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Hosting an industry conference? Ask us about including it in this ticker? Trending Topics for ERISA Plan Sponsors: Week Ending 10/13/17 Trending Topics for ERISA Plan Sponsors: Week Ending 10/13/17
October 16
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:
What a Fiduciary Should Know: Down and Dirty with ‘Clean’ Shares,” (, October 10, 2017) It will be important for 401k plan sponsors to get down and dirty when it comes to understanding the fiduciary liability implications of “clean” shares and their equivalent. Furthermore, since the most successful class action suits have involved different share classes of the same fund, you can be sure the introduction of “clean” shares will catch the eyes of your not-so-friendly neighborhood class action attorney.

Compliance – The Wrong Way:
For all the talk about solving the retirement “crisis,” we sure have plenty of examples of counter solutions.
Inside the First State-Run Retirement Plan,” (Wealth Management, October 6, 2017) Oregon will be the “guinea pig” for state-run retirement plans, according to the article. While this mandatory rule requires auto-enrollment, it also allows employs to opt out. Since this is structured as a Roth IRA and contributions are not immediately tax deductible, it’ll be interesting to see how many savvy employees do opt out.
First State-Run Retirement Plan Faces Legal Challenge,” (Wealth Management, October 12, 2017) High cost retirement plans promoted by the state is not what anyone wants. Unless you’re in Oregon.
PBGC premiums, pension costs to go up next year,” (BenefitsPRO, October 12, 2017) The downside of longevity.

Fiduciary – Is the SEC the Cavalry?:
More people are placing their faith in the SEC to come riding to the Fiduciary rescue. Haven’t we seen this movie before?
Is the Time Ripe for the SEC to Regulate Broker/Advisor Titles?” (ThinkAdvisor, October 2, 2017) The idea is to eliminate the use of “advisor” (note the “or” rather than the “er” ending) for anyone not registered with the SEC (which today is indicated by the “er” ending).
After History Of Ducking, Can SEC Act On Fiduciary?” (Financial Advisor, October 6, 2017) The SEC knew this day would come at least as far back as 1995, yet it never did anything. Now it’s a “top priority.” Time will tell.

Fees – The Truth About “Clean” Shares:
They ain’t as new as you’re being told.
CFA Urges Skepticism Regarding Industry Fiduciary Rule Concerns,” (PLANADVISER, October 6, 2017) Sometimes a client needs a broker, sometimes a client needs and adviser. Each service offers differing fee structures, the first being a one-time transactional fee and the latter an on-going fee. When you charge an on-going fee for a one-time service, then you’re starting to cross a line you might not want to cross.
What they’re not saying: The truth about clean shares – Carosa,” (BenefitsPRO, October 11, 2017) ‘Clean’ shares aren’t new – they’re already here. But they may signal what the future looks like – with or without the fiduciary rule.

Investments – It’s All Your Fault!:
Maybe all this “active vs. passive” argument has done has been to divert peoples’ attentions from the real problem: They just don’t have the discipline to stick to one investment philosophy.
Advising Women to Take More Investing Risk,” (PLANADVISER, October 10, 2017) Consistent with general behavioral studies, it appears woman may be too risk adverse with their long-term investments.
Debating Passive Versus Active Investing: Kaissar and Ritholtz,” (Wealth Management, October 11, 2017) The article says any damage done s mostly self-inflicted. As been said a million times before, the “passive vs. active” debate is the same as the “growth” vs. “value” debate. It doesn’t matter which one you pick, they’re all pretty much the same. The problem occurs when folks start switching horses in the middle of the race.
Think 7% returns are coming back anytime soon? Think again.” (BenefitsPRO, October 11, 2017) Could this be true? It’s a funny question to ask when we’ve seen double-digit return in all US Domestic equity classes the last five years. With this knowledge, the title appears to imply these high returns will remain. The article actually suggests we’ve been in low single-digit returns and we’ll be staying there.
How to invest for lifetime income and long-term growth,” (CNN, October 11, 2017) Who wouldn’t want a mix of guaranteed fixed income and growth investments. In theory it’s great. But you need to have a critical mass in retirement savings for this to work.
Thaler’s Work Met With ‘Hostility’ From Some Economists,” (Financial Advisor, October 12, 2017) This is a must read for all those that don’t remember. The irony – and the point of the article – is that the Rochester Democrat & Chronicle ran a top-of-the-fold headline trumpeting Thaler’s University of Rochester pedigree without recognizing that Thaler was essentially drummed out of the notoriously (at least then) quant school. “Behavior? In economics? Heresy!” In further irony, after roaming the economic department wilds, ended up at the University of Chicago, the U of R’s protégé. Go figure.
PANC 2017: Guide to the Markets,” (PLANADVISER, October 12, 2017) In case you wanted to know.
Taking aim at retirement: Gun company stocks may be hidden in your portfolio,” (BenefitsPRO, October 12, 2017) And you should be so lucky, since those stocks have had a good run of late. This is a classic example of allowing prevailing politics to risk a potential fiduciary breach. Fiduciary duty requires plan sponsors to do what’s in the best interest of future retirees, not to respond to today’s political issues.

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.
Managing Sequence Risk For Retirees,” (Financial Advisor, October 2017)
HSA providers urge employers to push plans as retirement investments,” (Employee Benefit News, October 9, 2017)
What Are Top 401k Advisors Doing About Participant Outcomes?” (The 401(k) Specialist, October 9, 2017)
Federal Reserve Data Offers Sweeping View of DC Plans,” (PLANADVISER, October 10, 2017)
Retirement Assets of Many Households Fell Between 2013 and 2016: CRR,” (ThinkAdvisor, October 10, 2017)
6 ways to make a good 401k great,” (Employee Benefit News, October 10, 2017)
Some employees use personal credit cards to save HSA funds for retirement,” (Employee Benefit Adviser, October 10, 2017)
State-Run Retirement Plans May Not Be the Best Option for Small-Business Owners,” (ThinkAdvisor, October 11, 2017)
Why Mutual Funds Still Matter in 401k Plans,” (The 401(k) Specialist, October 11, 2017)
Why ‘nudging’ works: People need a push when it comes to retirement savings,” (MarketWatch, October 11, 2017)
PANC 2017: Stronger DC Plans Built for a Changing World,” (PLANADVISER, October 12, 2017)
PANC 2017: Helping Your Clients With Governance,” (PLANADVISER, October 12, 2017)
PANC 2017: How Data Interpretation Affects Retirement Projections,” (PLANADVISER, October 13, 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 to save for retirement if you don’t have much money,” (CNN, October 4, 2017)
Save More For Retirement Or Pay Off Debt?” (Forbes, October 5, 2017)
Don’t fall for these common retirement myths,” (CNBC, October 5, 2017)
A Japanese Doctor Who Studied Longevity — And Lived To 105 — Said If You Must Retire, Do It Well After Age 65,” (Money, October 5, 2017)
Washington Post Retirement Story Is All Wrong,” (National Review, October 9, 2017)
Can A Roth Conversion Reduce Taxes For Affluent Clients?” (Financial Advisor, October 10, 2017)
3 Defenses Against Retirees’ Biggest Challenge,” (ThinkAdvisor, October 10, 2017)
Thank Richard Thaler for Your Retirement Savings,” (Bloomberg, October 10, 2017)
Why the average retirement age is rising,” (MarketWatch, October 10, 2017)
Bad news: Your 401k won’t give you a decent retirement,” (Los Angeles Times, October 10, 2017)
Watch out for hidden taxes when retiring to a new state,” (CNBC, October 10, 2017)
Millennials Suffering From Financial Anxiety,” (PLANADVISER, October 11, 2017)
Retirement saving checklist: 15 things to know that can lead to success,” (BenefitsPRO, October 11, 2017)
Here’s how to save $1 million for retirement on a $50,000 salary,” (CNBC, October 11, 2017)
6 Do-It-Now Retirement Moves For Women,” (Forbes, October 12, 2017)
Biggest Bump In Years For U.S. Retirees Amounts To $27 A Month,” (Financial Advisor, October 13, 2017)
Here’s how much Social Security checks could increase in 2018,” (MarketWatch, October 13, 2017)

Wisdom from Some of Our Favorite Blogs:
Nerd’s Eye View: 2017 Rules To Calculate Required Minimum Distributions (RMDs) |
Fred Reish: Interesting Angles on the DOL’s Fiduciary Rule #65 |
The Rosenbaum Law Firm P.C. Blog: The greatest plan audit ever |
The Rosenbaum Law Firm P.C. Blog: Don’t get out of your level of comfort |
Squared Away Blog: Before Retiring, Do this Homework |
RetirementRevised: How to close the race-based chasm in retirement wealth |
ERISA Lawyer Blog: Employee Benefits-IRS Announces Increase In PCOR Fees |
Ary Rosenbaum: The Truth And Myth Over The 401k Investment Policy Statement |
Retirement Income Journal: Bob Reynolds Sees the Future of 401k Plans |

Hot Tips from Popular Web Resources:
NAPA Net: Study Gauges FAs’ Thought Leadership Preferences |
NAPA Net: Is it Possible to Be an Advisor Without Being a Fiduciary? |
NAPA Net: Pew: Access, Participation in Employer Plan Keys to Retirement Saving |
Kiplinger: 5 Big Money Mistakes to Avoid in Retirement |
Morningstar: Optimize Investments Across Account Types |
NAPA Net: MIT Excessive Fee Suit Moves Forward |
NAPA Net: 5 Dangerous Fiduciary Assumptions |
NAPA Net: Behavioral Economics Pioneer Thaler Wins Nobel Prize for Economics |
NAPA Net: Study Finds ‘New Frugality’ Among Boomers |
The Motley Fool: Here’s How Much the Average 40-Something American Has Saved for Retirement
NAPA Net: Report: White House to Nominate EBSA Assistant Secretary |
NAPA Net: Case of the Week: SIMPLE IRA Plan Annual Notices |
NAPA Net: ETF Research Bill Signed into Law |
Kiplinger: Which Accounts to Spend Down First? 4 Tips |
NAPA Net: Prudential Prevails Again Over Pay-to-Play Allegations |
NAPA Net: The Demise of the Asset Manager as Recordkeeper: Don’t Bet on it. |
NAPA Net: OregonSaves Pilot Program Expands; Implementation of Phase 1 Nears |
NAPA Net: Partial Lump Sum Social Security Option Would Reduce OASDI Costs in the Long Term |
The Motley Fool: Over a Quarter of Seniors Say Retirement Is Worse Than They Expected |
NAPA Net: It’s Official: Rutledge Nominated as EBSA Head |
NAPA Net: NQDC Programs Perking Up? |
NAPA Net: House Committee Approves Rep. Wagner’s Fiduciary Rule Repeal Bill |

Miss anything? Feel free to add a comment below.

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Christopher Carosa, CTFA

Christopher Carosa, CTFA

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