When I’m out on the road speaking to various groups, I’m often asked to try and explain what’s going on in Washington.
Even after nearly four years living and working here, I still feel ill-equipped to do so, though being here all the time you do pick up on certain patterns and personalities that the occasional swing through town on business tends to miss.
As much as advisors (and plan sponsors) want to better understand what’s going on here, I am increasingly told that there are some things that the folks in Washington just don’t get… and, after I’m asked why they don’t “get” it (and sometimes they do, even if it doesn’t seem that way), I’m often asked to help convey these messages here.
So, from the perspectives of many, “Those people in Washington…
Seem to think that plan sponsors will offer workplace retirement plans no matter how much cost and burden is imposed on them.
Don’t seem to understand that the employer match component of retroactive automatic enrollment costs money – sometimes a lot of money.
Seem to think that all advisors are crooks.
Don’t seem to understand that “stretching” your match from 50 cents on the dollar up to 6% of pay to 25 cents on the dollar up to 12% of pay is going to be uniformly perceived as a benefit reduction.
Seem to think that the employer match really is “free” money.
Don’t seem to understand that “just” adding a payroll deduction isn’t quite that simple.
Seem to think that the tax preferences for 401(k)s are “upside down” because they look only at the contributions in, not the benefits out.
Don’t seem to appreciate the amazing success of the voluntary private retirement system.
Seem to think retirement plans are a “piggy bank” to fund other budgetary problems.
Don’t seem to understand that even low-income workers “get” (and appreciate) the ability to defer paying taxes.
Say that fees aren’t the only consideration, but seem completely obsessed with fees in their oversight.
Don’t seem to understand the difference between a deferral (a postponement of tax payment) and a deduction (a permanent reduction of tax payment).
Don’t seem to appreciate that encouraging saving is at least as important as encouraging spending.
These are messages I’ve tried to convey, when the opportunity presents itself, though admittedly it’s a lot of ground to cover, and a lot of individuals with which to cover that ground. For those of you joining us at the NAPA D.C. Fly-In Forum today, here’s hoping this gives you some additional discussion fodder for your trip to the Hill.
If you’ve got things to add to this list, feel free to do so (below or via email to me at [email protected]). But more importantly, be willing to get involved. If you don’t know how, you can call me — or reach out to the NAPA GAC team directly.
Because no matter how it seems, “those people in Washington” need to know.
