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Showing posts from September, 2008

Staying on Course

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One of my favorite quotations is George Santayana’s, “Those who cannot remember the past are doomed to repeat it.” It is also, unfortunately, one of the most overused quotations, generally during times when we are in the middle of repeating an unremembered mistake. The current financial mess on Wall Street is the most recent example, of course. The problem—like the tech bubble that preceded it, the derivatives mess in the mid-1980s, the junk bond blow-up before that—is not that we don’t see it coming. It’s that we don’t do a very good job of knowing when it will hit. That, and nobody wants to leave the “party” before it’s over. And then we all wind up with hangovers. On the plan sponsor side, it was interesting to see the encouraging words of a number of public pension plans this week (see " Public Pension Groups: We’re Still OK ". Most spoke to the long-term nature of their investments, and the short-term security that comfortable funding levels provided. Some offered

Pay “Back”?

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It was an interesting week, to say the least—all the more so since I spent it surrounded by financial advisers. The downs and—eventually—ups of the market, the absorption of storied brands, and the likely disappearance of others were, as you might imagine, fodder for a lot of cocktail banter and the occasional moment of financial gallows humor. But, after what is surely one of the most momentous weeks in memory, the question for most is—now what? IMHO, most investors realize that stock markets will go up and down—even, as was the case this week, when those movements are deep and largely unanticipated. Those who rode out the tumult are doubtless relieved that they did (having the wisdom to “stay the course” is a time-honored rationalization for inertia). As one adviser told me, the only person that gets hurt on a rollercoaster is the one who tries to get off in the middle of the ride. On the other hand, when malfeasance and/or malevolence seem to underlie those dramatic swings—and

“Free”, Falling

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According to a new survey, nearly one in 10 plan sponsors still believes that they pay no fees for their retirement plan. On the other hand, the Spectrem Group survey of an undisclosed number of plan sponsors (see " The First Step is Understanding ") claims that nearly one in four plan sponsors was of that opinion as recently as 2005. Not that they aren’t getting that information. Overall, 84% of sponsors responding to the Spectrem Group survey receive a written fee disclosure statement from their plan providers, and 88% receive one from their advisers and consultants (1) . However, as impressive as those statistics are, about half of the plan sponsors in the survey rely on their plan provider or the adviser who sold them the plan for any analysis of fees paid (only a third analyze fees using in-house staff, and a mere 17% use an outside consultant or a TPA). In sum, while the vast majority of plan sponsors said they were getting disclosures from their providers/advisers,

Storm "Surge"

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Over the past several weeks, I’ve received a dozen different inquiries from providers and advisers, all wanting to know if we’re seeing any pickup in provider changes. Now, aside from the frequency and consistency of the inquiries, they also share two interesting aspects. The first is that—to a person—the inquirers say that, while they are still enjoying a good deal of activity/interest, they have heard that things are slowing down. What I’ve not been able to figure out, of course, is if they are just nervous that their string of good luck is getting ready to run out, or if they are feeling really confident about their business prowess and are looking for some independent affirmation of same. Truth be told, I’ve not seen anything to suggest a noteworthy uptick in the number of provider changes—other than the uptick in volume that frequently is associated with changes at the providers themselves (see “ Exit Signs ”). It’s summer, after all, and if it isn’t quite the activity do

“Gold” Mettle

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The Olympics are already a distant memory for many, but despite the challenges of trying to keep up with events that are occurring halfway across the world, there were exciting finishes and new world records (and the ability to catch it all at a more convenient hour via the Internet). The moment that stands out for me most, however, was the American team's performance in the 400 freestyle relay—the one where Jason Lezak, 32, came from out of nowhere in the final leg to win the gold for his team (yes, the one that positioned Michael Phelps to keep his gold medal streak alive). Yet, as incredible as that finish was (that he managed to take it from the team that was "talking trash" ahead of the event was even more satisfying), I was most struck by another statistic from that event: While the top five teams all finished under the previous world-record time, two of them (Italy and Sweden) didn't even get a medal. Watching that event unfold, particularly the top two finish