Nevin's Data "Points"

As a parent (or even a mentor), sooner or later, you’ll wind up sharing tales of the way things “used to be.” Whether it’s a tale of the proverbial five-mile walk to school in the snow (“uphill, both ways”), the challenges of adjusting a tinfoil-laden TV antenna to obtain a decent black-and-white picture on one of four channels, or the days of laboring to get a quarterly valuation completed by six weeks AFTER the valuation cycle, the story-telling traditions of humankind are part of what makes us – well, human. By sharing a sense of where we have been, we all gain a better sense of the importance of where we are – and an appreciation (hopefully) for the progress that we’ve made. Now, according to a recent survey, it seems that we may well be on our way to a day when participant direction of their investment accounts seems as quaint a notion as a quarterly transfer. The aptly, if somewhat inelegantly, titled “ 401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2007

There was a time when Christmas shopping for my nieces and nephews was a relatively straightforward process. Simply put, we’d spend a day or two at the mall, looking for things that we thought would be genuinely fun (in my case) in a generic sort of way—some flavor of electronic car, legos, dolls, etc. Of course, as our family has grown ever more extended—and my nieces and nephews older—it became very nearly impossible to keep up with their various and sundry interests—and to a point where the only practical solution was a gift card (even then, pains must be taken to make sure it’s from a store at which they shop). Nonetheless, and in the spirit of the holiday season, here are some “presents” that I hope participants find on their retirement plan menus during the next year: (1) A workplace retirement plan. It’s easy to overlook this one, particularly for those of us who work with these programs on an ongoing basis. The sad fact is that roughly half of working Americans still don’t

My eldest has been carrying a heavier than “recommended” class load this semester, and that – combined with her choice of classes – has meant that she’s been trying to get ready for finals and writing several critical papers all at the same time. Now, she’s a gifted student, and more committed to her studies than most (or so she has convinced her father and mother) – but the pressure was certainly mounting. Just when she thought it couldn’t possibly all get done on time, she asked for – and got – an extension on one of the papers. Not that she did so with enthusiasm. She is very conscientious about her work and deadlines, and on more than one occasion has pulled the infamous “all-nighter” to meet deadlines. This time, however, she was smart enough to acknowledge the need and make the request. And while the extension was modest, it seems likely to give her enough mental “room” to devote the requisite level of attention to the array of competing priorities that the end of a college

As my wife and I drove to pick up our eldest for the Thanksgiving break, I saw something I never thought I would see again: $1.95/gallon gasoline (even more incredible, that was while I was still in the borders of Connecticut, which imposes some of the highest gasoline taxes in the nation). Indeed, what with the election, the introductions of the new Administration’s team, the bailout/rescue of the week, and the continued jitters of the world markets, the reality that gasoline costs about half what it did in July has gone almost unreported. Still, I heard a report last week that suggests the net impact of that drop in price has put about $500 billion back in American pockets—now THAT’S a “stimulus package” we can believe in! Still, what I find interesting about that dramatic turnaround in oil prices is that it happened so rapidly that the explanations of why it ran up so quickly are still ringing in my ears. I remember all too well the pundits laying the price hikes off on the growth

I wouldn’t for a second suggest that the current financial/economic crisis that we are enmeshed in isn’t “real,” or that the efforts to remedy it thus far aren’t well-intentioned, but it’s hard to shake the feeling that the words put forth to explain the situation—and thus the solutions put forward to redress that situation—are being done by folks desperate to be seen to be doing something, but not quite (at all?) sure what that something should be. And, IMHO, that inclination won’t diminish with a new Administration eager to prove itself. Let’s face it—even when doing nothing might be the best medicine (and I, for one, am at that point), we tend to believe that “something should be done.” Meanwhile, we have retirement plan participants, most of whom—again—appear to be riding this one out. Oh, there are signs of change on the fringes—some modest reductions in average deferral rates, slight upticks in hardship distributions, and, on particularly volatile days in the market, a bump in

Thanksgiving has been called a “uniquely American” holiday, and while that is perhaps something of an overstatement, it is unquestionably a special holiday, and one on which it seems a reflection on all we have to be thankful for is fitting. Here's my list for 2008 : I’m thankful that the election is over—and that the results were determined on Election Day (for the very most part). I’m thankful that so many made the effort to vote—and that, regardless of whether or not one always agrees with the outcome, we have the ability to do so. I’m thankful that our nation has passed yet another September 11 without a terrorist attack on our soil—and thankful to the leaders of this great nation, and to the men and women in our armed forces, intelligence agencies, and Homeland Security for their continued sacrifices in keeping us safe. Closer to “home,” I’m once again thankful that so many in Washington are concerned about the current state of employer-sponsored retirement plans, and the

In another week (or so), PLANSPONSOR will publish its annual Defined Contribution Survey. There are other surveys in this space, of course, but ours stands apart, IMHO, for its breadth and depth, painting a portrait of the industry that transcends size, geography, and provider. And this year the survey, now in its 13th year, is even bigger than ever. Over the years, asked to rank the criteria used in selecting their DC plan provider, plan sponsors have reliably opted to put “others” first—and this year, as in every year we have asked plan sponsors to do so, they ranked service to participants as the most important criteria, garnering a ranking of 6.5 on a 7.0 scale. Once again service to plan sponsors was the second most important (6.50). Not surprisingly (particularly these days), investment performance was deemed the third most significant, while the financial strength of the provider was ranked fourth. Interestingly enough, the numerical importance of all of these declined slig

Regardless of age, regular exercise is important – but I’m at an age where the demands of everyday life (and the toll of previous “misadventures”) frequently make that impractical, if not impossible. Nonetheless – generally after I’ve been away at a conference (where the hours, food, and drink have all been beyond my usual quotas) – I undergo a renewed “commitment” to exercise. Unfortunately, once you have gotten out of the habit – well, let’s just say your body has a way of reminding you how long it’s been. Consequently, I was concerned a couple of weeks ago when I heard that GM had decided to suspend its 401(k) match for salaried workers (see “ Benefits Cuts Next on GM Agenda ”). Now, the giant automaker, like many other firms, is struggling at present. And, frankly, given a choice between having a job and having a matching 401(k) contribution, I’d opt for the former every single time. Still, in recent weeks, that’s a move that we’ve seen a number of employers make (see “ Tighten

For all the talk of “hope” and “change,” this extended election cycle has offered little of either, IMHO. Now, I realize that there are those among you who are highly enamored of one candidate or the other – or at least highly un-enamored of the other. But, IMHO, if you don’t have some concerns about how both of the candidates would conduct themselves in office on at least some issues, you haven’t been paying attention. Truth be told, neither of the major U.S. party candidates would be my first choice for the office (don’t read too much into that – I don’t have anyone particular in mind), and frankly, I’m not all that keen on the folks they’ve chosen to back themselves up (though I can appreciate the rationale behind the choices). Nonetheless, our nation’s tried and tested method of screening and selecting representatives has, with all its flaws, done its job. Now it’s our turn. Come Tuesday, we have a real choice to make. And this one – more than most, perhaps more than any in m

They say that desperate times call for desperate measures. Well, of late, the markets have surely seemed desperate—and goodness knows, the response by regulators and lawmakers, certainly to this point, reeks of desperation, IMHO. We do seem, for the moment anyway, to be in something of a “pit” (and one, I must say, that the politicians seem to be trying to fill with money). As if things weren’t complicated enough, we’re also in the waning weeks of what is perhaps the longest election cycle in history—one that, according to the pundits, will sweep the Democrats into a fuller, if not veto-proof, majority in Congress, if not the White House itself. If those trends hold, the pendulum would have continued its swing back—from the 2000 elections where the Republicans controlled all three, the 2004 elections where they solidified that hold, and the 2006 interim elections where Democrats regained their control of Congress. Such is the way of American politics. Still, having spent some part

My September 30 statement arrived on Friday. No, I didn’t look at it. My wife opened hers (she’s braver than I). I heard her rip the envelope open, and I’m pretty sure I held my breath (doubtless listening for the thud of a body in the next room). But then, much to my surprise, she commented that it wasn’t as bad as she thought it might be. For a brief second optimism flittered—I started to get up to check it out. Then, I remembered the date of the statement. That’s right, September 30, 2008. Or as I think of them now, the “good old days.” We’ve all been dreading the arrival of those statements for what seems an eternity now. Yes, the headlines have been screaming about the stock market losses, and the 24-hour news cycle has been feasting on one interminable voice after another offering their perspectives on what it means, and when—or if—it will end. Participants—even those who have been trying not to think about it—surely have to be prepared for the worst. And therein lies a

The recent market tumult has hit Main Street in its retirement pocketbook—and some are once again fretting about their “201(k)s.” You can say all you want that this is a good buying opportunity, but the reality is that our retirement savings accounts have taken a hit, and most people are going to be in mourning, at least for a time. Regardless of the markets (which we can’t control), we all know that the most important determinant of retirement security is how much we save—something we can, within bounds, control. However, when it comes to saving, there are two big questions looming over us, IMHO: Are we saving enough?—and, more importantly, Can we save enough? Those of the opinion that Americans are saving enough are few and far between. With a median retirement savings plan balance of less than $125,000 (and that was before the impact of the last several weeks), it’s hard to see how we could be saving “enough” based on historical spending patterns, much less taking into account t

For most 401(k) plan participants, this has been a good quarter—to lose your statement. Sure, we all know that the lower prices make this a good chance to invest new contributions at a bargain price (once we get past the concern that those prices won’t continue to fall), but there is a very real possibility that some (many?) participants will see a 09/30 balance that is lower than it was a quarter ago, wiping out three months’ worth of contributions (and then some). It is interesting—and perhaps fortuitous—that, even as the markets struggle, asset allocation choices are available on a growing number of retirement plan menus. That they are increasingly a favorite as a plan default option—even as a growing number of automatically enrolled participants are defaulted into them—represents, IMHO, one of those rare occurrences where a much-needed solution is actually available and in place before the crisis it is designed for hits. Having said that, it is also a year when even diversified po

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

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

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,

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

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

Last week, the Department of Labor took another step toward finishing another piece of unfinished business. It did so by proposing regulations necessary to implement (in confidence, anyway) the provisions of the Pension Protection Act (PPA) dealing with investment advice offered to participants under the auspices of a fiduciary adviser. For the most part, the proposals (see “ EBSA Clarifies Investment Advice Regulations ”) seem fairly unobtrusive—if not downright “squishy” (more on that in another column). And, like the recent proposals on fee disclosure (see “ IMHO: No One (Else) To Blame ”), most of the 129-page document is spent outlining the details of the proposal’s cost/benefit analysis ($10 billion, in case you were wondering—$14 billion in benefits versus $4 billion in implementation/compliance costs). So, if you were having trouble working up the courage to wade through the PDF, take heart—the meat is found in the first 35 pages (with the occasional reference to a glossary a

I’m old enough to have been a driver (albeit a young one) the last time we had a “real” gas crisis (the one where the issue was not being able to buy gas, not just being able to afford to buy gas). I can still remember the national sense of frustration when a bunch of crackpots in Iran held 52 Americans hostage for 444 days; the concerns when the USSR, using language startlingly similar to that employed during the recent invasion of Georgia, strolled into Afghanistan—and, yes, I can still remember what a “real” recession felt like (the one where we actually had a 5% drop in GDP). I also remember the “response” of our leaders in Washington at the time. Now, it’s easy to sit on the sidelines and judge those who actually have to make the tough decisions, but I think it’s fair to say that a common sentiment was that we were “getting what we deserved.” America had too long strutted the world stage imposing its values on others, some said—this was just the ghosts of Vietnam and Watergate

At the moment, the industry is scrambling to respond to the DoL’s call for comments on the proposed participant fee disclosure regulations by September 8 (see " Know Way ". I think, based on the conversations I have had to date, that most of those comments will be positive on the scope of the disclosures, and fretful about the timeframe for implementation. Most seem to think that the DoL’s measured approach will be matched by a (more) reasonable timeframe for implementation that that contained in the proposal. Of course, there’s pressure from other sides - Congressman George Miller, who has not only held hearings on the subject, but introduced legislation regarding fee disclosures, is grumbling that the DoL’s version doesn’t go far enough. He’ll no doubt be joined by the voices of unbundled solutions who may well feel that they are disadvantaged by the current proposal’s terms. The ‘debate” over participant fee disclosure has generally focused on one of two concerns – the

Like most of you, I have found the soaring price of gasoline to be enormously frustrating. Not that we haven’t dealt with this kind of thing before—but in the past, there generally seemed to be a reasonable explanation, whether it be a deliberate shift by OPEC, refineries shut down by a hurricane, or some kind of political turmoil in some far-off nation. This time, we have a series of potential “culprits”—the new economies in India and China, government taxes, greedy oil companies, irresponsible automobile manufacturers, unresponsive legislators, and, more recently, underinflated tires, and even speculative pension fund investments. It seems like everyone—and no one—is to blame for our current predicament (and, as painful as the current situation is, just wait until winter). Some politicians have already picked up on the shift—and, with luck, their August recess will help them better understand just how angry the American people are about the situation. I wouldn’t for a minute sug