The Mutual Fund Marketplace Is Broken. Time to Fix It
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General Items The Mutual Fund Marketplace Is Broken. Time to Fix It Summary: According to this article, Wall Street and Washington have it wrong. The most important debate today isn't whether financial professionals should adopt the suitability standard or the fiduciary standard. The more flagrant issue to address, in the authors opinion, is the mind-boggling array of share classes that exist only to hide fees paid by mutual funds to brokers in exchange for feeding them business. Source: Investmentnews.com (registration may be required) Canada Gets a Pension Proposal No One Asked For Summary: Both cynics and more trusting analysts are crying electioneering to explain an out-of-left-field policy pronouncement on voluntary retirement benefit options in Canada. On May 26 Canadian Finance Minister Joe Oliver offered a proposal that would allow Canadians to make greater voluntary payments to the Canada Pension Plan (CPP). There would be no change in the mandatory contribution. Source: Institutionalinvestor.com How Small Business Owners Can Take Control of Their Retirement Future Summary: Entrepreneurs are often quite confident when it comes to their business and finances. When it comes to retirement planning, however, many small business owners are not too sure about their future. Here are some steps they can take to control their retirement future. Source: 401khelpcenter.com Streamlining 401k Plans to Improve Diversification Summary: Over time it has become clear that extensive fund lineups can create problems for DC plan participants. For one, there's the "paradox of choice," the anxiety created by multiple options that paralyzes consumers and can lead 401k investors to opt out. Or a confused investor could simply decide to sample everything on the menu, as nearly 75 percent of 401k participants in a recent survey indicated they would do. Source: Institutionalinvestor.com
403(b) Plans Fiduciary Liability for 403(b) Non-ERISA Plans Summary: Many have been arguing about the extent of fiduciary liability for non-ERISA 403(b) plan sponsors for years now. This was caused by the 2007 changes to the 403(b) tax regulations, which significantly increased employer responsibility for the maintenance of 403(b) plans. This greater level of employer involvement lead to our ongoing discussions on the sort of liability could these plans cause for the non-ERISA plan sponsor. Source: Businessofbenefits.com Advisory Committee Suggests Additional Guidance for 403(b)s Summary: Seven years after IRS regulations were implemented, 403(b) plans still have trouble with compliance. The Internal Revenue Service Advisory Committee on Tax Exempt and Government Entities has issued a report of recommendations to the IRS. This article reviews the committee's recommendations. Source: Planadviser.com A Close Look at ERISA 403(b) Plans Summary: Employees of educational institutions and other nonprofit employers who participate in 403(b) plans enjoy many investment options in their plans, according to a research study by BrightScope and the Investment Company Institute. Study also finds total costs of 403(b) plans decreased from 2009 to 2012. Source: Ici.org
Insight: Studies, Research and White Papers The Plan Auditor Selection and Monitoring Process Summary: After a recent DOL study found significant errors in auditor reviews of 5500 filings, plan sponsors should anticipates increased scrutiny around their process for choosing an auditor and evaluating their work. This white paper explains the DOL's findings and provides recommendations for how to think about the auditor hiring process and where to ask questions when reviewing the final audit results. Source: Lockton.com Four Strategies to Help Increase 401k Participation Summary: Americans need to save for retirement, but many are unsure how to go about it. Employers realize that they are part of the solution that can lead employees toward making choices that can help to drive better outcomes. This white paper features four strategies and action steps which may help increase plan participation. Source: Baml.com Retirement Assets Total $24.9 Trillion in First Quarter 2015 Summary: Total U.S. retirement assets were $24.9 trillion as of March 31, 2015, up 1.3 percent from $24.6 trillion on December 31, 2014. Retirement assets accounted for 36 percent of all household financial assets in the United States at the end of the first quarter of 2015. Source: Ici.org
Items of Special Interest to Service Providers Defining "Best Interest" Standard in Fiduciary Debate a Head Scratcher Summary: Two industry trade groups and the Financial Industry Regulatory Authority came out recently with uniform best interest standards in an attempt to squelch what they say will be competing fiduciary plans to be issued by the Department of Labor and the Securities and Exchange Commission. Source: Thinkadvisor.com How Retirement Plan Advisors Can Benefit From Any New DOL Fiduciary Rule Summary: Attorney Ary Rosenbaum opines on why any expanded fiduciary rule will be an opportunity for the advisor ready for this change because change in the retirement plan industry always equals opportunity for the bold. Source: Jdsupra.com
Plan Automation The Downside of Automatic 401k Enrollment Summary: Employees participating in auto enrollment tend to contribute less than people who sign up for 401k plans on their own, often because their employers set a low default contribution level. Source: Cnbc.com Relationship Between Automatic Enrollment and DC Plan Contributions Summary: This paper reexamines the determinants of 401k participation and contributions in the presence of automatic enrollment using nationally representative data from the Health and Retirement Study for 2006 through 2012. The results confirm previous findings that automatic enrollment is associated with a higher proportion of workers included in DC plans; however, automatically enrolled workers are less likely to contribute to their DC plans than voluntarily enrolled workers. Source: Bc.edu
Compliance and Regulatory Tiered Penalties Increase for Plan Distribution Reporting Failures Summary: President Barack Obama has signed into law the Trade Preferences Extension Act (H.R. 1295), which includes, among other things, an increase in the tiered penalty fees that apply to certain retirement distribution reporting failures. Source: Ascensus.com Same Sex Marriage: Effect on Benefits Summary: The United States Supreme Court recently held in Obergefell v. Hodges that all states must recognize and allow marriages between same sex partners. Depending on an employer's current employee benefits plan, certain provisions may need to be changed in light of this ruling. Source: Benefitsnotes.com
Marketplace News BPAS Expands Retirement Plan Business With Acquisition TCW Launches Emerging Markets Fund Fidelity Unveils Third-Party Fiduciary Program Transamerica Announces Retirement Plan Distribution Partnership With Edward Jones Hancock Begins Supporting LPL's Employee Advice Tool NAGDCA Announces 2015 Leadership Recognition Award Recipients
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