Graff: ‘Blank Slate’ Approach to Tax Reform Would Put Retirement Savings at Risk

The two most influential members of the U.S. Senate when it comes to tax issues revealed yesterday that they intend to take a ‘“blank slate” approach to tax reform. In a “Dear Colleague“ letter, Sens. Max Baucus (D-MT), chairman of the Senate Finance Committee, and Orrin Hatch (R-UT), the committee’s ranking member, indicated that their plan for tax reform is to begin with “a tax code without all of the special provisions in the form of exclusions, deductions and credits and other preferences that some refer to as ‘tax expenditures,’” and asked for input from other members of the Senate as a first step in revamping the Code.   Read More

Using Reenrollment to Improve TDF Adoption

Citing TDFs’ benefits to participants and the safe harbor protection offered to fiduciaries under the QDIA rules, Fred Reish and Bruce Ashton of Drinker Biddle advise plan fiduciaries to add TDFs to their investment lineups and encourage as many existing participants as possible to invest in them. A default through reenrollment is a particularly effective way of achieving the latter goal, Reish and Ashton note in a new white paper — although a “mapping” or an investment reset process can be effective as well.   Read More

Oregon House of Representatives Passes Retirement Study Bill

The Oregon State House of Representatives approved a bill on June 24 that would create a task force to develop recommendations for establishing an “Oregon Secure Retirement Plan” to offer retirement investment plans to individuals. Unlike the legislation passed in California last year, the Oregon bill outlines a state-run program that simply would compete with private providers without expanding coverage by requiring employers to offer a workplace retirement plan.   Read More

Supreme Court’s DOMA Decision: Not the End of the Story

The U.S. Supreme Court ruled yesterday that the Defense of Marriage Act (DOMA) is unconstitutional. The Court’s decision in United States v. Windsor means that same-gender marriages must be recognized by the federal government in the states that permit them. For ERISA plans, however, the Court’s decision leaves open more questions than it answers.   Read More

The Graying of the Advisor Market

According to research by Cerulli, the headcount for advisors dropped 1.3% in 2012 — a trend that’s expected to continue through 2016. Combined with the fact that the average age for advisors is 51, with 68 the age they expect to retire, you can begin to see the problem. After the recession, wire houses, which have the most robust training programs, were forced to back off, with some senior executives questioning the efficacy of a program that has only a 40-50% success rate. That low rate may explain why fewer college grads are becoming advisors, even though it’s cited as a top career path.   Read More

TDF Assets Grow as Numbers Shrink

Though TDF assets grew 20% in 2012, the net number of TDFs dropped from 50 to 48, according to a 200-page report from Brightscope and TD Analytics. This marked the first drop in that number since the two groups started covering TDFs. Columbia, Oppenheimer, Goldman Sachs and American Independence dropped out, while JP Morgan and PNC added funds. The report projects that TDF assets will grow to $2 trillion in 2020 — a four-fold increase from their current level.   Read More

Advice on Using Form 5500 Data

Tom Clark at FRA/PlanTools has spent considerable time and energy delving into and analyzing the DOL’s Form 5500 database for usable prospecting information. He shared some insights and tips that I think you will find useful in your business development efforts.   Read More

Judge Dismisses Suit Over Verizon Buyout

Last December, a judge allowed a lawsuit by Verizon retirees to halt the sale of $7.5 billion or 25% of their DB plan to Prudential to proceed. The suit claimed that the sale wiped out the pensioners’ insurance protection under the PBGC. Now a U.S. district court has dismissed the suit because the court did not believe that the purchase of an annuity was a fiduciary function or that the $1 billion premium payment was unreasonable. The plaintiffs have 30 days to file an amended complaint.   Read More

Broker Dealer Wrap-Around Meetings – 2014 NAPA 401(k) Summit

The newly branded 2014 NAPA 401(k) Summit is scheduled to be held in New Orleans, March 23-25. It promises to be the largest Summit since its inception, bigger even than the 1,500 people and almost 500 advisors and home office people who attended the 2013 convention in Las Vegas. Leveraging the incredible growth of NAPA, which boasts almost 100 institutional and 6,000 individual members, NAPA will be facilitating a series of broker dealer wrap-around meetings to be held before or after the NAPA Summit. They’ll provide a convenient opportunity for advisors to meet with colleagues from their own broker dealer who are attending the Summit.   Read More

NY Times Weighs in On 401(k) Fees and Lawsuits

The New York Times took up 401(k) fees in a recent lead article that highlighted lawsuits, especially the 15 cases brought by Jerome Schlichter, as well as last year’s DOL fee disclosure regulations. Stating the obvious —that fees make a difference—the Times calculated that a $25,000 account gaining 7% per year would be 39% higher if fees are just .5% lower. Perhaps prompting the article is Schlichter’s just-filed $35 million settlement of Cigna’s 401(k) participants’ case against Cigna and Prudential.   Read More

Domestic Equities Losing Traction in DC Plans

Northern Trust released the inaugural edition of the DC Tracker, a report that follows how investors moved their money based on the 85 plans and $190 billion of assets for which Northern Trust provides custody services. Despite a 16.4% gain in domestic equities as measured by the Russell 3000, investors experienced outflows as high as 5% for small cap. It comes as no surprise that the winners were target-date funds (TDFs), which increased overall assets from 11.87% to 14.62%. And fixed income saw inflows of 7.17%—a big surprise. International equities saw inflows in 2012 of 4.67% and company stock experienced outflows of 11.22%.   Read More

How Are Advisors Driving Growth?

While social media is all the buzz in financial services markets, making many advisors feel left out if they don’t have a strategy, investing in social media yields the lowest returns for gaining new clients. This is according to a recent survey of retail advisors from both RIAs and broker dealers from Russell Investments. Referrals from clients are the largest source of new business, even bigger than from centers of influence like CPAs.   Read More

FINRA is Watching

FINRA has announced that they will be conducting spot checks of their firms’ social media policies and usage over the period of February 4-May 4, including supervisory policies and monitoring procedures, and the top 20 reps by commissioned income who used social media.   Read More