IMHO June 21, 2009

IMHO: Design Lines

It’s now been nearly three weeks since our Plan Designs conference in Chicago and, once again, I got so many interesting ideas, so much good information—well, I’m still making notes from my notes.
Reported by
For those who weren’t able to participate this year, here’s a sampling—and here’s hoping you will be able to join us in 2010!
Participants who are automatically enrolled are even more inert than those who took the time to fill out the form.
92% of participants defaulted in at a 6% deferral do nothing. 4% actually increase that deferral rate.
The Obama Administration does not want to mandate a government retirement solution—but it might provide one.
Concerns about cost and control that target-date fund managers wield are generating a new interest in customized solutions.
The key to successful retirement savings is not how you invest, but how much you save.
Even if a plan has a plan adviser that is a fiduciary, the plan sponsor is still a fiduciary.
Most plans don’t comply with ERISA 404(c). Plan fiduciaries are responsible for every participant decision in plans that don’t comply with ERISA 404(c).
Hiring a co-fiduciary doesn’t make you an ex-fiduciary.
“Because it’s the one my recordkeeper offers” is not a good reason to pick a target-date fund.
Given a chance to save via a workplace retirement plan, most people do. Without a workplace retirement plan, most people don’t.
Nobody knows how much “reasonable” is.
Innovative doesn’t mean nobody’s ever thought about it, or that nobody’s ever done it.
Wherever you default participants, come back in a year, come back in five years—they’ll still be “there.” Make sure it’s a good place.
Nobody ever expects a 40% drop in the market.
You want to have an investment policy in place before you need to have an investment policy in place.
Don’t put it in writing unless you mean it.
Most participants can’t even remember their PIN.
Things participants may have to “unlearn”: “Don’t put all your eggs in one basket” (target-date funds).
Things participants may have to “unlearn,” part two: “The advantages of tax-deferred savings” (Roth 401(k)).
The trust will come back when the market comes back (see “‘View’ Points“).
The same provider can charge different fees to plans that aren’t all that different.
Disclosure isn’t the same thing as clarity.
Automatic enrollment (still) isn’t for everyone.
If your company has laid off a lot of people, you could have triggered a partial plan termination.
“Staying the course” is only a viable strategy if you’re on the right track to begin with.
It could get worse before it gets worse.
If you’re automatically enrolling participants, what is your match encouraging them to do?
If you can’t remember the last time you did a provider search, you’re probably overdue.
In health care, the participant spends the sponsor’s money. In the 401(k) system, the sponsor spends the participant’s money.
If our schools would devote half as much time educating our kids on finances as they do warning them (again and again) about drugs and sex, we’d all be better off.
It’s not what you’re doing wrong; it’s what you’re not doing that’s wrong.

You can read the musings from last year’s conference (still strikingly relevant, if I do say so myself) at “’Swimming’ Pool“).

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