A Model for 401(k) Advice, Pt. 2 – Must be Ongoing

By Jay Jandasek | March 26, 2010

A fiduciary relationship is one which is ongoing, in which the fiduciary is responsible for conducting ongoing due diligence on the various provisions for which they are responsible. A company fiduciary is charged with the responsibility of ongoing due diligence of the various fees, investment options, and vendor capabilities of the plan for the benefit of the participants. An ERISA fiduciary, regardless of the “flavor,” is hired to provide ongoing advice to the employer specific to investment due diligence and advice, vendor benchmarking, etc. Both of these more traditional fiduciary roles are ongoing relationships. Why isn’t employee fiduciary advice?

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A Model for 401(k) Advice, Pt. 1 – Must be Conflict-Free

By Jay Jandasek | February 18, 2010 |

Many 401(k) sponsors, providers and advisors eagerly await the DoL’s new advice proposal, which is due to be released within the next 30-45 days. In an effort to put in our two cents, we thought we would share our hopes for the proposal based on our experience in delivering advice, our understanding of other options in the marketplace, and the feedback we have received from employers and investors alike. Keep in mind most of our clients exist in the top end of the small market (250+ employees) to large sized employers (1,000+ employees).

Goal #1 – Advice Must be 100% Conflict-Free
We believe advice for 401(k) investors must be start with being conflict-free. If there are conflicts in providing participants advice, then 401(k) advice is doomed to fail. So, let’s look at how to ensure this holds true for participants and the employers that are required to do their due diligence on service providers, including advice providers.

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Another Study Shows 401(k) Advice/Help Improves Participant Outcomes

By Jay Jandasek | January 29, 2010 |

A recent study by Hewitt and Financial Engines found that people getting “help” outperformed those that did not by about 2%, after analyzing the performance of roughly 400,000 investors across seven retirement plans. The findings compliment the study by Charles Schwab in Nov. ’07, which found those that got help outperformed those that did not by nearly 3%. The studies compliment each other by the fact that each were conducted during different market cycles, the Schwab study during a bull market, the Hewitt study during a bear market. Thus, regardless of the market’s direction, studies show proper portfolio management superceded normal investment behavior (chasing performance, emotion based investing, etc.).

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401(k) Participants Need Credible Advice, and Quickly

By Jay Jandasek | December 2, 2009 |

It’s no surprise to anyone that 401(k) investors need help, or should I say NEEDED help during the historic volatility we have experienced since the fourth quarter of ’07. During that time, mutual fund companies, insurance companies, and the broker dealer world has been fighting over providing advice to those investors.

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Target-date Funds Under the Microscope

By Jay Jandasek | June 4, 2009

Robert Powell’s article on Marketwatch is a well written overview of the concern Congress has regarding these funds’ performance and construction, which consequentially were given Congress’s blessing in the ’06 Pension Protection Act. However, it was clearly stated in the PPA that a company’s fiduciaries must do their due diligence in reviewing these funds, just like the other investment options in the plan

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