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Hosting an industry conference? Ask us about including it in this ticker? Trending Topics for ERISA Plan Sponsors: Week Ending 2/23/18 Trending Topics for ERISA Plan Sponsors: Week Ending 2/23/18
February 26
00:08 2018

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: David Levine: 401k Plan Sponsors Must Separate These Fiduciary Rule Facts from Fiction,” (, February 21, 2018) “This uncertainty can be very challenging for plan sponsors. If I have to give some basic words of advice to plan sponsors, I simply say ‘stop and take a breath.’”

Compliance – Attention Deficit Disorder:
Can’t politicians focus on getting one thing right before they move on to something else? They should get the public employee retirement mess in order before they start working on FUBARing private employer’s retirement policies.
Big Ideas,” (PLANADVISER, January/February 2018) The article asks if it’s time for a new PPA.
Why Reining in Retirement Regulators is Rule No. 1,” (The 401(k) Specialist, February 20, 2018) This op-ed doesn’t pull any punches.
The Risk Pension Funds Can’t Escape,” (Wall Street Journal, February 20, 2018) The very thing that can reduce pension contributions in the short-term act as a mismatched liability for future payout obligations.
IRI backs 401k mandate for employers,” (BenefitsPRO, February 21, 2018) Saving for retirement is the right thing to do. Not sure that the government forcing you to save for retirement is the right thing to do. One of the biggest complaints about any government meddling in retirement policy is that it appears paternalistic. We don’t want people to make poor decisions that can hurt them, but do we have a right to remove that freedom from them? Furthermore, are we obligated to pay when their own decisions cause them harm? Sounds like some folks need another lesson in the wisdom of “Ye reap what ye sow.”
California Lawmaker Pushes for State DC Plan Option,” (PLANADVISER, February 22, 2018) This is a trend worth watching. The more states place new employees into 401k-like retirement plans rather than pension plans, the sooner those states will be to diffusing their pension liability time bomb.

Fiduciary – Two Wrongs Don’t Make a Right:
Ethics ain’t math. Not sure where this whole Scottrade thing will end up.
Sloppy Scottrade Fiduciary Slip Completely Self-Inflicted,” (The 401(k) Specialist, February 20, 2018) The bald truth hurts.
Lawsuit Appellants: Scottrade Case Brings Urgent Need to Vacate DOL Rule,” (Wealth Management, February 20, 2018) While this be a Pyrrhic Victory?
Retirement pros face these 2 key items right now – Carosa,” (BenefitsPRO, February 21, 2018) The emphasis on “Fiduciary” is not going away soon, and here’s why.
More states expected to bring claims against Scottrade,” (BenefitsPRO, February 21, 2018) Who’s betting on the usual suspects? Unrelated thought: What if Scottrade claims the contests were solely within the context of its acting as a broker, not an adviser? The Fiduciary Rule does not outlaw the brokerage business model, it only kicks in when the “broker” starts acting like an “adviser.” Food for thought.
FSI Looks To Kill Maryland Fiduciary Advisor Law,” (Financial Advisor, February 22, 2018) Have we learned nothing from the tangled mess of health insurance. We need one uniform rule, not 50+ different Fiduciary Rules.
Phyllis Borzi on Scottrade and the Future of the Fiduciary Rule,” (Wealth Management, February 22, 2018) Despite the headline, read the article and see what Borzi really says about the limitations of state enforcement.
How Scottrade Could Have Avoided DOL Rule Charges,” (ThinkAdvisor, February, 23, 2018) Does this sound like OJ’s book If I did it this is how I would have done it?
SEC’s Clayton: Broker, Advisor Titles Need More Clarity,” (Financial Advisor, February 23, 2018) Could better titles have saved Scottrade? Regardless, this is a step in the right direction.

Fees – Wow. Just Wow:
Just as the SEC seems finally turned around on the issue of conflict-of-interest fees, out comes a story about a company offering “free” advice by relying on an ancient self-dealing mechanism long ago abandoned by fiduciaries.
The Future of Finance is Free,” (Wealth Management, February 16, 2018) Those of us who’ve been around the block or tow know there’s no such thing as a free lunch. And, as every good reporter weened on the tales of Woodward and Bernstein can tell you, if you’re looking for the real story, “Follow the money.” This service isn’t “free” the same way 12b-1 commissions and revenue sharing isn’t free. The firm uses securities lending (i.e., lending someone else’s assets) to monetize their business model. We’re not quite certain, but, wethinks using other people’s assets to make money might be some form of prohibited transaction – or should be – because it violates the very underpinning of the fiduciary philosophy.
401k Fees: A Simple Way To Boost The Size of Your Nest Egg,” (Money, February 16, 2018) Yes, if you’re going to earn the same, pick the fund with the lower fees (or, better yet, pick the one with no fees). Of course, the only way you’ll know two funds will yield the same return is if they are index funds – for the same index.  And don’t confuse fees with expense ratio. They are two totally different concepts. Funds with different expense ratios can have identical returns.
Fee, Share Class Shifts at Schwab and Putnam Reflect Vigorous DCIO Competition,” (PLANADVISER, February 20, 2018) Or can it be due to heightened awareness thanks to the DOL’s Fiduciary Rule and the SEC’s recent 12b-1 fee amnesty?
Advisor Share-Class Infractions a ‘Widespread Problem,’ SEC Says,” (ThinkAdviser, February 23, 2018) Why would a fiduciary knowingly do this?

Investments – Does Anyone Else Hear Nelson Snarking “Har! Har!”:
Call it poetic justice when you see crypto-mania blow up in an expert’s face. Time for someone to re-read Charles P. Kindleberger’s Manias, Panics, and Crashes: A History of Financial Crises.
How To Save More For Retirement And Deal With Volatility,” (Forbes, February 19, 2018) Like life, investments – both stocks and bond – have their ups and downs. Here’s a way to deal with it. “It” being investments, not life.
401k best practices: Investments,” (Employee Benefit News, February 21, 2018) Not sure they’re all “best,” but this opinion piece offers plenty of good ones. Worth the read if you’re a plan sponsor or work with plan sponsors.
Risky Crypto Bet Blows Up Dennis Gartman’s Retirement Account,” (Financial Advisor, February 21, 2018) Investment fads fool everyone, even sometimes experienced investors who should know better.
LPL Researchers Perspectives on Managing Interest Rate Risks,” (PLANADVISER, February 21, 2018) And the answer is… diversification and managing to the yield curve. Who knew?
Should I follow Warren Buffett’s 90/10 investing strategy?” (CNN, February 21, 2018) Well, for sure if you’re Warren Buffet. But you don’t have to be Warren Buffet for this to work.

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.
4 Ways Low Returns Affect Retirement Decisions: NBER,” (ThinkAdvisor, February 14, 2018)
Top 5 findings on 401k contribution behavior from PSCA’s annual 401k report,” (BenefitsPRO, February 15, 2018)
Court Finds ERISA Does Not Preempt Illinois Slayer Statute,” (PLANADVISER, February 16, 2018)
Northrop Grumman Gets Some Claims Dropped in Excessive Fee Suit,” (PLANADVISER, February 16, 2018)
Airline boom times stoke push by pilots for lost retirement pay,” (BenefitsPRO, February 20, 2018)
Participant Fails to Show Harm in Retirement Plans Acquisition,” (PLANADVISER, February 20, 2018)
Concerns About Retirement Health Care Costs Increasing Interest in HSAs,” (PLANADVISER, February 21, 2018)
5 ways to boost retirement plan participation,” (Employee Benefit Adviser, February 22, 2018)
Fidelity Stable Value Fund Suit Gets Final Dismissal From Appellate Court,” (PLANADVISER, February 22, 2018)
How plan sponsors can up their fiduciary game,” (Employee Benefit News, February 23, 2018)

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.
The New Tax Law: Retiree Tax Issues,” (Wall Street Journal, February 13, 2018)
Sweetheart Scams & Retirees: What Advisors Need to Know,” (ThinkAdvisor, February 14, 2018)
Americans to Use Tax Reform Pay Bump for Financial Wellness,” (PLANADVISER, February 16, 2018)
An Unintended Consequence of Tax Reform on 401k Hardship Withdrawals?” (The 401(k) Specialist, February 18, 2018)
What Makes 401k Loans Risky?” (NerdWallet, February 18, 2018)
How Many Workers Will Increase Retirement Savings Because of Tax Reform?” (The 401(k) Specialist, February 19, 2018)
Future Retirees Will Be More Vulnerable to Market Shocks: CRR,” (ThinkAdvisor, February 20, 2018)
The Afterlives of IRAs and Other Plans,” (Wealth Management, February 20, 2018)
By Cutting Back, Current Retirees Navigate Financial Shocks,” (PLANADVISER, February 20, 2018)
Sallie Krawcheck: How Much You Should Save at Every Age,” (Money, February 6, 2018)
Declutter Your Retirement Savings: What To Do With Your Old 401k And IRA Plans,” (Forbes, February 20, 2018)
Help DB Clients Stay Realistic About Mortality Assumptions,” (PLANADVISER, February 20, 2018)
The serious financial considerations of marrying later in life,” (MarketWatch, February 21, 2018)
Retiring with Debt: Mortgage, Home-Equity Loans, Credit Cards,” (TheStreet, February 21, 2018)
Working longer better than saving more for retirement late in career,” (BenefitsPRO, February 21, 2018)
My father is moving to a retirement community — what do we do with his $1.8 million home?” (MarketWatch, February 22, 2018)
Paycheck Bumps and Tax Reform Present Crucial, Brief Savings Opportunity,” (PLANADVISER, February 22, 2018)
Today’s Retirees, The Lucky Few, Are Riding High—Why?” (Financial Advisor, February 23, 2018)

Wisdom from Some of Our Favorite Blogs: TPA Revenue Sharing Exposed |
The Rosenbaum Law Firm P.C. Blog: Get that late 5500 Filed |
The Rosenbaum Law Firm P.C. Blog: Never leave a bad taste in the mouth of the one who brings you business |
RetirementRevised: Retirement savers, how much market risk can you handle? |
Ary Rosenbaum: The Word On The Street On What 401k Plan Sponsors May Need |
ERISA Lawyer Blog: Seventh Circuit Uphold’s Arbitrator’s Ruling That Withdrawal Liability Is Not Imposed When An Exemption For The Building And Loan Industry Applies |
Squared Away Blog: What’s New in Retirement Research |
Proskauer: Tackett Redux: Ordinary Principles of Contract Interpretation Mean No Inference of Vesting |
fi360: Do bad index funds exist? |
Fred Reish: Interesting Angles on the DOL’s Fiduciary Rule #80 |
401k Plan Blog: Has the government increased the contribution limit for 401k in 2018? |
That 401k Site: Plan Provider to make restitution for fake loans |
That 401k Site: New Survey Shows 401k Participation and Contributions Rising |
Proskauer: Third Circuit Deepens Circuit Split Over Test for “Top Hat” Status Under ERISA |
Proskauer: Third Circuit Analyzes Standing for ERISA Plan Management Claims |
Ary Rosenbaum: That Fiduciary Warranty Is Not Worth The Paper it’s Printed On |

Hot Tips from Popular Web Resources:
Kiplinger: How to Be Rich (A 401k Alone Won’t Get You There) |
The Motley Fool: Retirement Savings Are at an All-Time High, but Most Americans Still Have Work to Do |
NAPA Net: Scalia: Massachusetts’ Move Makes Case to Vacate Fiduciary Rule |
NAPA Net: 5 Things Plan Sponsors Should Know Before Hiring an Advisor |
NAPA Net: NJ Reviewing RFI Responses for Small Biz Retirement Marketplace |
NAPA Net: What Do Consumers Want Most From Financial Services Firms? |
The Motley Fool: 4 Ways Your Social Security Benefits Are Being Reduced |
Kiplinger: How to Turn ‘Found’ Money into Retirement Income |
NAPA Net: Should Broker-Dealers Become Sole Proprietors to Take Advantage of the TCJA? |
NAPA Net: Case of the Week: Active Plan Participant Making an IRA Contribution |
NAPA Net: Will the SEC Eliminate the Reasonable Compensation Rule? |
NAPA Net: New Investment Scam Outed |
The Motley Fool: Can I Get Money From My 401k at 55? |
Kiplinger: Comparing Self-Employed Retirement Plans: Solo 401k vs. SEP IRA vs. SIMPLE IRA |
NAPA Net: IRS VCP fees |
NAPA Net: 401k Fee Trends Follow Familiar Path |
NAPA Net: Markets Make Mark on Retirement Plan Assets |
NAPA Net: Old Line State Looks at Extending Fiduciary Lines |
NAPA Net: Digital Advice Preferences May Not Be What You Think |
NAPA Net: Equity Compensation Participants Receptive to Financial Wellness Programs |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


  1. Dennis Myhre
    Dennis Myhre February 26, 14:27

    Chris… your comment “We’re not quite certain, but, we thinks using other people’s assets to make money might be some form of prohibited transaction – or should be – because it violates the very underpinning of the fiduciary philosophy.” is spot on, BUT not always the case. Insurance company variable and group annuities, a box store 401(k) product, wrap separate accounts in which “units” are owned by the 401(k) investor.
    Under most state regulations, all plan assets are then declared as “owned” by the insurance company, and as such, common law prevails as to the plan provider’s legal responsibilities owed the 401(k) plan. Not only are the plan providers considered non-fiduciaries, those same “plan assets” are frequently “sold” to banks under a reverse repurchase agreement and then loaned out to real estate developers. The separate accounts themselves are often used as collateral for loans to developers, or included as a party to the loan under a loan purchase agreement should the loan go south.

    The ONLY way an investor can retain ownership of his/her plan assets is to avoid investing in insurance company separate accounts.


    Dennis Myhre, AIC

  2. Christopher Carosa, CTFA
    Christopher Carosa, CTFA Author February 26, 14:45

    Dennis: Thanks for the comment!

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