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Showing posts from September, 2005

When the Levee Breaks

Like much of the nation over the past couple of weeks, I have been tracking the events along the Gulf Coast with much interest. I’ve never lived close enough to the coasts that tend to fall prey to such calamities to have experienced their wrath directly – though I was close enough to brush some 70 mph winds from the last bits of Hugo in the early nineties. Unlike tornados, which seem to come from nowhere and disappear almost as quickly, hurricanes take time to build and to strike – and their destruction is likewise spread out over a much wider area and timeframe than most natural disasters. Katrina was a different kind of disaster, of course. By now we’ve no doubt become mini-geographical “experts” on the unusual topography of New Orleans. More than that, the impacted area was unusually urban, which not only revealed a new class of disaster victims (and found them clustered in high concentration), it likely facilitated the subsequent coverage of their plight. Moreover, unlike p

“Short” Comings?

As the recent bankruptcies of Delta and Northwest Airlines remind us, pensions are a precarious business. Once again, we - and most particularly, the employees of those airlines - are presented with the stark reality that pension promises made in better times are frequently no more secure than the financial wherewithal of the institution that, once upon a time, made them. One can certainly have some sympathy for the individuals who have made an employment commitment predicated on those promises, most particularly for those who have already entered retirement. The signs of danger are all around us, and not just in private industry. By now, we are all well aware of the “perfect” storm’s combination of slumping asset values, the burgeoning pension obligations of early and accelerated retirements, and the exaggerated impact of historically low interest rates that result in even higher projected pension liabilities. We are frequently reminded of the “sorry” state of pension funding in t

IMHO: 'Expert' Opinions

There’s a commercial that seems to run pretty regularly these days that features a concerned looking man on the phone with his physician. In short order it becomes apparent that the physician is talking his patient through the intricacies of a surgical procedure, right down to telling the would-be patient where HE will need to make the incision. At that point, the understandably nervous man says, “Shouldn’t you be doing this?” No doubt to the chagrin of whoever put that commercial together, I can’t recall the sponsoring organization. However, its message certainly resonates with any financial advisor who has been asked to justify his/her role in helping workers make financial decisions. Much as I relish that commercial message, however, I’ve never been keen on a broad-based application of those types of analogies. Like, “You wouldn’t think of doing your own plumbing, why should you try to do your own portfolio management?” Or, “You have a mechanic to work on your car, why wouldn’t

The Best Test

The pages of PLANSPONSOR magazine frequently chronicle the impending onslaught of change and its implications for plan sponsors, and we also hope we provide readers a forward-thinking perspective on trends and opportunities, as well as threats. A constant theme in these pages, certainly over the past five years, has been not only the high standard to which fiduciaries are held in their actions, but also the difficulties associated with living up to that standard. Plan sponsors understandably rely on experts to assist them in their Herculean task, and ERISA contemplates that reality. Unfortunately for plan sponsors, the standards in selecting and monitoring, on an ongoing basis, the skills and actions of those experts can be almost as daunting as the underlying activities themselves. In the midst of these challenging times, financial advisors have become a ubiquitous element in many markets. Absent their presence, many small-plan sponsors might still lack access to a respectably priced