And now we wrap up with Part Three of our series. If you're just joining us, be sure to check out Part One and Part Two. If you found this series helpful, don't miss what's next to come - subscribe in the sidebar!
Below continues part two in our series, "Making Sure 401(k) & 403(b) Fees are "Necessary" & "Reasonable". If you missed out last week, be sure to check out Part One. And don't miss Part Three - subscribe in the sidebar!
As a plan sponsor, you are required to understand all of the fees that are associated your organization’s retirement plan benefit program. This is a challenge because plan fee structures are often opaque, complicated (needlessly so) and, sometimes, downright misleading. You are also required to ensure the services for which the plan is paying are necessary, meaning the plan wouldn’t function (or function as well) without them, and reasonable. Taken together these are one aspect of the “expert standard” you are expected to meet to fulfill your plan management responsibilities.
The value of having an investment advisor? A highly significant 3% per year in additional returns, according to Vanguard.
If you have ever wondered whether working with an investment advisor is worth the cost, you should find long-term research from Vanguard just the kind of information you are looking for.
For more than 15 years, Vanguard has conducted ongoing research called “Advisor’s Alpha” in which the mutual fund giant has attempted to determine just what, if any, additional return on investment (“alpha”) investors might realize from working with an investment adviser employing best practices.
We all have our morning routines. Mine typically begins around 5 and heading to the gym. Now that I’m in my 60s, I focus more on not losing ground than getting buff. That done, typically get to my desk, whether at home or the office, by 7 to go through email as well as a fairly wide range of articles and updates that have come in from various news feeds, Google Alerts and news aggregators. Usually, these are just background. Occasionally one or two make me pause and think of interacting with the piece and/or the author.
As we wrap up our review of the 11th annual Callan DC Trends Survey report we turn our attention to how plan sponsors are measuring success and two growing trends, the use of collective trusts and deliberate efforts to retain participant assets in plans post-separation from service.
In our last post on the 2018 Callan DC Trends report we summarized and commented on findings in the areas of automatic enrollment, escalation and participant default strategies as well as utilization of Roth 401(k) options. In this post we continue by focusing on the practice of bundling or unbundling of services management of plan-related fees and use of independent investment advisors and/or consultants.
“Losing money when investing is as inevitable as death and taxes. Those who immediately fire their advisers for incurring such losses will never be satisfied. I’m referring to short-term losses, over periods as long as a year, if not more. Even advisers with the very best long-term records regularly lose money in many calendar years along the way.”
So writes Mark Hurlbert in a USA Today post entitled “Your financial adviser will lose some of your money. Here’s what to do.” on July 23rd of last year. [Emphasis ours]. He goes on to refer to findings based on the Hurlbert Digest’s forty years of analysis of more than 1000 model portfolios the Digest has audited.