COLLECTED WISDOM™ On Self Directed Brokerage Accounts

Self Directed Brokerage Accounts were very popular during the bull market of the 1990's, but only about 16% of all 401k plan offer them today. As a result, you don't find them being discussed much in the press or in retirement industry publications.

LaRue Heightens Liability of Self-Directed Plans - Summary: A dividend of LaRue is that it may cause employers to step back and reconsider the current, expensive, and dangerous fad of self-direction. Located at: Theworkplace.biz, February 2008. Click on headline for full article.

Risk of Self-Directed Brokerage Accounts in 401(k)s - Summary: Fiduciaries of 401(k) plans that offer a SDBA option are asking for trouble if they allow plan participants to establish a SDBA with their favorite brokers on a standalone basis, apart from a plan's master custodian. Located on: Morningstar, January 2006. Click on headline for full article.

Self-Directed Brokerage Accounts Tend to Reduce Retirement Success and May Not Decrease Plan Sponsor Liability - Summary: Plan participants often expect that self-directed brokerage accounts offer more choices and wealthier retirement prospects than do managed model portfolios; plan sponsors might expect less liability. But the substantial under performance, restrictions, costs, and liabilities of such plans dictate that caution is in order. Located at: Unified Trust , June 2005. Click on headline for full article.

The Fairy Tale of Fiduciary Liability and Self-Directed Brokerage Accounts - Summary: Self-directed brokerage accounts can be offered to 401k plan participants without compromising protections under ERISA Section 404(c). This column explains why and how. Located at: Drinker Biddle , March 2005. Click on headline for full article.

Getting That Self-directed Brokerage Account Off on the Right Foot - Summary: As long as cost is removed from the equation, plan sponsors routinely offer “bells and whistles” as part of their retirement savings programs, even when workers may not take full advantage. However, one option that almost no one embraces without some level of additional focus—particularly in today’s markets—is self-directed brokerage accounts, or SDBAs. Located on: Plansponsor.com (free registrations required), October 2002. Click on headline for full article.

Self-Directed Brokerage Account Buyer's Guide - Summary: As published in the October 2002 issue of PlanSponsor magazine. Located on: Plansponsor.com (free registrations required), October 2002. Click on headline for full article.

Pros and Cons of Self-Directed 401k's - Summary: An increasing number of 401k and other types of qualified retirement plans are giving plan participants the option of opening a self-directed brokerage account within the plan. While this option offers participants a much broader universe of investment options, it is not without its risks, caution many financial planners and other investment experts. Located on: Smartpros.com, October 2001. Click on headline for full article.

Opinion: Why Individually Directed Accounts Are A Dumb Idea - Summary: Individually directed accounts (IDAs) are an extremely popular concept in the 401k and investment industry right now. While hundreds of plan sponsors have already added this feature to their plans and many more are considering it, many retirement plan professionals think they are generally a bad idea. Located on: 401khelpcenter.com. Click on headline for full article.

Seeing Through Brokerage Windows - Summary: Are self-directed brokerage accounts and window options the portals to plan sponsor paradise or just another pricey and confusing alternative your participants won't use? Located on: Plansponsor.com (free registrations required), August 2001. Click on headline for full article.

Self-Directed Brokerage Windows in 401k Plans: Empowering Participants, Protecting Sponsors - Summary: Sponsors of 401k plans are turning to self-directed brokerage windows to meet the demands of sophisticated investors for more choices and greater control. What many plan sponsors do not realize is that a self-directed brokerage option also can help them meet their fiduciary requirements under the federal Employee Retirement Income Security Act (ERISA). Located on: 401khelpcenter.com. Click on headline for full article.

Sued By Your Own Employee? - Summary: Fiduciary liability and how to manage it, particularly as it relates to participant investing. Located on: 401khelpcenter.com. Click on headline for full article.

Is It Prudent to Offer Brokerage Accounts to 401k Participants? - Summary: When the fiduciaries limit the investment options to a finite number, whether it is 3 or 300, those options are "designated" and, as a result, they must be prudently selected, periodically monitored and removed from the plan if they are no longer prudent and suitable for the participants. However, when a plan offers all the investments that are "administratively feasible," those investment options are not considered to be designated (which we have labeled "nondesignated") and, as a result, the specific investments do not need to be prudently selected and monitored. Located on: Reish Luftman. Click on headline for full article.

Who makes the decisions? - Summary: What if there were a way for 401k plan sponsors to eliminate any fiduciary liability for how they administer participants' accounts, while affording better management, lower cost, more choice, and a shot at better returns? Located on: Plansponsor.com (free registrations required). Click on headline for full article.

Hewitt Study Shows Employee Demand as Driving Force Behind Self-Directed Brokerage Accounts - Summary: If you're interested in expanding your 401k investment options speak up, because chances are your employer is listening. New research by Hewitt Associates, a global management consulting and employee benefits delivery firm, indicates that the majority of companies adding self-directed brokerage account options to their 401k plans do so to meet employee demand for additional flexibility and control. Located on: 401khelpcenter.com. Click on headline for full article.

Self-directed 401k brokerage accounts have drawn raves from some, doubt from others - Summary: In large part because today's business environment is marked by a wide-ranging skills shortage--the "war on talent," in "managementspeak" hyperbole--a growing number of companies are willing to listen when employees ask for an SDB option as part of their 401k accounts. According to a study conducted earlier this year by Cerulli Associates Inc., a Boston-based financial research and consulting firm, 14 percent of the 250 companies surveyed offer an SDB option, up from 8 percent in 1999 and 5 percent in 1998. Another 9 percent of respondents said they were planning to add the feature this year. Located on: CFO.com. Click on headline for full article.

Individually Directed Accounts in Defined Contribution Plans - Summary: Individual directed brokerage accounts (IDAs) are increasingly popular with both plan participants and plan sponsors. However, offering IDA`s introduces numerous fiduciary issues, operational concerns and potential tax problems for plan sponsors. Fortunately, there are several practical approaches that a sponsor can adopt to more effectively manage liability, operational and cost issues. In addition, the article illustrates a transition plan for moving from a less effective to a more effective brokerage account structure. Located on: Advisorsquare.com . Click on headline for full article.

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