Viewpoints: Opinion and Commentary
People within and out of the industry speak out on a variety of issues related to 401k's. One of our most interesting areas, but remember, opinions expressed here are those of the author and do not necessarily reflect the positions of 401khelpcenter.com.
Abstract: How long would it take the Department of Labor to change a light bulb? Several years, judging by progress on the even simpler task of mandating standardized lifetime retirement income disclosure for defined contribution pension arrangements.
Source: Russellinvestments.com, October 2016
Abstract: By creating a "safe harbor" that allows states to mandate payroll deduction IRAs for these workers, the DOL fails to provide the protections afforded by ERISA to participants in these State-sponsored IRA plans. The irony is patent: IRAs are important enough to be caught within the ambit of ERISA's fiduciary rule, but large state plans using IRAs can otherwise avoid the myriad of other ERISA protections.
Source: Benefitsbryancave.com, October 2016
Abstract: As commendable as it is when younger workers commit to contributing up to the matching percentage or beyond, there is a risk of disenchantment that may dampen their future 401k savings habits when they are, say, a mere 20 percent vested in their matching funds upon departure. The author looks at how might matching and vesting might be revamped.
Source: Shrm.org, October 2016
Abstract: Ever since the DOL announced its new fiduciary rule, much has been made of the alleged "ambiguity" of certain aspects of the rule, such as "best interests" and "reasonable compensation," with suggestions that the meaning of the rule and the full extent of one's obligations under the rule will not be clear until the courts have interpreted the rule. The author thinks "those that adopt such a position may well be exposing themselves to unnecessary potential liability exposure."
Source: Iainsight.Wordpress.com, September 2016
Abstract: Though some commentators seem to believe that QLACs will take the world of retirement plans by storm, especially when the Department of Labor finalizes participant statement requirements for lifetime retirement income projections, the writer believes that much of an increase in QLAC usage difficult to fathom.
Source: Asppa.org, August 2016
Abstract: There was never a time when most Americans had traditional pensions, and most lower-income retirees collected little or nothing from such plans. But 401ks, which are more affordable to employers and thus more widespread, mean that more lower-income Americans are likely to reach retirement with private retirement plan benefits than ever before.
Source: Forbes.com, August 2016
Abstract: Ron O'Hanley, president and chief executive officer of State Street Global Advisors, called on Congress to enact a national framework that ensures workplace coverage for all private-sector working Americans. Open letter outlines a suggested framework.
Source: 401khelpcenter.com, June 2016
Abstract: Ron Rhoades writes, "I believe most advisers, and eventually most firms, will conclude that either fee-offsets must be undertaken (to return the arrangement to agreed-in-advance reasonable and levelized compensation), or they will simply switch to some form of level fee arrangement (assets-under-management percentage fee, annual retainer, fixed fee for discrete advice, subscription-based fees, and hourly fees). In other words, I suspect BICE will not be used all that much."
Source: Scholarfp.blogspot.com, May 2016
Abstract: While details of the long and complex rule are still under review, Vanguard believes the DOL took significant steps to simplify, clarify, and streamline earlier proposed provisions.
Source: Vanguard.com, April 2016
Abstract: While the industry axiom is that changes in the DC market start with the largest plans and move down market, there may be some outside forces that will affect smaller DC plans outside of larger plan changes. With that in mind, author shares his view of what the under $3 million plan market might look like in three years.
Source: Napa-net.org, March 2016
Abstract: Author takes issue with a recent Washington Post story on why the 401k has not been a great solution for improving Americans' retirement security.
Source: 401kspecialistmag.com, March 2016
Abstract: For a decade, plan sponsors and service providers have been in the crosshairs of plaintiffs’ lawyers. But the few cases have been litigated to conclusion in the courts with largely favorable results for plan sponsors and service providers. David Levine suggests something has changed and plan sponsors and service providers now face a dizzying world of contradictions.
Source: Napa-net.org, February 2016
Abstract: Reuters reported last week that "some states have already started looking at introducing plans for private sector workers, leveraging the extensive infrastructure, know-how, and cost benefits they have acquired in running plans for public employees." Author writes, "I'm not sure how many states and cities could make such a statement and keep a straight face given their miserable history in 'running plans for public employees'."
Source: Linkedin.com, February 2016
Abstract: We tend to assume that HR professionals inherently care about their DC plan, but is that really true? And if not true, how do we engage HR and benefits professionals in their retirement plan?
Source: Napa-net.org, February 2016
Abstract: Author suggests that contrary to her assertions, Deputy Treasury Secretary Sarah Raskin's recent post on President Obama's plan to provide new retirement savings at work isn't going to create "inclusive prosperity."
Source: Huffingtonpost.com, February 2016
Abstract: The DOL proposal designed to help states create retirement plans for private-sector workers would spur a confusing, state-by-state patchwork of savings programs that could lack the strict federal protections mandated for private employers' retirement plans, the Investment Company Institute said in a newly filed comment letter to DOL.
Source: Ici.org, January 2016
Abstract: There is always a strong push and pull moving the industry in one direction or another, observes Josh Cohen, a 20-plus year industry veteran currently running DC business for Russell Investments.
Source: Plansponsor.com, January 2016
Abstract: One persistent feature of the conservative attack on Social Security, and especially on the emerging campaign to increase benefits, is the notion that the typical American will do just fine in retirement just as it is. This opinion piece looks at the evidence and its implications.
Source: Latimes.com, January 2016
Abstract: John Croke, senior product manager, Vanguard Portfolio Review Department, shares his thoughts on a common misperception about target-date fund investors and shares the results of a survey that offers valuable insights.
Source: Vanguardinstitutionalblog.com, January 2016
Abstract: USA TODAY's Editorial Board weights in on the DOLs proposed fiduciary rule with this opinion piece.
Source: Usatoday.com, December 2015
Abstract: ERISA was a wonderfully crafted and meaningful law when it passed more than forty years ago. Today, it still provides, in no small measure, the intended benefits and protections that were expected in 1974. But times change and so has the retirement system.
Source: Benefitsbryancave.com, December 2015
Abstract: Author writes, "I read several articles recently about MyRA and State sponsored programs written by retirement industry professionals and organizations where their words seemed to take on a cynical tone instead of one of encouragement to the reader to look further into the programs. My belief is that their words can discourage Advisors and others to explore, understand and bring information to all individuals and employers to promote retirement savings."
Source: 401khelpcenter.com, December 2015
Abstract: Despite months of media attention and frequent discussion within our industry, many financial advisers are only beginning to grasp the implications of the Labor Department's effort to expand its definition of fiduciary under ERISA.
Source: Investmentnews.com (registration may be required), December 2015
Abstract: According to the author, "the movement towards what amounts to the first step towards nationalizing America's retirement system is based on a well-publicized series of talking points repeated echoed, very often without rebuttal or counter examples, through various media outlets over the past several years."
Source: Fiduciarynews.com, December 2015
Abstract: Author writes, "In the midst of rightly placed concerns over proposed new Department of Labor fiduciary rules for brokers, the DOL has also issued a new interpretive bulletin designed to politicize investment choices."
Source: Ncpa.org, November 2015
Abstract: Author writes, "There are readily understood standards for selecting and continuing to monitor an investment for its financial suitability. Picking investments that are compatible with a participant's conscience is another matter altogether."
Source: Erisanews.blogspot.com, November 2015
Abstract: ICI President and CEO Paul Schott Stevens issued this statement in response to proposed regulations issued by the Department of Labor governing state-based retirement programs.
Source: Ici.org, November 2015
Abstract: Vanguard has released a short paper, "Women versus men in DC plans." Author writes, "The study confirmed some prior beliefs, and learned a couple of new things along the way. But I found the story that Vanguard chose not to tell to be more compelling. Three of the article's ancillary figures were striking."
Source: Morningstar.com, November 2015
Abstract: Advisers should not be distracted by all of the noise. Despite the daily drumbeat of industry-inspired opposition, a review of the political and regulatory landscape leads to the conclusion that the DOL fiduciary rule will survive largely intact. Author offers 12 predictions about the rule that will come to pass.
Source: Investmentnews.com (registration may be required), November 2015
Abstract: Joe Duran writes, "Every once in a while the government passes a regulation that completely alters the landscape. The new standards proposed by the Labor Department for ERISA participants and their advisers will have the biggest impact since the deregulation of the securities industry a few decades ago. That shift created independent brokerage firms, independent advisers and the custodians and platforms to serve them. This bill will change all of our lives."
Source: Investmentnews.com (registration may be required), October 2015
Abstract: The DOL has traditionally been very supportive of 403(b) modernization. In fact, they've encouraged it. Author writes, "That's why it is particularly curious that the DOL's proposed fiduciary regulation seem to introduce prohibitions that will likely prevent future modernization."
Source: Principal.com, September 2015
Abstract: Many people believe or want to believe that most 401k plans are being run by highly sophisticated and well-trained individuals. So plan fiduciaries leave it up to the service providers to run the show. Article discusses this issue and why it could be based on faulty facts.
Source: 401kadvisor.us, September 2015
Abstract: The DOL is acutely aware of the series of reverses suffered by the SEC in recent years over economic analyses that the U.S. Court of Appeals for the District of Columbia Circuit found flawed and doesn't want to make the same mistake. The most recent analysis by the DOL came out recently.
Source: fi360.com, September 2015
Abstract: Author writes, "While the Department of Labor's broad efforts to protect investors are admirable, the complexities of its fiduciary proposal will likely make new regulations challenging for retirement investors and advisors alike."
Source: Mtrustcompany.com, August 2015
Abstract: Calling it a "game changer," NTSA Executive Director Chris DeGrassi and American Retirement Association CEO Brian Graff offered their takes on the Department of Labor's proposed fiduciary rule.
Source: Ntsa-net.org, August 2015
Abstract: It is pretty easy to focus on what is wrong with our defined contribution retirement system. But, even though they're not perfect, defined contribution plans, including 401ks, have made some great strides.
Source: Morningstar.com, August 2015
Abstract: Author writes, "The Fiduciary Wars now raging at full pitch in Washington, D.C...are, at base, about the Golden Goose of IRA money. The overriding issue the folks in D.C. are grappling with is how to bring business models that are rife with inherent conflicts of interest into accord with a best interest/sole interest fiduciary standard."
Source: Morningstar.com, August 2015
Abstract: The law firm of Schlichter, Bogard & Denton has had a very good couple of weeks. After winning two high profile 401k fee lawsuits, courts have approved the payment of more than $31.9 million in legal fees. These settlement fees got the author thinking about the DOL's proposed fiduciary rule. Would the proposal, if implemented, give trial lawyers more fodder for excessive 401k fee lawsuits? Author thinks it would.
Source: Employeefiduciary.com, July 2015
Abstract: Employers are often placed in a position of trust with respect to their company's 401k plan. Unfortunately, until recently the responsibilities associated with that position have not been fully understood. That is about to change.
Source: Brightscope.com, July 2015
Abstract: 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 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), June 2015
Abstract: As the dust begins to settle on the fallout of the Supreme Court's unanimous Tibble v. Edison, one thing has become apparent -- when it comes to a plan sponsor's fiduciary duty, nothing has really changed. It's just business as usual for those who have been paying attention to their fiduciary duty all along.
Source: Benefitspro.com, May 2015
Abstract: Critics of the DOL's proposed fiduciary rule argue that the rule will make investment advice too costly for many 401k plans. If the critics are right, this issue would be a compelling reason to scuttle the rule. But fiduciaries already complying with underlying standards compare favorably with industry averages for non-fiduciaries. Rule changes will allow more low-cost competition to flourish.
Source: Employeefiduciary.com, May 2015
Abstract: Since many workers look to DC plan sponsors to invest for them, Russell's Josh Cohen argues that sponsors should consider adopting defined benefit (DB) strategies, including asset class diversification, a smart mix of active and passive, and open architecture, multi-manager investing. He believes this improves the odds of positive outcomes rather than just achieving investment simplicity.
Source: Russell.com, May 2015
Abstract: Objective observers should conclude that it is too early to tell exactly how this complicated fiduciary proposal will affect the advice market. But it is, in fact, a proposal, not a final rule, and public comments may bring about some needed clarifications and changes. Here is the author's list of five steps the DOL could take to improve the proposal.
Source: Pensionsbenefitslaw.com, April 2015
Abstract: Chris Carosa writes, "Like an ornery in-law who's overstayed his welcome, 401k participant fee disclosure isn't going away anytime soon. It's become the booby prize for those who believe sunlight heals all, a veritable case study for all that is wrong with disclosure."
Source: Fiduciarynews.com, April 2015
Abstract: After seeing the unanticipated side effects of 401k participant fee disclosure, professionals are increasingly having their doubts. Author suggests ten reasons why 401k participant fee disclosure hurts employee's retirement prospects.
Source: Fiduciarynews.com, April 2015
Abstract: It's been more than two years now since the DOL required 401k plan fees to be disclosed in participant statements. Yet, at least one study says one in five employees still think they get their 401k for free. Author explores why fee disclosure may not be working.
Source: Fiduciarynews.com, April 2015
Abstract: Federal budgetary considerations, a growing focus on coverage, questions of efficiency, and several other pressure points are leading to a growing likelihood of change in the retirement system. A number of proposals are circulating at the Federal and the States level. A lot is in play: a system that has grown to $27 trillion cannot expect to avoid legislative attention.
Source: Russell.com, March 2015
Abstract: Author writes, "President Obama should be commended for taking on the brokerage industry for ripping off multitudes of 401k participants. Last month he announced support for a Labor Department proposed regulation that would subject those advising 401k participants to a fiduciary standard."
Source: Huffingtonpost.com, March 2015
Abstract: Author doesn't believe in forcing DC plans to use low-cost mutual funds, but does think it would be great to mandate their availability in employer-sponsored plans.
Source: Wsj.com, March 2015
Abstract: Ron Rhoades writes, "While I appreciate Don Trone's work in the fiduciary movement, his recent opinion in RIABiz, headlined Why Obama and the DOL are all wet when it comes to the proposed fiduciary rule, is ill-informed in part and premature in part."
Source: Riabiz.com, February 2015
Abstract: Don Trone writes, "As I considered the President's remarks, it occurred to me that there are two faces to a fiduciary standard -- Positive and Punitive -- and it's critical that the industry be able to distinguish between the two." Read his take here.
Source: 401khelpcenter.com, February 2015
Abstract: RadioShack workers won't be just losing their jobs as a result of the company's bankruptcy filing, but a big chunk of their retirement savings as well. Author points out the danger around owning to much company stock in your 401k retirement account.
Source: 401khelpcenter.com, February 2015
Abstract: In this commentary, author write, "The Obama administration is geared up to leave a lasting impression upon employee benefit packages. Just weeks after the Affordable Care Act's employer mandate to provide specific health care coverage or face penalties took effect, the administration is now in position to make its mark on employee retirement accounts."
Source: Benefitnews.com, February 2015
Abstract: Nevin Adams questions the assumptions in a recent Center for Retirement Research at Boston College paper entitled "The Impact of Leakages on 401k/IRA Assets." He notes, "As for the so-called impact of leakages? It might more accurately be described as the impact of assumptions."
Source: Napa-net.org, February 2015
Abstract: Study data implies that the high rate of 401k plan loan defaults could be for reasons of low financial literacy, impatience, or inattention. Many employees were surprised by the effect of an unanticipated job change on an outstanding 401k plan loan. Author suggests we need more and better financial education in the workplace.
Source: Retirementplanblog.com, February 2015
Abstract: It would be highly controversial for Obama to impose the higher legal standard, called a fiduciary duty, on brokers. Wall Street will hate the requirement that brokers act solely in a client's interest or risk getting sued, and will probably ask Congress to overturn it.
Source: Benefitspro.com, January 2015
Abstract: Recently, many plan sponsors were forced to make a decision about keeping the PIMCO Total Return Fund in their line-up that many participants feel is the anchor to their 401k plan investment strategy. Observers have used this situation to outline the benefits of white-labeling 401k plan investment funds. But does white-labeling makes sense?
Source: Lawtonrpc.com, January 2015
Abstract: Legislative and regulatory consultant Duane Thompson writes, "Given the premise that a fee arrangement is inextricably bound with the fiduciary standard, it would seem logical to assume that a salesperson working on commission cannot be a fiduciary. However -- spoiler alert -- you would be wrong. That is not to say that working on a commission basis and serving the client's best interest is an easy thing to do -- it's just far more difficult, at least in legal terms."
Source: Kitces.com, January 2015
Abstract: The problem with advice given to plan sponsors is that it's often self-serving by the plan providers who want to maintain or get the business from plan sponsors. ERISA attorney Ary Rosenbaum has six pieces of "plain" advice to retirement plan sponsors.
Source: Jdsupra.com, January 2015
Abstract: Author takes issue with a recent article that claims the promotion of MEP's is "a conspiracy of Wall Street to hoist unnecessary and expensive financial products on small plans, as a way to further promote mutual fund interests."
Source: Businessofbenefits.com, December 2014
Abstract: Author writes, "The idea that small employers cannot provide low-cost plans to their employees is a myth perpetuated by vested interests in the financial services industry. MEPs are a solution to a problem that does not exist, and they bring other potential risks to small employers."
Source: Employeefiduciary.com, December 2014
Abstract: New regulatory guidance allowing plan sponsors to include annuities in QDIA-ready target-date funds is a watershed moment for the retirement industry. But cost and complexity may warrant a look at other reliable income options, writes Glenn Dial.
Source: Allianzgi.com, December 2014
Abstract: As the 401k plan has moved from being seen as a supplementary savings vehicle to taking on the role of primary retirement plan for most private sector workers, the way that plans are structured has evolved. It's probably the most widespread application of the principles of "choice architecture," which were described in Cass Sunstein's and Richard Thaler's influential book "Nudge."
Source: Russell.com, November 2014
Abstract: The motivations under the non-fiduciary and fiduciary business models are vastly different, which results in the recommendation of quite different financial products for clients, writes Scott Simon, Prudent Investor Advisors, in this piece.
Source: Morningstar.com, November 2014
Abstract: The author suggests that, although the case is interesting, a more fundamental issue that needs to be addressed. "The use of multiple share classes for mutual funds in 401k plans is confusing the heck out of just about every small business retirement plan sponsor in America."
Source: Employeefiduciary.com, October 2014
Abstract: Jerry Schlichter has made a name for himself and his firm as lead attorney on numerous cases on behalf of employees and retirees involving claims of excessive fees and fiduciary breaches in large 401k plans. Here, he talks about how plan sponsors might reduce their fiduciary liability while helping retirement savers have the best chance to enjoy a comfortable retirement.
Source: Fiduciarynews.com, October 2014
Abstract: Author writes, "Very few plans take advantage of everything they pay for when it comes to bundled services. As a plan fiduciary, you should be asking your plan's vendors to break out its fees for each desired and necessary service, so you can then make a determination of reasonableness."
Source: Pension-consultants.com, September 2014
Abstract: Not everyone has a 401k at work, but that is irrelevant. ERISA safeguards the retirement plans that are in place for workers. Author therefore writes, "I'm seeing all of these 40th anniversary stories about ERISA and how the system has failed Americans, and it's burning me up."
Source: Workforce.com, September 2014
Abstract: Choice in the context of a retirement plan means something quite different to providers that aren't fiduciaries to a plan than to fiduciary plan providers. Non-fiduciary plan providers care little about what any given participant invests in, because they just want to sell product. Which is why they give plan participants lots of 'choices.' Defining choice in this way, however, means that plan participants have a much greater risk of investing in portfolios that are sub-optimal in diversification.
Source: Morningstar.com, September 2014
Abstract: The enactment of ERISA in 1974 was inspired by the 1963 collapse of the Studebaker Corporation, whose pension was so poorly funded that even workers with 10 years of service got a tiny pension and about a third of the workers got nothing. The bill was sponsored by the late Senator Jake Javits, who saw it as just one step towards a more satisfactory private retirement system. Author writes, "Let's make sure Senator Javits' efforts weren't in vain. We need to put pressure on Congress to move on [pension reform]."
Source: Huffingtonpost.com, August 2014
Abstract: Under an all-in fee approach, all administrative, recordkeeping and investment expenses are summed into a single, total amount. This approach "normalizes" the numerous fee arrangements used by 401k service providers, including compensation paid to providers from plan investments, making it easier for the sponsor to compare fees provider by provider. It does matter if fees are paid directly by an employer or deducted from participant accounts or paid indirectly from revenue sharing or wrap fees. Regardless of the compensation's origin, it should be included in the all-in fee total.
Source: Employeefiduciary.com, August 2014
Abstract: Author writes, "[T]aken as part of a broader retirement system, 401ks work for working Americans. Retirees do face legitimate risks -- but the decline of private-sector defined benefit plans and the rise of defined contribution plans, such as 401k plans, isn't one of them. This shift isn't unlikely to reduce retirement preparedness."
Source: Ici.org, August 2014
Abstract: According to Phil Chiricotti, "industry forces fighting coverage solutions like MEPs and outsourced 3(16) services along with the fiduciary standard are providing the government and DC plan critics with the ammo to launch their own solutions, undermine the industry, and eventually take over the private system."
Source: Fiduciarynews.com, August 2014
Abstract: Chris Carosa writes of this interview," Phil Chiricotti's blunt no-holds-barred style makes him a perfectly delicious interview. His incendiary commentary is so provocative we considered whether it would be too hot for our readers. But, then again, our readers are old enough to play with fire, so we decided to give Phil the keys to the typewriter and have him do what his may."
Source: Fiduciarynews.com, August 2014
Abstract: Studies have shown that too many funds on a plan's investment lineup actually lowers the rate at which participants defer their salary in a 401k plan. Why? Too many funds, especially in one asset class have the ability to confuse and overwhelm plan participants and overwhelmed plan participants are less likely to defer than those that aren't.
Source: Jdsupra.com, August 2014
Abstract: Can dabblers survive in today's complicated DC world? While many experts think that advisors must specialize to do well in the 401k and related retirement plan markets, there's a lot of evidence that many advisors with plans under management do not specialize, nor do they intend to.
Source: Napa-net.org, August 2014
Abstract: American workers need their employers to provide 401k plans that can help meet their retirement goals. They need their employers to help educate them to make good investment choices. Service providers also are vital to a well-functioning system. But Jerry Schlichter suggests that the 401k retirement complex also needs to retool itself so that it works primarily in the best interests of American savers. According to Schlichter, that is the real retirement crisis we face.
Source: Investmentnews.com (free registration may be required), August 2014
Abstract: Should target-date funds be more like DB pension plans? The argument for the DB-ization of TDFs is a poor one according to the author, when DC sponsors should consider risks, transparency, and other factors.
Source: Vanguardinstitutionalblog.com, August 2014
Abstract: How well are Americans planning and saving for retirement? This is an important question to answer, but also vexingly difficult. Researchers have come to different conclusions. Much of the academic research and ICI's own analysis of the data indicate that, contrary to conventional wisdom, most Americans are properly preparing for retirement.
Source: Ici.org, August 2014
Abstract: The majority of plans will be using outsourced 3(16) services within a decade. Service providers that don't offer or provide due diligence on these services will lose business. MEPs and aggregated solutions are the easiest way to access 3(16) services today.
Source: Linkedin.com, July 2014
Abstract: Ary Rosenbaum writes, "Leisure suits were once in style and while people claim style is cyclical, leisure suits never made a comeback. Revenue sharing is becomes a lot like a leisure suit, it's not going to come back in style and most plan sponsors and their plan providers are going to touch it with a 10 foot pole."
Source: Jdsupra.com, July 2014
Abstract: The evidence is clear: employers need to provide their employees with a way to save for retirement that requires little effort on their part. They need an automated retirement program that ensures they are saving the right amount for retirement, with automatic contribution adjustments made as market fluctuations dictate.
Source: Xerox.com, July 2014
Abstract: Author writes, "I take no issue with those who opt for passive management, if they have done thorough research and analysis on what's the best investment solution for their participants. I do have concerns with sponsors who base their decision to go passive because of a fear that higher fees for actively managed funds could expose them to potential lawsuits or put them in a fiduciary bind."
Source: Russell.com, July 2014
Abstract: While it may look good on paper to hire a payroll provider as a 401k TPA, the author of this paper thinks it's actually a terrible idea and explains why in this article.
Source: Jdsupra.com, July 2014
Abstract: Smaller US defined contribution plans face a host of fee difficulties simply because of the size of their plans. This has led to a growing interest in multiple employer plans as a potential cost-effective solution. But, MEPs do have an important regulatory issue.
Source: Alliancebernstein.com, July 2014