed,” (PLANADVISER, July 28, 2018)
Automation making a big difference in millennials’ retirement plans,” (Employee Benefit News, June 28, 2017)
UPS to freeze pensions for 70,000 workers to reduce costs,” (BenefitsPRO, July 28, 2017)
Micro Plan Sues Nationwide Over Asset-Based Fees,” (PLANADVISER, June 29, 2017)
How to get 401k participants to think long-term,” (Employee Benefit Adviser, July 29, 2017)
ESOP Failed to Meet Burden of Proof in Suit Against Transactional Trustee,” (PLANADVISER, July 29, 2017)

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 much should employees save for retirement?” (BenefitsPRO, June 14, 2017)
The New Science Of Retirement Planning,” (Financial Advisor, June 15, 2017)
401k: What to Know About Your Collective Investment Trust,” (Money, June 19, 2017)
Don’t fall for these retirement planning myths,” (CBS News, June 21, 2017)
Pros and cons of paying off mortgage before retirement,” (CNBC, June 22, 2017)
How to create an automatic retirement paycheck,” (CBS News, June 22, 2017)
Unrealistic expectations muddy employee retirement planning,” (Employee Benefit Adviser, June 25, 2017)
14 reasons millennial women may never make it to retirement,” (BenefitsPRO, June 26, 2017)
Investors Younger Than 30 Confident About Retirement,” (PLANADVISER, June 27, 2017)
How to protect your retirement savings from a crash,” (CNN, June 27, 2017)
These tactics will protect retirement income from taxes,” (CNBC, June 28, 2017)
4 Mistakes That Will Sabotage Your Retirement,” (Money, June 28, 2017)
Reason No. 1,467 for 401k Financial Wellness,” (The 401(k) Specialist, June 29, 2017)
10 ways millennials are saving for the future,” (BenefitsPRO, June 29, 2017)

Wisdom from Some of Our Favorite Blogs:
Nerd’s Eye View: CFP Board Commission On Standards Expands CFP Fiduciary |
The Rosenbaum Law Firm P.C. Blog: Just tell them straight |
The Rosenbaum Law Firm P.C. Blog: Ascensus is becoming a big time player |
Scholarship Financial Planner: Most Nevada Financial Planners Become Fiduciaries Per State Law on 7/1/2017 |
Fred Reish: Interesting Angles on the DOL’s Fiduciary Rule #53 |
Squared Away Blog: Mutual Fund Fees: Here’s What Matters |
Proskauer’s: DOL Again Seeks Comments on New #Fiduciary Rules and Exemptions |

Hot Tips from Popular Web Resources:
Kiplinger: How Investors Can Get Out of a Low-Return Rut |
NAPA Net: Oregon Retirement Savings Program Amends Enrollment Language |
NAPA Net: Fiduciary Lessons from the Founding Fathers |
NAPA Net: University Served With 2nd Excessive Fee Suit |
NAPA Net: Addressing Student Loan Burden Key to Helping Millennials Save for Retirement |
NAPA Net: Proprietary Fund Suit Served on Another Money Manager |
NAPA Net: Small Plan Participant Seeks Big Class Action Against Nationwide |
NAPA Net: Case of the Week: Changes in Plan Blackout Ending Date |
NAPA Net: Study Finds Trust Gap in Investment Performance Reports |
The Motley Fool: Americans Need to Save More for Retirement: Here’s How to Do It |
Kiplinger: How Saving Too Much Money Could Actually Backfire |
NAPA Net: DOL Issues RFI on Fiduciary Rule |
NAPA Net: Fewer DC Plans Offering Hardship Withdrawals and Plan Loans |
NAPA Net: Don’t Stop Thinking About… Retirement? |

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Christopher Carosa, CTFA

Christopher Carosa, CTFA

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