Nevin's Data "Points"

About a year ago, I was asked by an advisor if we had ever written anything about the potential pitfalls of hiring a relative as a plan advisor. We hadn’t, as it turns out, in no small part because some things just seem (painfully) obvious to me – but it resulted in a column  that, as I tried to point out at the time, was applicable to more than just familial relations. In recent weeks I have received similar requests: one from an advisor looking for something on the hazards of “tying” bank business to providing services to a retirement plan, and another looking for validation of the wisdom of using a qualified 401(k) advisor on a plan rather than a part-timer. Now, as someone who has been involved with ERISA and its fiduciary strictures his entire professional life, the responses to these questions are nearly self-evident. But let’s face it: Many, perhaps most, plan fiduciaries haven’t had that much exposure. Before making a decision to hire an advisor – or fo...

A recent Alliance Bernstein survey found that plan sponsors’ awareness of their fiduciary role, much less the responsibility, has deteriorated significantly in recent years. In fact, their survey found that less than half of plan sponsors knew they were fiduciaries. Here are, in my estimation, the three biggest mistakes fiduciaries make. Not knowing they are fiduciaries. As noted above, a significant – and apparently growing – number of individuals who are, in fact, plan fiduciaries are oblivious to that reality. The reasons for that are varied, though the Alliance Bernstein survey  suggests that knowledge gap is wider among those who serve on a plan committee than with those who have primary responsibility for the plan. Of course, fiduciary status is based on one’s responsibilities with the plan, not a title. Simply stated, if you have discretion in administering and managing the plan, or if you control the plan’s assets (such as choosing the investment options...

It has been heartening in recent weeks  to see a number of employers announce plans to expand and increase benefit programs, offer bonuses, and increase the employer match. Better still, a recent survey  indicates that more positive changes could lie ahead. A decade ago , the headlines were filled with stories about a number of large firms announcing that they were cutting, and in some cases eliminating altogether, the employer match. While the vast majority of employers didn’t reduce those matches, it was nonetheless a stark reminder that those defined contributions are “defined” annually, not in perpetuity. The Match Matters There are a number of things that we know about the importance of the employer match; there’s the obvious (though sometimes glossed over) impact that an employer contribution means in terms of retirement security in simple dollars, for one thing. Indeed, the nonpartisan Employee Benefit Research Institute (EBRI) has estimated th...

Will your portfolio soar with the Eagles, or get pummeled by the Patriots? That’s what adherents of the so-called Super Bowl Theory would likely conclude. The Super Bowl Theory holds that when a team from the old National Football League wins the Super Bowl, the S&P 500 will rise, and when a team from the old American Football League prevails, stock prices will fall. It’s a “theory” that has been found to be correct nearly 80% of the time — for 40 of the 51 Super Bowls, in fact. Though last year’s big comeback by the AFC Champion Patriots (who once were the AFL’s Boston Patriots) against the then-NFC champion Atlanta Falcons — alongside the 2017 market surge — surely places its validity in question. Not to mention 2016, and the AFC’s (and original AFL) Broncos 24-10 victory over the Carolina Panthers, who represented the NFC. It was an unusual break in the streak that was sustained in 2015 following Super Bowl XLIX, when the New England Patriots (yes, those ...