Saturday, March 04, 2006

Where There’s a Will…

Last week, a provider was perusing our editorial calendar, saw that we were covering automatic enrollment in our March issue, and volunteered their expertise on the issue. Well, it was too late for that issue – but they sent along a research paper on “quick” enrollment that had some interesting findings (see Plan Design below) – interesting enough that we wrote up a brief news item on it for, and in the NewsDash.

Next day, I get e-mails from three different providers – all picking up on the quick enrollment issue – and all, in slightly different ways, sharing their very positive experiences with the concept. What I found particularly interesting was that they all basically said, “Our plan sponsor clients have been slow to adopt auto-enrollment because of fiduciary and cost concerns…” so voila, “quick” enrollment, or “easy” enrollment, had been introduced – and was working quite well, without running afoul of the fiduciary concerns attendant with automatic enrollment.

Now, I’ve expressed my ambivalence about “automatic” solutions in this space before. Nonetheless, they appear to be all the rage among providers these days, and among no small number of advisors. They have their fans among plan sponsors as well – but frankly, most of the plan sponsors I talk to are hesitant to take on the additional risk (and cost), even if the automatic alternative would increase participation (and it seems to, I should add). My experiences notwithstanding, I routinely find myself in settings where I seem to be the only one acknowledging that there might be legitimate reasons why a prudent plan sponsor might NOT want to embrace the notion.

Consequently, I drew some solace from the “admissions” that plan sponsors weren’t all flocking en masse to automatic enrollment (though, in point of fact, the results of any number of surveys, including our own, also support that conclusion). What I found most encouraging, however, was that this kind of “easy” enrollment alternative had been developed and was being so widely promoted to plan sponsors (and participants) as a credible, working alternative to help increase plan participation even though, from a provider standpoint, “automatic” enrollment is surely easier.

I realize that there are commercial interests involved; nonetheless, I think it speaks to the ingenuity of the people committed to this industry – people who work hard every day to make retirement security a reality for so many people. People like you.

- Nevin Adams

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