Here you’ll find all news stories and all posts by our Portal Conductors, with the newest item at the top.

Fee Disclosure: Warning is Not the Same as Protecting

Bringing about significant change is a three-step process. It begins with awareness, followed by willingness and capped by action. Though the recent plan- and participant-level fee disclosures might have started the industry on the process, clearly we have a long way to go. After interviewing industry experts and plan advisors, Christopher Carosa of “Fiduciary News” takes a look at the practical effects of 408(b)(2) and 404(a)(5) six months into the process.   Read More

10 Minute Manager? Try the 10 Minute Enrollment Meeting

Should enrollment meetings be limited to 10 minutes or less? A paper authored by Diversified makes a strong case. New employees can be burnt out after days and maybe weeks of new employee orientation, so a 45 minute meeting reviewing plan features like loans, distribution and especially investments may be detrimental. Just get them enrolled — answering other questions as they come up — and schedule meetings about investment education or advice later in one-on-one settings.   Read More

Social Security Changes for 2013 — and FAQs on 403(b) and 457 Plans

Advisors who work closely with their clients on sources of retirement income know that it’s important to include calculations and counsel on Social Security benefits. In an article published in NTSAA’s “Market Beat” newsletter, 403(b) and 457 plan consultant Ellie Lowder addresses the 2013 changes in Social Security benefits and addresses some of the more frequently asked questions from advisors.   Read More

Mutual Funds Trump CITs

The death of mutual funds in 401(k) plans is greatly exaggerated, especially in smaller and mid-sized plans, according to a survey conducted by Cerulli with help from the PSCA and data from the DOL. Though collective investment trusts (CITs) are cheaper and offer more flexibility, mutual funds dominate plans with less than $250 million — followed by closely bunched separately managed accounts, CITs and insurance products. In larger plans it’s a much closer race, although mutual funds products are still the most popular investment vehicle.   Read More

Taxing 401(k)s Will Lead to Fewer Plans, Less Retirement Security, Survey Finds

Curtailing the current tax treatment of contributions that workers and their employers make to 401(k) plans will significantly reduce employers’ willingness to sponsor plans and employees’ ability to save, according to a survey of more than 500 companies conducted by Mathew Greenwald & Associates, Inc. and the American Benefits Institute, the education and research affiliate of the American Benefits Council (ABC).   Read More

Case of the Week: Plan Permanency

Responding to a question from an advisor in Michigan, the ERISA consultants at the Columbia Management Retirement Learning Center Resource Desk addressed a common inquiry related to plan permanency. While plan sponsors reserve the right to terminate their qualified retirement plans, the IRS views “business necessity” as the only legitimate reason for plan abandonment — an important dynamic that plan advisors need to be aware of.
  Read More

7 Retirement Planning Myths Debunked

When you’re trying to help plan participants move the ball on their retirement planning, the first step can be the hardest: “unlearning” mistaken beliefs. A recent consumer-directed article from the Associated Press does a good job of debunking seven myths on saving for retirement and planning for life after retirement — covering basics like Medicare, Social Security, replacement income, target date funds, working in retirement and more.   Read More

DOL Rule Would Allow Chap. 7 Bankruptcy Trustees to Use EBSA’s Abandoned Plan Program to Terminate Plans

The U.S Department of Labor’s Employee Benefits Security Administration announced Dec. 11 a proposed rule and related class exemption that will make it easier for Chapter 7 bankruptcy trustees to distribute assets from bankrupt companies’ retirement plans. The proposal would allow Chapter 7 bankruptcy trustees to use EBSA’s existing Abandoned Plan Program to terminate, wind up and distribute benefits from such plans.   Read More

Gross Predicts ‘Strawberry Fields Forever’

Echoing the refrain from the Beatles classic, “Strawberry Fields Forever,” PIMCO’s Bill Gross predicts slower growth of the economy over the next decade, or a “new normal” of 2%. While it’s understandable that “living is easy with eyes closed, misunderstanding all you see,” Gross explains how opening your eyes, though difficult, is essential. In his monthly commentary for December, Gross notes that this is probably why both presidential candidates were vague about economic fixes — because there aren’t any short term ones.   Read More

Ocean State Flooded with Pension Liability

In what is shaping up to be a seminal case addressing whether states can change and reduce their unfunded pension liabilities, Rhode Island state officials asked the courts to dismiss challenges by state employee unions to planned reforms in the state’s pension system. With an estimated $1.4 trillion of unfunded state pension liability across the country, Rhode Island is one of the worst offenders — which is why they took drastic action to reduce their liability, including suspending increases, raising retirement age, and merging pensions into 401(k)-like plans.   Read More

Steady Deferral Increases and High Participation Rates Found in Auto-Enroll Plans

Updating recent auto-enrollment research across its retirement clients, New York Life Retirement Plan Services found that over time, plans with auto-enrollment saw steady deferral increases and sustained high participation, versus the opposite in plans without auto-enrollment. Plans employing this feature achieved 93% participation in the first year of auto-enrollment and 87% after four years, compared with 37% and 56% respectively, in plans without auto-enroll.   Read More

DOL to Re-propose Fiduciary Rule ‘in Several Months’

The Department of Labor will re-propose its controversial rule to amend the definition of fiduciary under ERISA within several months, Phyllis Borzi told Advisor One on Dec. 7. Borzi indicated that DOL “is not finished” with the rule, and went on to say that agency officials are addressing many of the legitimate issues that were raised in the comment process.   Read More

How Smart is Your Beta?

With more money moving to passive strategies, there’s a subculture that falls under the rubric of “Smart Beta.” Smart Beta generally refers to non-market-cap-weighted, systematic strategies that aim to add value by improving returns and/or providing lower volatility compared with the market-cap index itself. Dimensional Fund Advisors has been the leader of Smart Beta among advisors, but there are other firms — primarily in the institutional market, like Research Associates — that are using it as well.   Read More

What’s Auto Enrollment Without Auto Escalation?

Even in the face of research and logic that shows how auto enrollment and auto escalation improve plan outcomes, plan sponsors are still reluctant. In a survey of 118 plan executives (mostly from larger plans) by the Defined Contribution Institutional Investor Association (DCIIA), 69% indicated that they were unlikely to offer auto escalation.   Read More

Your Employee Makes a Costly Mistake. What Do You Do?

Mistakes are an important part of the employee learning process, but they definitely represent risk to a financial services practice. How you train and manage your employees, including how you handle their mistakes, improves the return on your human capital investment in them and reduces the risk they will make mistakes. Advisor One columnist Kirk Hulett of Securities America Financial offers some helpful guidance (and a checklist) about reviewing areas like training and written procedure updates.   Read More

Pre-retirees Looking for Return of Principal, Not Return on Principal

How times have changed. When the market was booming in the 1990s and parts of the 2000s, investors looked for ways to increase returns. Now, based on an online survey of 3,400 people age 55 or older conducted by AIG and Ken Dychtwald of Agewave, it seem that over 80% of investors seek safety. The most popular investment option (at 67%) was one guaranteed not to lose value, followed closely by investments that protect against loss providing income for life. Only 19% selected funds that have higher returns but greater risk.   Read More

This is What Falling off a Cliff Looks Like

The “Affluent Investor Confidence Index” compiled by the Spectrem Group market research and consulting firm dropped 11 points in November, marking its lowest reading in a year and biggest plunge since June 2011. Spectrem’s “Affluent Household Outlook,” a survey of attitudes toward financial factors that impact affluent investors’ daily lives, also took a dramatic turn for the worse in November, falling to its lowest reading since August 2011. The October-to-November drop-offs in both indexes are either a further indicator of investors’ concerns about the fiscal cliff or, as Spectrem’s analysis amusingly puts it, “perhaps just a case of PETS (Post Election Trauma Syndrome).”   Read More

IBM Reduces Match Without Reduction

How does a company reduce their 401(k) match without decreasing or eliminating it? IBM found a way: by holding it until the end of the year — which means that people who retire or leave before the Dec. 15 trigger date don’t get a match that year. While IBM employees are unhappy, the change has little effect on the current work force.   Read More

Retirement Deficit Overshadowed by Budget Deficit

Speaking before the Women’s Institute for a Secure Retirement, Sen. Tom Harkin, D-Iowa, chairman of the Senate Health, Education, Labor and Pensions Committee, pointed out that sometimes in a crisis we can forget another one that is potentially more dangerous. While we focus on the budget deficit, the other one that’s looming — and which might get worse depending on the budget compromise — is the “retirement deficit,” or the difference between what Americans have saved for retirement and what they will need.   Read More