Nevin's Data "Points"

Over the past decade and change, there have been a number of high-profile excessive fee suits brought against retirement plan fiduciaries, notably the plan committees that oversee these programs. Here’s what your plan committee members should know. 1. Why they are a member of the committee. Today the process of putting together an investment or plan committee runs the gamut – everything from simply extrapolating roles from an organization chart to a random assortment of individuals to a thoughtful consideration of individuals and their qualifications to act as a plan fiduciary. There is, or should be, a legitimate, articulatable reason why each and every member of your plan/investment committee was selected. They, and every other member of the committee, should know that reason. If you can’t articulate that reason (or can’t with a straight face), they shouldn’t be on the committee – for their own sake, and the sake of every other committee member. Note a...

You may have missed it – but we just passed the anniversary of the 1912 sinking of the now iconic RMS  Titanic , at the time the world’s largest ocean liner. Its passengers included some of the wealthiest people in the world, as well as a large number of emigrants seeking a new life in North America. On the ocean liner’s maiden – and only – voyage, it carried 2,244 people, 1,514 of whom would perish in the North Atlantic. In hindsight, the  Titanic  seems a textbook example of a disaster that could have been avoided: There were plenty of warnings about sea ice (as many as six), but the ship was traveling near her maximum speed (though it’s a movie myth that they were trying to set a speed record) when lookouts sighted the iceberg that did her in with a “glancing” blow – that nonetheless opened 6 of her 16 compartments to the sea (the ship was designed to stay afloat with four of her forward compartments flooded). And let’s not forget that she went to ...

I’ve been working with retirement plans for my entire professional career, during which I have met, spoken with, and written to tens of thousands of plan sponsors. And yet, in all that time, and with all those people, I’ve not met more than a handful who had chosen that specific role as a career path. More often than not, they’ve found themselves in that role with no training, education or background in the role beyond an out-of-date plan document and the cryptic notes left behind by a harried predecessor. Indeed, there’s more than a bit of irony that individuals who find themselves in a job with personal liability for their actions (and the actions of their co-fiduciaries), alongside an expectation of prudence that courts have described as the “highest known to man,” have had little in the way of practical, retirement-plan-focused training. That’s a problem for those plan sponsor fiduciaries, of course, but also for the plan advisors who support them. While...