Nevin's Data "Points"

It is something of a tradition this time of year to look back, to reminisce about past events and lessons learned, and sometimes to look ahead – and who am I to buck that trend? Here’s a look back – and some “things” that I hope will help lay the groundwork for a productive and prosperous 2019 for both you, and those you serve. 5 Things of Which Plan Fiduciaries Need to Be Aware Whoever said ignorance was bliss surely wasn’t talking about fiduciary litigation. 5 Key Industry Trends You May Have Missed Here are five key trends highlighted in the Plan Sponsor Council of America’s 60 th Annual Survey of Profit-Sharing and 401(k) Plans that you may have missed. 7 Reasons Retirement Income Solutions Stall A recent report suggests that participants are “clueless” about decumulation. And who can blame them? 6 Things Those Who Don’t Get the Saver’s Credit Don’t ‘Get’ About the Saver’s Credit  Here are six things that people who don’t get the Saver’s Credit – and someti

A few years back – when my kids were still “kids” – and believed in the reality of Santa Claus – we stumbled across an ingenious website. This was a website that purported to offer a real-time assessment of one’s “naughty or nice” status. Now, as Christmas approached, it was not uncommon for us as parents to caution our occasionally misbehaving brood that they had best be attentive to how their actions might be viewed by the big guy at the North Pole. But nothing we ever did or said had the impact of that website – if not on their behaviors (they were kids, after all), then certainly on the level of their concern about the consequences. In fact, in one of his final years as a “believer,” my son (who, it must be acknowledged, had been particularly  naughty that year) was on the verge of tears, distraught that he’d find nothing under the Christmas tree that year but the lump of coal and bundle of switches he surely “deserved.” Naughty Behaviors? When one consider

For all the buzz around financial wellness, a new survey suggests there is a long way to go. These days there’s not much argument against the premise behind pursuing financial wellness. The notion is that bad financial health contributes to (and/or causes) a bevy of workplace woes: stress, which can lead to things like lower productivity; bad health and higher absenteeism; and even a greater inclination toward workplace theft, not to mention deferred retirements by workers who tend to be higher paid and have higher health care costs. But if there is little argument that financial wellness is a worthwhile goal for workers – and one worth supporting by employers – the recent Financial Wellbeing Employer Survey from the Employee Benefit Research Institute (EBRI) suggests that we have a ways to go. Here are some key takeaways from that survey of 250 employers: 1. HR is leading the charge. The most commonly cited primary champion for financial wellness was Human R

What are you waiting for? So, have you registered for the NAPA 401(k) Summit? Hundreds already have. What about you? I know it’s still a ways off (though April will be here before you know it). Maybe you’re waiting till after the holidays (it won’t be any cheaper). Maybe you don’t care about the convenience of being at the host hotel? Or maybe you’re just one of those who winds up putting things off till the very last minute (I feel your “pain”). One thing I’m sure of – if you’re serious about working with retirement plans – it’s only a matter of time until you do…or risk spending the rest of the year hearing from those who did about the amazing event you missed. So why should you commit NOW to the NAPA 401(k) Summit? First off, by now you know that this is the only retirement plan advisor conference developed by plan advisors for plan advisors. The proof of that is, quite literally, in the program that has been developed – for you. This year, as in years past, t

Last week, Senate Democrats unveiled a bill that would, among other things, enhance the Saver’s Credit – a provision which retains bipartisan support, even as the take-up rate disappoints. Here are six things that people who don’t get the Saver’s Credit often don’t “get.” The Saver’s Credit is, of course, a tax credit from the federal government for low- to moderate-income workers who are saving for retirement. For those who qualify, 1 in addition to the customary benefits of workplace retirement savings, the amount of the credit is 50%, 20% or 10% of retirement plan (or IRA or ABLE account) contributions depending on adjusted gross income. Credit ‘Limits’? And yet, some of the things that seem to be holding back the take-up rates could surely be addressed with a legislative “fix” – and here we’re talking about the relatively low income thresholds to which it applies, the fact that while it’s a credit, it’s not a refundable credit (and thus you have to have a fe

Thanksgiving has been called a “uniquely American” holiday, and though that is perhaps something of an overstatement, it is unquestionably a special holiday, and one on which it seems appropriate to reflect on all for which we should be thankful. And so… I’m thankful that participants, by and large, continue to hang in there with their commitment to retirement savings, despite lingering economic uncertainty and competing financial priorities, such as rising health care costs and college debt. I’m thankful that so many employers voluntarily choose to offer a workplace retirement plan – and that so many workers, when given an opportunity to participate, do. I’m thankful that figuring out ways to expand that access remains, even now, a bipartisan concern – even if the ways to address it aren’t always. I’m thankful that so many employers choose to match contributions or to make profit-sharing contributions (or both), for without those matching dollars, many work

Nobody likes to be thought of as “average” – so why do people spend so much time worrying about the “average” 401(k) balance? These averages are reported with some regularity by any number of providers (based on the records for which they have access), and sometimes by academics drawn from government databases. 1 The short (and less cynical) answer to “why” is most likely that the math is “easy.” You simply take the total assets (from whatever recordkeeper/plan balances you have), divide it by the number of participants in that group, and “voila” – you have an average. 2 Now, when you stop and think about it (and many don’t), you realize that doing so adds together the balances of individuals in widely different circumstances of age and tenure – everything from those just entering the workforce (and who have relatively negligible 401(k) balances) with those who may have been saving for decades. It can also, in the case of government databases, add together those that

"Unintended consequences” are generally a bad thing. But not always. The 401(k), for example. This week we celebrated the birthday of the 401(k) – because it’s the anniversary of the day on which the Revenue Act of 1978 – which included a provision that became Internal Revenue Code (IRC) Sec. 401(k) – was signed into law by then-President Jimmy Carter. That wasn’t the “point” of the legislation of course – it was about tax cuts (some things never change) – reduced individual and corporate tax rates (pulling the top rate down to 46% from 48%), increased personal exemptions and standard deductions, made some adjustments to capital gains, and – created flexible spending accounts. But it did, of course, also add Section 401(k) to the Internal Revenue Code. That said, so-called “cash or deferred arrangements” had been around for a long time – basically predicated on the notion that if you don’t actually receive compensation (frequently an annual bonus or profit-shar

Halloween is the time of year when one’s thoughts turn to trick-or-treat, ghosts and goblins, and things that go bump in the night. But what are the things that keep – or should  keep – plan fiduciaries up at night? Well, there are the things like… Getting Sued Plan sponsors will often mention their fear of getting sued (actually, their advisors frequently broach the topic), and little wonder. The headlines are (still) full of multi-million dollar lawsuits against multi-billion dollar plans, and if relatively few seem to actually get to a judge (and those that do have – to date – largely been decided in the plan fiduciaries’ favor), they nonetheless seem to result in multi-million dollar settlements. Oh, and not only has this been going on for more than a decade, the issues raised are evolving as well. As a plan fiduciary, you can be sued, of course; and let’s not forget that that includes responsibility for the acts of your co-fiduciaries, and personal liabilit

While it might not be on your calendar, this happens to be National Retirement Security Week – and in the spirit of the week, here are five things that can provide just that. Retirement security – or more precisely, preparing so that you do have retirement security – is a year-long activity, of course. But this week is devoted to making employees more aware of how critical it is to save now for their financial future, promoting the benefits of getting started saving for retirement today, and encouraging employees to take full advantage of their employer-sponsored plans by increasing their contributions. So, for those looking to shore up your own retirement security – or those you may work with – here are some things to keep in mind. Don’t default to the plan default. While most education materials provided with your 401(k) emphasize the benefit of the employer match (generally referencing that you don’t want to leave “free money” on the table), a growing number

Did you hear the one about loan defaults adding up to $2.5 trillion in potential retirement savings shortfalls over the next 10 years? How about the “$210 Billion Risk in Your 401(k)”? Those reports were based on an “analysis” by Deloitte that claims to find that “…more than $2 trillion in potential future account balances will be lost due to loan defaults from 401(k) accounts over the next 10 years…” That’s right, $2 trillion lost “due to loan defaults” (the Wall Street Journal  apparently picked the figure that matched the impact on a “typical 401(k) borrower” – more on that in a minute). Now, when you see headlines putting a really big number on what you already suspect is a problem – in this case “leakage” – roughly defined as a pre-retirement withdrawal of retirement savings – well, you could hardly be blamed for simply accepting at face value the most recent attempt to quantify the impact of the problem. A closer look at the assumptions behind that analysis,

The tail end of hurricane season — and more specifically the disastrous flooding of Hurricane Florence — brings to mind my last serious brush with nature’s fury. It was 2011, and we had just dropped our youngest off for his first semester of college in North Carolina, stopped off long enough in Washington, DC to check in with our daughters (both in college there at the time), and then sped home up the east coast to Connecticut with reports of Hurricane Irene’s potential destruction and probable landfall(s) close behind. We arrived home, unloaded in record time, and rushed straight to the local hardware store to stock up for the coming storm. We weren’t the only ones to do so, of course. And what we had most hoped to acquire (a generator) was not to be found — there, or at that moment, apparently anywhere in the state. What made that situation all the more infuriating was that, while the prospect of a hurricane landfall near our Connecticut home was relatively rare

Academics have long agonized over something they call the annuitization puzzle. Simply stated, the thing academics can’t quite understand is the reluctance of American workers to embrace annuities as a distribution option for their retirement savings. Some of that is because they assume workers are “rational” when it comes to complex financial decisions, specifically because “rational choice theory” suggests that at the onset of retirement, individuals will be drawn to annuities because they provide a steady stream of income and address the risk of outliving their income. Compounding, if not contributing to that belief, are surveys – albeit surveys generally published , if not conducted by, annuity providers (or supporters) that consistently find support from participants for the notion of reporting benefits as a monthly payout sum, if not the notion of providing a retirement income option. And yet, despite those assertions, in the “real” world where participants ac

Just when you thought retirement plan projections couldn’t get any worse… Last week the National Institute on Retirement Security released a report – “ Retirement in America | Out of Reach for Most Americans? ” that claimed that the median retirement account balance among all working individuals is… $0.00. Moreover, that same report claims that “57 percent (more than 100 million) of working age individuals do not own any retirement account assets in an employer-sponsored 401(k)-type plan, individual account or pension.” It’s not the first time the NIRS has produced reports finding significant problems with the nation’s private retirement system. Indeed, this report “builds on previous NIRS research published in 2015,” though the conclusions presented here seem unusually stark. Then, as now, the NIRS conclusions rely heavily on self-reported numbers from the Federal Reserve’s Survey of Consumer Finances (SCF) and the U.S. Census Bureau’s Survey of Income and Program P

It’s hard to believe it’s now been 10 years since the 2008 financial crisis. Let’s face it — no matter how busy or hectic your week has been, I’m betting it’s been a walk in the park compared to those times. Yes, it was just 10 years ago this week that Lehman Brothers filed for bankruptcy — the same day that Bank of America announced its plans to acquire Merrill Lynch, and a day on which, not surprisingly, the Dow Jones Industrial Average closed down just over 500 points. That, in turn, was just a day before the Fed authorized an $85 billion loan to AIG — and that on the same day that the net asset value of shares in the Reserve Primary Money Fund “broke the buck.” This was made all the more surreal to me because it was going on while I — and several hundred advisers — were in the middle of an adviser conference. Not that the folks on the panels were getting much attention. The funny thing is, looking back (and armed with the prism of 20/20 hindsight), there were lo

Early on a bright Tuesday morning in September, I was in the middle of a cross-country flight, literally running from one terminal to another in Dallas, when, much to my dismay, my cell phone rang. It was my wife. It was September 11, 2001.   I had been on an American Airlines flight heading for L.A., after all — and at that time, not much else was known about the first plane that struck the World Trade Center. I thought she had to be misunderstanding what she had seen on TV. Would that she had… It’s been 17 years since then – and yet every year on September 11, I can’t help but recall the events of that day.   How on that day in particular, when family and friends were so particularly dear and precious, I spent stranded in a hotel room in Dallas. It was perhaps the longest day — and loneliest night — of my life. In fact, I was to spend the next several days in Dallas — there were no planes flying, no rental cars to be had — I was literally separated from home and fam