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News Items, by Subject

Ret plan investments - misc

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Text of Amicus Brief to 10th Circuit, in Support of Stable Value Fund Providers in Fiduciary Litigation
"The growth of stable value offerings has been an enormous boon to sponsors and participants, helping to safeguard retirement benefits for millions of Americans. Unfortunately, Plaintiff would turn one type of these valuable products into a magnet for wasteful litigation. Treating general account stable value fund providers as functional fiduciaries would severely curtail stable value funds and potentially drive those providers out of the market entirely. Such an outcome is not just bad policy but also bad law[.]" [Teets v. Great-West Life & Annuity Insurance Co., No. 18-1019 (10th Cir. July 17, 2018)] (American Benefits Council)
Fidelity Backs Away from Being 'Point in Time' Fiduciary for 401(k) Plans
"Fidelity Investments no longer will serve as a fiduciary when it helps employers select investments for their 401(k) plans, moving away from a policy the firm adopted last year in response to the [DOL's] fiduciary rule.... Fidelity was the only record keeper that said it would adapt by providing services as a fiduciary under the new regime ... However, given the DOL rule's fate, the level of investment guidance is again considered non-fiduciary under ERISA, and Fidelity has distanced itself from the 'fiduciary' label as a result." (Pensions & Investments)
[Opinion] Be Wary of 401(k) Robo-Fiduciaries -- Especially the Human Ones
"Some institutional consultants have turned to the outsourced chief investment officer model, while others have moved down-market. Mercer created a robo-fiduciary called '401kWise' that offers to serve as the plan administrator and named fiduciary for even the smallest 401(k) plan, promising reduced costs and better outcomes, which includes financial wellness. But the chances for success are limited because 401(k) plans are sold, not bought. Few plan sponsors are likely to abandon a person for a phone number." (InvestmentNews)
Brown University Wins Dismissal of Many Claims in 403(b) Plans Challenge
"[The District Court judge] found the plaintiffs' allegation that a prudent fiduciary would have chosen one -- rather than two -- recordkeepers suffices to state a plausible claim. In addition, he said the plaintiffs' claim that a prudent fiduciary in like circumstances would have solicited competitive bids plausibly alleges a breach of the duty of prudence." [Short v. Brown Univ., No. 17-318 (D.R.I. July 11, 2018)] (planadviser)
DOL Guidance Impacts Consideration of ESG Factors in Investment Decisions and Shareholder Engagement
"In response to FAB 2018-01, fiduciaries may wish to: [1] review their investment policies and practices (or investment manager contracts, as relevant) to ensure the fiduciary's consideration of ESG factors is tied to economic factors over an appropriate time horizon, and that such decision-making is well documented; [2] review their shareholder engagement policies to ensure the decision to engage will enhance the value of investments, after considering costs, and that the decision is well documented; and [3] review their proxy voting policies to document academic research findings that connect the proxy voting issue ... with economic value." (Reinhart Boerner Van Deuren s.c.)
Lessons Learned from Recent Litigation Involving ESOP-Owned Companies (PDF)
28 presentation slides. "Recent litigation and audit activity is focusing on the process undertaken by fiduciaries in connection with a transaction involving an ESOP." (McDermott Will & Emery)
'Hibernation' Approach Recommended to Wait Out High Demand for DB Plan Derisking Transfers
"[G]rowing pressure on insurers' capacity to absorb more pension risk transfers (PRT) from an upswing in plan terminations is expected ... to continue and be 'more widespread in the near future.' ... So how should DB plans proceed that are still seeking to remove PBOs from their balance sheets -- or are still responsible for reduced pension plans remaining with non-standard features after partial derisking?" (HR Daily Advisor)
[Opinion] How to Keep HSAs From Cannibalizing Retirement Savings
"Anytime we can help a participant understand how to prioritize and spend their 'next best dollar' we should jump on that opportunity. It makes sense that the HSA should be integrated with any retirement discussions. Most health brokers are not licensed to talk about investments and retirement savings ... [As] long as the retirement industry leads the discussion and not the health broker, we should be in good shape. This just adds to the need of better communication and education. Which now points back to more resources are needed from adviser teams to provide this type of education." (Fiduciary News)
Interesting Angles on the DOL's Fiduciary Rule, Part 98
"[A] broker-dealer will need to justify recommending a higher-cost investment (over another reasonably available, but lower-cost alternative). However, if there are two similar investments (including costs), but one pays the broker-dealer (and the financial advisor), more than the other, and it is better for the investor, then it could be recommended under the best interest standard. The inverse of that, though, is that the higher cost (and higher compensating) alternative cannot be recommended unless there are different characteristics and features that justify the cost." (
Will Capacity Run Out in the Bulk Annuity Market?
"[T]here are three different aspects of the longer-term capacity question: [1] Will the insurers have the manpower to price and execute the transactions in the market? [2] Will the insurers have access to sufficient, suitable high-yielding assets so that attractive pricing can continue? ... [3] [W]ill there be enough capacity in the longevity reinsurance market?" (Willis Towers Watson)
The Fiduciary Rule May Be Dead, But Fiduciary Responsibility Isn't
"Nevada, New York and Massachusetts have taken steps to provide greater fiduciary protections through law changes and enforcement. Other states may follow their lead.... [T]here are issues whether states are permitted to act in this area due to ERISA preemption, and the status of these laws and state enforcement is not clear." (PenChecks)
Brown University Retirement Plan Lawsuit Advances
"The workers can move on with their claims related to record-keeping services, including that Brown acted imprudently by using more than one record-keeper, not employing competitive bidding in its selection, and allowing the plans to pay excessive administrative fees ... The workers also can advance their claim that the university breached its fiduciary duties by selecting more expensive funds with poor historical performance, such as the CREF stock account and the TIAA real estate account[.]" [Short v. Brown Univ., No. 17-318 (D.R.I. July 11, 2018)] (Bloomberg BNA)
Should Participant Behavior Influence Investment Lineup Offerings?
"[T]here are, we think, significant reasons for saying 'No': ... [T]here's the difficulty of determining whether participants are moving money from a fund due to underperformance or for other reasons.... [By] engaging participants on their reasons for the actions taken are fiduciaries obligating themselves to provide counter arguments or explanations justifying the decision to continue holding the fund(s)? ... If participants deeply disfavor a particular fund offering, even though the investment guidelines favor it, might there be some obligation to replace it with a similar fund that participants perceive more favorably? If so, is this a weighty enough consideration to balance the negatives noted above?" (Fiduciary Plan Governance, LLC)
Alight Solutions 401(k) Index(tm): June 2018 Observations
"Only one day of above-normal trading activity in June. Continued movement away from equities, with 13 of 21 days favoring fixed income funds. On average, 0.013% of balances were traded daily." (Alight Solutions)
SEC Prioritizes Data Security and Expects More Mature Cybersecurity Programs
"[R]egulators and law enforcement are focused on cybersecurity threats that rely on investment services platforms and resources to target or harm the investing public. For registered investment advisers and broker-dealers, the primary implication of this focus is that the SEC will continue to expect more mature cybersecurity programs that adapt to the changing threat environment and appropriately manage and communicate risks to investors and other market participants[.]" (Alston & Bird)
[Guidance Overview] Interesting Angles on the DOL's Fiduciary Rule, Part 97
"The proposed best interest standard for broker-dealers will apply only to securities transactions recommended to 'retail customers.' ... [Compare] that to the SEC's Interpretation for RIAs, which applies to all advice to all clients. This article gives examples of how the proposals will differ when applied to common scenarios." (
What Explains the Differences in Public Pension Returns Since 2001?
"Investment returns for state and local pension plans varied over 2001-2016 from 6.3 percent for the top quartile to 4.6 percent for the bottom. The variation could be due to differences in asset allocation and/or to the returns by asset class. The analysis found that asset allocation -- in equities, fixed income, and alternatives -- was broadly similar across plans, while asset class returns showed more variation. Therefore, asset class returns turned out to be the primary reason for the disparities in overall returns." (Center for Retirement Research at Boston College)
Governance Checklist for Today's Investment Committees
"Tasks that were once the purview of an investment committee (e.g., manager selection and rebalancing) are increasingly delegated to investment staff or transferred to an outsourced chief investment officer (OCIO) partner.... The biggest change in the investment committee's responsibilities occurs with the activities that fall between defining the objectives and monitoring progress towards those objectives. Namely, the design and implementation of the investment strategy." (Russell Investments)
Top 10 Actively Managed Funds in Defined Contribution Plans: Forensic Analysis 2Q 2018
"The AMVR reflects a fund's incremental costs relative to a fund's incremental returns. Therefore, a low AMVR score is the goal.... [A]ll ten of the funds had a R-squared number over 90, most were 95 or greater. As a result, the funds' AER effective annual expense ratios rose dramatically and rendered all but one of the funds as cost-inefficient ... Even the sole surviving cost-efficient fund, Vanguard PRIMECAP Admiral shares failed to score in the optimal range, just slipping in 0.86." (The Prudent Investment Fiduciary Rules)
New Jersey Pension Investments Guided by Social, Environmental Values
"The State Investment Council has withdrawn investments from a company that manufactures high-powered firearms, pressured two private-equity firms not to foreclose on Puerto Ricans displaced by Hurricane Maria last year, and urged Target not to do business with trucking companies that classify their drivers as contractors rather than employees.... [T]he investment council now is working on a formal policy on ... considering environmental, social and governance factors in deciding where to put pension investments." (
Creating the Ideal 401(k) Plan, Part 1
"Deferrals would start at 5% and escalate to 10% automatically over 5 years.... As plans become 'healthier,' employers get greater safe harbor protection and lower liability. Measures could include participation and deferral rates -- and ultimately, income replacement ratios.... Default would be TDFs with risk based and managed accounts for those willing to fill out online surveys, along with do-it-yourself options.... Transparent, unbundled pricing with level comp paid by participants paid using flat, fee-per-head charges for participants with account balances over a certain size; ... Focus on financial literacy," (National Association of Plan Advisors [NAPA])
401(k) Plan and Participant Outcomes Improved Again in 2017 (PDF)
55 pages. "The 6% default deferral rate for auto-enrollment plans surpassed the 3% industry standard for the first time by a small amount: 32.4% of plans had a 6% default deferral compared with 31.9% with a 3% default.... The average employee pretax deferral rate reaches 8.3% -- the highest in 10 years ... [T]arget date products now account for the largest percentage of plan assets under management, surpassing all other investment types in nearly every category.... Loan usage decreased to 23.4%, but a greater number of participants age 50+ have outstanding loans." (T. Rowe Price)
Proposed Securities Legislation Could Affect 401(k) Participants' Rights
"The proposed legislation's goal is to federalize securities fraud actions by preempting any and all state laws that even indirectly touch on securities fraud. The result would be that all securities fraud litigation and enforcement would need to take place at the federal level.... [In addition,] the SEC is considering allowing companies to adopt mandatory arbitration clauses for shareholders -- an idea which is opposed by most 401(k) participant advocates on the grounds that it would effectively kill recovery chances for most 401(k) plan participants alleging securities fraud violations." (Compliance Dashboard)
Global Investor Study: Saving for a Comfortable Retirement (PDF)
22 pages. "People aged 55+ expect to need more income to live comfortably in retirement than retirees actually receive.... The cost of living in retirement takes up more income than expected.... The majority of retired people consider their income to be sufficient, but most could do with more.... On retirement, people allocated more of their financial resources to investments than non-retired people expect to.... Globally, people feel they should be saving more of their income for retirement." (Schroders)
[Opinion] Should 401(k) Plans Embrace Alternative Investments?
"Rocket Dollar 401(k) plans enable their owners to buy cryptocurrency, rental properties, and venture-capital funds.... Often ... the extra costs of exotic securities fully consume their advantages.... [E]ven if Rocket Dollar's customers have access to appropriately priced options ... they won't necessarily be positioned to make sound investment decisions.... [M]ost employees ... did not seek greater complexity.... [E]mployees voted with their feet to do less with their 401(k) plan, not more, by gravitating toward target-date funds." (John Rekenthaler, in Morningstar Advisor)
Four Ways To Rebalance Your 401(k)
"[1] Rebalance according to the calendar ... [2] Percentage of portfolio rebalancing ... [3] Constant proportion portfolio insurance (CPPI) ... [4] Rebalance with future contributions." (Financial Finesse)
Tax Wrinkle Spurs Pension Funds to Buy More Treasurys
"S&P 500 companies are contributing to pension plans this year at a pace expected to nearly match 2017's level, which at $63 billion was the most since 2003 ... Last year's contributions were spurred in part by companies anticipating changes in the U.S. tax-code overhaul. That and continued contributions this year have been a boon for the Treasury market because pension funds tend to invest in long-dated bonds to match their long-term liabilities." (The Wall Street Journal; subscription may be required)
How The DOL Fiduciary Rule Changed Norms
"[FAB 2018-02] states that prohibited transaction claims will not be brought against advisors who 'are working diligently and in good faith' to satisfy the impartial conduct standards set forth in the DOL rule exemptions.... Because the FAB is still in place, the impartial conduct standards essentially remain in place ... While not as strict as the fiduciary definition set out in the Investment Advisors Act of 1940, the five-part test is still a tough standard on ERISA fiduciaries.... [T]he application of the 1975 rules will most certainly be broader than in the past[.]" (
DOL and Thrivent Ask Judge to Keep Fiduciary Rule Case Open
"The parties agreed that despite an appeals court decision that struck down the fiduciary rule in its entirety, its related litigation hasn't been finally resolved ... Last week, Judge Barbara M.G. Lynn -- the judge in Texas whose ruling upholding the fiduciary rule was reversed by the Fifth Circuit decision -- issued an order asking 'any party seeking further relief in this action' to notify the court of that intent by July 12.... The time hasn't yet run for the potential intervenors ... to seek further review of that denial, the DOL and Thrivent said." (Bloomberg BNA)
Federal Judge Approves $4.7M Settlement of 10-Year ERISA Lawsuit Against SunTrust Banks
"[P]lan participants will each receive a share of the payment from the settlement fund ... Named plaintiffs each receive a case contribution award of $10,000. Class counsel were awarded attorney fees in the amount of $1,583,333.33 and reimbursement of expenses totaling $462,810.18[.]" [In Re SunTrust Banks, Inc. ERISA Litigation, No. 8-3384 (N.D. Ga. June 28, 2018)] (Atlanta Business Chronicle)
Top Fiduciary Questions to Ask Your Plan's Financial Professional
"How do I protect myself from being sued due to my position as a fiduciary on the 401k? ... What is a fiduciary, and how do you know if your advisor will fulfill that role? ... How does automated investing fit in with the traditional advisory model? ... . Who does our investment professional represent? ... What is this product's true track record over the long run? ... What exactly is a financial 'conflict of interest'? ... How do you get paid?" (Fiduciary News)
June 2018 Pension Finance Update
"June was another decent month for pension sponsors, rounding out a solid quarter and first half of 2018 for pension finance ... Both model plans ... held steady again last month -- traditional Plan A gained 1% while the more conservative Plan B was unchanged during June. For the year, Plan A is 6% ahead, while Plan B is up 1%:." (October Three Consulting)
Matrix Trust Company Accused of Making Unauthorized Transfers of 403(b) Plan Assets
"Matrix [allegedly] ... did not verify that the transfers were authorized by the participants in the 403(b) plans or permissible under the terms of the plans. [Plaintiffs allege that] the plans for which Matrix was custodian could only be invested in certain mutual funds as specified by the 403(b) plans' documents, [and that] the bank account maintained by Vantage or its agents was not one of them." (planadviser)
When It Comes to the Proposed SEC Advice Rule, Words Matter
"Regulation Best Interest would establish a new conduct standard for broker-dealers that provide investment recommendations to retail customers.... To differentiate the existing standard for RIAs from the new one for brokers, the SEC proposes to reinterpret 'best interest' in non-fiduciary terms for broker-dealers. The words 'fiduciary' and 'loyalty,' which have long been part of the lexicon associated with 'best interest,' are nowhere to be found in the enhanced suitability standard now under consideration." (InvestmentNews)
[Opinion] Having Too Much Employer Stock in Your 401(k) Is Dangerous -- Just Look at GE
"[A] large holding in employer stock doubles your risk: If your company runs into major problems, you may lose your job and your retirement security.... At the center of the problem is federal pension law, which establishes a 10 percent limit on employer stock in defined benefit plans, but not in defined contribution plans such as 401(k) plans." (Robert C. Pozen and Ming Liu, via The Brookings Institution)
Three Reasons Cryptocurrency Is Making Its Way Into Retirement Plans
"[C]ryptocurrencies represent one of the newest, fastest growing and most intriguing asset classes around. But do they belong in a retirement account? ... [R]easons some are starting to create a cryptocurrency IRA as part of their overall retirement portfolio: [1] Diversification ... [2] Government Hedge ... [3] Long-Term Growth Potential." (Forbes)
Finally Final: Court's Mandate Terminates DOL Fiduciary Rule
"The DOL has remained silent following the Fifth Circuit's June 21, 2018, mandate officially invalidating the investment fiduciary guidance.... [T]he SEC has indicated that [its] final guidance will generally include advice given to retirement savers who are invested in securities and are receiving investment advice from broker-dealers or registered investment advisors." (Ascensus)
[Opinion] Merrill Lynch Took the Lead on the DOL Rule, Now It's Wrapping Its Flip-Flop in the Same Pious Intent
"When it looked like the DOL fiduciary rule was a foregone conclusion two years ago, Merrill Lynch jumped ahead of pack and announced the end of commission-based IRAs with a major advertising campaign exalting its holier-than-thou embrace of the controversial regulation.... When the rule finally died in the federal 5th Circuit Court of Appeals earlier this month, Merrill's reaction was swift.... [It] announced it would be re-examining its position over the next 60 days -- in the name of providing more 'choice.' " (Lisa Shidler, in RIABiz)
Xerox HR Solutions Wins Another Dismissal in ERISA Challenge
"In the original complaint, [Xerox HR Solutions] was accused of collecting excessive fees and engaging in a type of pay-to-play arrangement with Financial Engines Inc.... The text of the new decision says the amended complaint has failed because 'it is an attempt to replead dismissed counts,' and because it includes an entirely new cause of action, violation of the Racketeer Influence Corrupt Organizations Act [RICO]. Also problematic, it includes new parties, Xerox Corporation and Conduent, Inc." [Chendes v. Xerox HR Solutions, LLC, No. 16-13980 (E.D. Mich. June 25, 2018)] (PLANSPONSOR)
GWU Tells Court 403(b)s Cannot Be Compared to 401(k)s
"In a brief supporting a motion to dismiss a case against George Washington University related to the management of its 403(b) plan, the defendants note that 403(b)s have always looked differently and were set up for a different purpose than 401(k) plans." (PLANSPONSOR)
The End of the DOL's Fiduciary Rule
"It remains to be seen whether some firms will nonetheless continue the processes or standards they have already put in place in response to the fiduciary rule. For instance, firms that suspended investment by IRAs and ERISA clients because they were unable to meet the BIC exemption under the fiduciary rule may decide to keep the suspensions in place. However, it also remains to be seen whether firms adopting and retaining the standards under the fiduciary rule will have a competitive advantage in the market." (Bradley)
Plans Easing Burdens by Taking the OCIO Route
"OCIO managers reported nearly 2,000 U.S. DC clients as of March 31, a 22.4% increase from 2017. Total assets for the group reached $113.8 billion as of March 31[.]" (Pensions & Investments)
[Guidance Overview] Interesting Angles on the DOL's Fiduciary Rule, Part 96
"[According to] the SEC proposal ... a 'retail customer' includes individual investors, family and personal trusts, IRA owners, and plan participants. However, it does not include businesses, retirement plans, and tax-exempt organizations. Unfortunately, the SEC did not explain why they excluded some of those investors, who may be relatively unsophisticated." (
[Guidance Overview] Socially Responsible Investing: What Retirement Plan Sponsors Need to Know
"The new guidance notes that DOL policy does not require fiduciaries to include ESG considerations in investment policies, develop ESG-specific policy statements or guidelines, or incorporate ESG-related tools, metrics or analyses into risk/return analyses. While the bulletin does not prohibit these actions, it does warn that fiduciaries 'must disregard' routine compliance with ESG-related investment policy statements if it would be imprudent, as it relates to participants' retirement income interests, to comply." (Cammack Retirement Group)
FINRA Hits Betterment with $400,000 Fine
"The Financial Industry Regulatory Authority has imposed a $400,000 fine on robo-advisor Betterment Securities for a series of supervisory and compliance issues, including problems with how it protected customers as it was growing at a rapid pace -- from about $120,000 in sales in 2011 to over $1.2 million in 2014." (ThinkAdvisor)
[Opinion] Stop Politicizing Pensions: The Sole Duty of Politicians Should Be to Deliver Maximum Return to Retirees
"In the latest movement to force political agendas into the management of public pension funds, [Mayor de Blasio and City Controller Scott Stringer] proposed in January 2018 to divest $5 billion in energy stocks from the city's pension funds.... New York City stands to lose $25 million immediately in frictional costs, and up to $1.5 billion over the next 50 years if it goes ahead with this plan." (Christopher Bancroft Burnham, via New York Daily News)
Indexed Annuity Issuers Seek 401(k) Plan Default Investment Role
"QDIA regulations prevent employers from using many kinds of annuities, including indexed annuities, as QDIAs in 401(k) plans and other retirement plans governed by ERISA ... Indexed annuities protect holders against market downturns and but offer the holders a chance to share in investment market growth... [M]any experts believe that the typical indeed annuity would not qualify as a QDIA ... [R]egulators could add consumer protection requirements to make an indexed annuity suitable as a QDIA, such as new disclosure and surrender charge requirements." (ThinkAdvisor)
Fifth Circuit Issues Mandate Vacating the DOL Fiduciary Rule (PDF)
"Asset managers who revised subscription documents, placement agent agreements, marketing materials and other documents to take advantage of the Fiduciary Rule's 'Independent Fiduciary Exception' may begin removing that language from those documents ... Asset managers who suspended investment by IRAs and other ERISA clients that were unable to meet the requirements of the Independent Fiduciary Exception may now admit those investors to applicable products, to the extent any such investors would have been admitted prior to June 9, 2017." (Fried Frank)
It's Over! Fifth Circuit Issues Mandate Vacating Fiduciary Rule
"What this means is that the 'Five Part Test' from 1975 has sprung back to life, and Advisory Opinion 2005-23A (the 'Deseret Opinion') has likely been restored.... The SEC has proposed a slate of rules that would cover the retirement space. The retirement industry has a role to play first in ensuring that any new regulations are workable and second in seeking coordination between the SEC and DOL. Separately, financial institutions that achieved BIC Exemption compliance may seek new exemptions that provide broad relief for advice fiduciaries." (Groom Law Group)
It's Official: The Fiduciary Rule Is Dead
"[T]he final judgment ... not only spoke to the disposition of the case ... but also contained an order that the DOL 'pay to appellants the costs on appeal to be taxed by the Clerk of this Court.' Most of the document was a copy of the March 15 decision." [Chamber of Commerce v. DOL, Nos. 16-1476, 16-1530 and 16-1537 (5th Cir., mandate issued Jun 21, 2018)] (American Society of Pension Professionals & Actuaries [ASPPA])
The High Stakes of QDIA Selection
"For plan sponsors, the tremendous growth in assets, changing market conditions and balancing the needs of younger and older participants complicates selection and monitoring of these investments. Advisors can help by bringing plan demographics to the discussion and looking at the distribution of ages and account balances of a plan population." (American Century Investments)
[Guidance Overview] Interesting Angles on the DOL's Fiduciary Rule, Part 95
"[It] does not appear that the best interest standard would apply to recommendations to plans that are not participant directed. For example, a recommendation to take a distribution from a defined benefit pension plan or a cash balance pension plan does not seem to be a securities recommendation, because the participant does not have the ability to liquidate plan investments. On the other hand, a recommendation by an RIA to take a distribution from any type of plan would be covered by the best interest standard. Similarly, for RIAs a recommendation about the investments in the rollover IRA would also be covered by the best interest standard." (
[Opinion] DCIIA Testimony Before the ERISA Advisory Council: Lifetime Income Solutions as a QDIA -- Focus on Decumulation and Rollovers (PDF)
24 pages. "Those in QDIAs near retirement are more likely to have shorter tenures, lower balances and potentially lower salaries ... The idea of long-tenured participants retiring and utilizing the LTI features in a QDIA may be less common than initially anticipated. As LTI solutions continue to develop, it is important to consider these demographics when assessing their effectiveness." (Defined Contribution Institutional Investment Association [DCIIA])
Alight Solutions 401(k) Index: May 2018 Observations
"May was a slow month for trading activity in defined contribution plans, ... with one day of above-normal trading activity for the month. When 401(k) investors made trades, they tended to favor fixed income funds over equities. May observations: [1] Continued movement away from equities, with 13 of 22 days favoring fixed income funds; [2] On average, 0.14% of balances were traded daily." (Alight Solutions)
Anthem 401(k) Investor Ordered to Disclose Facebook Messages
"A participant in Anthem's 401(k) plan must disclose to the company's attorneys some of her Facebook private messages concerning her lawsuit accusing Anthem of allowing excessive fees in the plan. The Facebook private messages ... discussed the participant's emotional status over her upcoming deposition, a future meeting with the attorneys, and that she wanted to be a 'good representative'[.]" [Bell v. Pension Comm. of ATH Holding Co., No. 15-2062 (S.D. Ind., order on motion to compel, June 14, 2018)] (Bloomberg BNA)
Non-ERISA 403(b) Plans May Be Subject to Proposed SEC Regulation Best Interest
"[T]he proposed [SEC] regulation could apply to a non-ERISA plan, such as a non-ERISA 403(b) plan.... [T]he employee owning the annuity contract would likely be treated as a 'retail customer' and subject to the protections of the Best Interest rules. To that end, although they are treated differently for tax purposes, the participant in the non-ERISA 403(b) plan would seem to be in the analogous position to the owner of an IRA." (The Wagner Law Group)
Pension Funding Index June 2018
"In May, the funded status of the 100 largest corporate defined benefit pension plans worsened by $2 billion ... The deficit rose to $141 billion from $139 billion at the end of April due to a decrease in the benchmark corporate bond interest rates used to value pension liabilities. As of May 31, the funded ratio was unchanged from 91.6% seen at the end of April." (Milliman)
[Guidance Overview] Why Fiduciary Status Still Matters in a Post-Fiduciary Rule World: Broker-Dealer Compensation and Prohibited Transactions
"The Fifth Circuit's ruling will vacate the Rule in toto, which means that all of the new prohibited transaction exemptions disappear as well ... Many [broker-dealers] will still be fiduciaries under the 1975 Rule, but the variable or third-party compensation they received while relying on the BIC Exemption will no longer be permitted. Even though they were fully complying with the DOL Fiduciary Rule and the BIC Exemption, there may not be another exemption they can use once the 5th Circuit decision goes into effect." (Drinker Biddle)
About That SEC Best Interest Rule
"Regulation Best Interest makes clear that it would apply only to stand-alone broker/dealers, which currently account for about 30% of all broker/dealers. The other 70% of broker/dealers are dually registered; that is, they are RIAs, as well. This larger group wouldn't be subject to Regulation Best Interest at all." (W. Scott Simon, in Morningstar Advisor)
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