Articles of Interest

KRAFT 401(K) SETTLEMENT ENDORSES PASSIVE INVESTMENTS
The $9.5 million settlement of an excessive fee lawsuit against Kraft Foods shows the U.S. District Court’s conclusion that offering active funds was not prudent.

FIDUCIARY STATUS TO BE THE NEXT BIG ISSUE FOR RETIREMENT PLANS
Now that the final 408(b)2regulation has been issued by the DOL, the next big issue facing the retirement plan industry is Fiduciary Status. For years, the marketplace has been dominated by non-fiduciary brokers and "advisors", but awareness of this issue among plan sponsors is growing rapidly and this article highlights what will likely be a popular topic of conversation in late 2012.

THE WALL STREET JOURNAL SHEDS LIGHT ON 408(b)2...
In the lead article, the Journal provides an overview of the new fee disclosure regulations and points out that the DOL is still dragging their feet on issuing the “final” final version of 408(b)2. Speculation continues that the current effective date of April 1st may get pushed back.

PERHAPS TOO MUCH LIGHT FOR SOME
This brief follow-up piece is particularly interesting in that it provides keen insight into what the response from participants may be to all of this disclosure in the light of day.

"401(K) FEES TO BE A GAME-CHANGER IN 2012"
This recent Reuters article highlights the upcoming focus on 401(k) fees that we've been discussing for months. Of particular note is their mention of Dimensional Fund Advisors and the increased interest they are seeing from plan sponsors. The article also gives typical fees for various sizes of plans, including "…1.86% for plans with less than $10mm in assets." For comparison, a $5mm plan with 100 participants done through Advisors Access would cost 1.23%.

"WAL-MART AND MERRILL LYNCH PAY $13mm TO SETTLE 401(K) LAWSUIT"
In a further sign that plan sponsors need to pay close attention to their 401(k) plan’s fees and expenses, Wal-Mart just settled this lawsuit relating to their plan’s offering of high-cost, retail funds. But the most surprising part is the fact that Merrill Lynch has to pay the biggest part of the settlement for receiving “kickback payments”.

"ON 401(k) PLANS, THE LESS CHOICE THE BETTER"
This recent Washington Post article highlights the natural human reaction to too much choice and suggests a 401(k) menu very similar to Advisors Access.

"FATHER OF THE 401(k)'S TOUGH LOVE"
Ted Benna, considered the “Father of the 401(k)” for having discovered the section of the IRS code that allowed for the creation of these plans, says that 401(k) plans have become a monster by being made too complex. Having spoken with Mr. Benna at DFA’s Defined Contribution Conference in Chicago earlier this year, I can share that he is a big fan of how Advisors Access simplifies the process for employers and participants.