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Hosting an industry conference? Ask us about including it in this ticker? Trending Topics for ERISA Plan Sponsors: Week Ending 7/21/17 Trending Topics for ERISA Plan Sponsors: Week Ending 7/21/17
July 24
00:03 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:
Exclusive Interview: Dale Neibert Explains 21st Century 401k Plan Design,” (, July 18, 2017) If you want to understand how sophisticated plan sponsors think, you need to talk to sophisticated plan sponsors. For many years, Dale Neibert served as part of a two-man operation that headed one of the nation’s most sophisticated 401k plans. He explains how this plan sponsor incorporated advance behavioral finance techniques, and how it avoided some of today’s most dangerous fads.

Compliance – The Social Security Conundrum:
Everybody’s got an idea, but most of them seem cut from the same old cloth. Such stale thinking will only kick the can down the road. It’s back to the future (minus two years since the movie came out in 1985). In 1983 policy makers had the best chance to wean the nation from the financial faux-pas of Social Security. They blew it then by falling back on trying the same failed “solutions” that had been tried before.
6 Reasons the 401k is a ‘Scam’ (Wait, What?),” (The 401(k) Specialist, July 12, 2017) As the author of this article admits, he writes these not because they’re true, but because it’s what the #Never401k crowd is constantly repeating.
Social Security Trust Fund Still Projected to be Depleted by 2034,” (PLANADVISER, July 14, 2017) Train is a comin’, oh, yeah… With every passing day, the solution to wean ourselves off of this accidental Ponzi Scheme becomes more challenging.
Sharpening the Focus on Social Security Proposals,” (PLANADVISER, July 19, 2017) They’re all backward looking and inside-the-box.
Newborns would save $2.2M for retirement with this idea,” (CNBC, July 19, 2017) This idea is forward looking and outside-the-box. It’s called The Child IRA. Read about it.
How to Fix Social Security: Alicia Munnell,” (ThinkAdvisor, July 20, 2017) Well, there’s really no “how” in the article. It’s more like, “we have a couple of polar opposite competing ideas and America is a democracy so let the voters decide.” It’s an inside-the-box proposal purporting to be a solution. What we need it an inside-the-box patch (which could be some of the ideas expressed in this article) with an outside-the-box solution (like the Child IRA proposal in the above article).
Connecticut pension returns lag target,” (BenefitsPRO, July 20, 2017) Someone should start a new TV game show called “So you think you can sponsor a retirement plan for private employees?” The contestants will be state officials who, well, think they can do it for private employees despite the readily apparent problems they have managing retirement plans for their own public employees.

Fiduciary – Leveling the Playing Field:
That’s the only thing the fiduciary standard is about. Once the playing field is level, the market can decide which direction it wants to go.
Is the Fiduciary Standard Really a Political Issue?” (ThinkAdvisor, July 14, 2017) Self-proclaimed conservative Bob Clark defends himself (and others) after being accused of “being liberal” because he supports the fiduciary standard. He should have confronted the charges more directly, rather than beating around the bush. Yes, the government paternalism advocated by the Fiduciary Standard implies the same government-centered solutions liberals generally advocate. But the idea of universal Fiduciary Standard isn’t about whether on a government-based solution or a free-market based solution. The horse is already out of the barn on that one and, since 1940, the government-based solution has ruled the roost – at least as it pertains to SEC Registered Investment Advisers. The trouble starts, as Bob eventually gets to, when folks who aren’t under the SEC definition of “fiduciary” begin calling themselves “advisors.” What’s a naïve consumer to think? Both words sound the same. Pretty much both words mean the same. Unfortunately, “er” must always act in the client’s best interest but “or” can settle for mere suitability. The government’s nose is already in this tent. The only decision is should the rest of the camel come in or should the nose get out. You can argue that if you want to argue the “conservative vs. liberal” argument. In the meantime, and I think this is what Bob is really trying to say, one way or another the playing field has to be level. Either all “ers” and “ors” fall under the same fiduciary standard via a government-based solution, or we free the “ers” to act like “ors” and allow the free-market to determine whether “fiduciary” is even relevant.
Investors seek fiduciary standard in working with advisors,” (BenefitsPRO, July 18, 2017) We all knew this would end up being decided in the marketplace.

Fees – Focusing on the Fees that Matter:
It’s never been about “fees,” despite what you read in the headlines. It’s about the conflicts-of-interest.
The Real Cost of HSA Investment Fees,” (The 401(k) Specialist, July 13, 2017) Sometimes you get what you pay for, and this article explain why that’s dangerous.
Why high 401k fees are likely to stick around,” (CNBC, July 17, 2017) Marcia Wagner, quoted in this piece, explains the folly of “fees=expense ratio” when she states comparing active to passive fund expense ratios is “apples and oranges.” Trial lawyers seeking to make a “high fee” case based on expense ratios are doomed to fail – unless they find fund comparisons that are truly “apples-to-apples.” So far there appear to be only two circumstances where this is the case: 1) The same fund with different share classes; and, 2) Index funds pegged to the identical benchmark index. This means it’s impossible to compare one active fund vs. another active fund, let alone against an index fund. This is also why it’s better to focus on “401k Fees That Matter,” (, April 27, 2010) and ignore “401k Fees That Shouldn’t Matter,” (, May 3, 2010).
Elite DC Advisers Have Had Enough of Falling Fees,” (PLANADVISER, July 19, 2017) They’re emphasizing value rather than fees.
Morningstar: Industry’s idea of clean shares may not be clean enough,” (BenefitsPRO, July 19, 2017) Again, it’s all about conflicts-of-interest.

Investments – Hodgepodge of Stretching for Returns:
Your Retirement Portfolio: Can It Survive a Stock Crash?” (Money, July 13, 2017) It’s all about assessing downside risk.
The pros and cons of annuities in a retirement portfolio,” (CNBC, July 17, 2017) A fair and balanced approach to the subject.
Alternative Assets Rose 10% in 2016 to $4 Trillion,” (PLANADVISER, July 18, 2017) This appears to confirm a general movement towards portfolios that mimic traditional corporate retirement plans.
Don’t believe this is how plan sponsors think: Carosa,” (BenefitsPRO, July 19, 2017) From someone who helped design one of the world’s largest 401k plans: This is what plan option menus should look like.

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.
Shielding Yourself: Deciding whether to be a 3(21) or a 3(38) Fiduciary,” (PLANADVISER, May/June 2017)
CITs Rise in Face of 401k Fee Litigation,” (The 401(k) Specialist, July 7, 2017)
Why Roth Tax Math Works in 401ks,” (The 401(k) Specialist, July 11, 2017)
Connecticut District Court Tosses Voya Stable Value Suit,” (PLANADVISER, July 17, 2017)
Only one-third of part time workers have a retirement plan,” (Employee Benefit Adviser, July 18, 2017)
Americans’ Retirement Benefits Have Been Slashed By A Quarter,” (Financial Advisor, July 19, 2017)
Sears Faces ERISA Suit Over Holding Company Stock in Retirement Plan,” (PLANADVISER, July 20, 2017)
Preparing for Form 5500 deadlines,” (Employee Benefit Adviser, July 20, 2017)
Plan Sponsor Admits to Stealing from 401k,” (PLANADVISER, July 20, 2017)
Do Roth 401k plans have the edge over pre-tax 401k plans?” (Employee Benefit News, July 21, 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.
Social Security beneficiaries may get biggest raise in 6 years,” (USA Today, July 13, 2017)
How Do Your Funding Tactics Work Together In Your Retirement Income Framework?” (Forbes, July 13, 2017)
Don’t fall for the conventional wisdom when choosing an IRA,” (MarketWatch, July 13, 2017)
This is what women need to do to catch up in retirement,” (MarketWatch, July 13, 2017)
There are 2 primary types of retirement savings accounts — and people don’t realize you can use both,” (Yahoo, July 14, 2017)
How can I offset taxes when I convert to a Roth IRA?” (MarketWatch, July 14, 2017)
Retirement at 65 becomes a reach for some, as seniors stay in the workforce,” (CNBC, July 16, 2017)
‘Super savers’ make ‘sacrifices’ to save for retirement,” (BenefitsPRO, July 17, 2017)
How to pay off debt with a 401k loan: Very carefully,” (CBS News, July 17, 2017)
These Three Trends Are Eating Up The American Retirement Dream,” (Financial Advisor, July 18, 2017)
Retirement Dread Is Replacing the American Dream,” (Bloomberg, July 18, 2017)
7 stumbling blocks women face on the way to retirement,” (BenefitsPRO, July 18, 2017)
Retirees’ Perceived Quality of Life Declines,” (PLANADVISER, July 19, 2017)
Wealthy Pre-Retirees Confident About Retirement,” (PLANADVISER, July 20, 2017)
Phased Retirement Can Preserve Boomers’ Knowledge: GAO,” (PLANADVISER, July 20, 2017)

Wisdom from Some of Our Favorite Blogs:
RetirementRevised: Gap years aren’t just for kids anymore |
RetirementRevised: When Social Security gets its wrong on claiming advice |
Fi360: Fiduciary Talk 49: Moving Forward with Impartial Conduct Standards |
The Rosenbaum Law Firm P.C. Blog: EBSA means Business |
The Rosenbaum Law Firm P.C. Blog: The Overselling of Services and they will find out |
The Rosenbaum Law Firm P.C. Blog: My long running issues against self-directed brokerage accounts |
Fi360: Fiduciary Talk 50: SEC Enters Fiduciary Rule Discussion |
Fi360: Fiduciary Talk 51: Regulatory Interplay |
Squared Away Blog: Mid-sized Employer Meets Big 401k Goal |
Fred Reish: Interesting Angles on the DOL’s Fiduciary Rule #55 |
Nerd’s Eye View: Discount Rates For Social Security Or Pension Decisions |
The Retirement Plan Blog: Can you put your retirement plan on autopilot? |

Hot Tips from Popular Web Resources:
NAPA Net: Statements Tip Off 401k Embezzlement Scheme |
NAPA Net: HSAs: The Healthy Savings Choice |
NAPA Net: ARA Crafts New Levelized Fee Exemption in RFI Response |
NAPA Net: Are SDBAs the Next Litigation Target? |
NAPA Net: DOL Pulls Back on Anti-Arbitration |
NAPA Net: Senators to Urge DOL to Issue Guidance on Auto Portability |
NAPA Net: Cardin: ‘Do No Harm’ in Tax Reform |
NAPA Net: Case of the Week: Nonstatutory Stock Options and 401k Plan Deferrals |
NAPA Net: Good News, Bad News in Social Security Trustees’ Report |
Kiplinger: Things to Know About Health Savings Accounts |
The Motley Fool: 3 Retirement Savings Mistakes That Could Cost You $100,000 or More |
NAPA Net: House Committee Approves Bill Repealing the Fiduciary Rule |
NAPA Net: Stout Recommends Improvements at House Hearing on Tax Simplification |
NAPA Net: Benefit Costs Soar, But Retirement Costs Slip |
NAPA Net: Stock Slump Sets Up Stock Suit |
NAPA Net: Will Tax Reform Be the Fish That Got Away? |
NAPA Net: Gig Workers May Have ‘False Sense of Security’ |

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Christopher Carosa, CTFA

Christopher Carosa, CTFA

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