Nevin's Data "Points"

At the end of every year, and as we approach a new one, it’s natural to look back at experiences and lessons learned—and to ponder ways to apply them productively going forward. Here’s some thoughts from 2020 that I hope will help you do just that. 3 Things That (Seem to) Scare Plan Sponsors 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. And sometimes it’s just a good time to think about the things that give us pause—that cause a chill to run down our spine. In that category, here are three things to ponder… 3 Retirement Income Impacts That Can Impact Retirement Income   Most of the focus on retirement savings is on those who haven’t saved enough, or who lack access to the platforms to make saving enough easy. But even those that have done the “right” things can nonetheless have their retirement planning realities tripped up. Here are three retirement income impacts of which (even...

Once upon a time, as Christmas neared, it was not uncommon for my wife and I to caution our occasionally misbehaving brood that they had best be attentive to how their (not uncommon) misbehavior might be viewed by the big guy at the North Pole. In support of that notion, a few years back—well, now it’s quite a few years back—when my kids still believed in the (SPOILER ALERT) reality of Santa Claus, we discovered an ingenious website  that purported to offer a real-time assessment of their “naughty or nice” status. No amount of threats or admonishments—in fact, nothing we ever said or did—ever managed to have 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, panic-stricken– following a particularly worrisome “rea...

So much of our lives have been disrupted by the COVID-19 pandemic—but the pace of 401(k) litigation, it seems, has, if anything, accelerated. Now, some may find the label “terror” in the title extreme. In fact, it hadn’t really occurred to me until I read the response of defendants to a suit slapped on Genentech Inc. and the plan fiduciaries of its $7.6 billion 401(k) plan in early October. In a response to that excessive fee suit, the defendants’ attorneys referred to this suit—and others like it—as “an  in terrorem  attack on fiduciaries and employers seeking sweeping monetary and injunctive relief geared toward disrupting employee benefit relationships and causing protracted, expensive litigation.”  “In terrorem,” Latin for “into/about fear,” has a legal context—a legal threat, really—one generally voiced in hope of compelling an action (or lack of action) without resorting to a lawsuit or criminal prosecution. It normally arises in regard to a provision...

 Thanksgiving has been called a “uniquely American” holiday —and so, even in a year in which there has been an unprecedented amount of disruption, stress, discomfort, and loss—there remains so much for which to be thankful.  I’m thankful that so many employers (still) voluntarily choose to offer a workplace retirement plan—and, particularly in this extraordinary year, that so many have remained committed to that promise. I’m thankful that the vast majority of workers defaulted into retirement savings programs tend to remain there—and that there are mechanisms (automatic enrollment, contribution acceleration and qualified default investment alternatives) in place to help them save and invest better than they might otherwise. I continue to be 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 a...

 In these extraordinary times, there’s a lot of change in the mix—and new legislative and regulatory developments that could be “game changers”—or perhaps not-so-much. Even in the most normal of times, it’s customary for businesses in evaluating future prospects to consider/identify elements under a “SWOT” analysis: strengths, weaknesses, opportunities or threats—and the recent Summit Insider gave us a chance to see what is on advisor minds now—and for the days ahead. For this year’s Summit Insider, we asked respondents [i]  to weigh in on how they saw various portents of change: as a game changer, for good or ill, something about which much ado had been made without justification (those that are mere “rearrangers”)—or was it simply too soon to say?  Here’s what they thought about:  1. MEPs/PEPs (Multiple Employer Plans/Pooled Employer Plans) 40% - Too Soon to Say 38% - Positive Game Changer 20% - Much Ado About Not Much 12% - Negative Game C...

Recent reports of 401(k) thefts  and an ongoing concern about cybersecurity  (should) have everybody on the alert. Here’s some things you, your plan sponsor clients, and their participants should check out—now. Find Your Account(s) It may have been a while since you checked out your 401(k) balance—indeed, many may not have  ever   checked it out online. Start by tracking down the website, your user id, your password. If you haven’t done so in a while, you may have lost those credentials—or your access may have been disabled. Even if those credentials are still valid, it’s probably a good time to change them. Make sure you remember those account(s) at previous employers’ 401(k)s that you may have left “behind.”  Oh, and it will be less frustrating if you don’t do this on the weekend. In my experience, few offer customer service support then, and if you need help getting on, you’ll need some help. You might also find that it’s a good time to ...

If you have turned on a TV, walked by a radio, driven down a residential street, or answered a phone (or more likely let it go unanswered) in the past month, you will, of course, be aware that our nation will officially go to the polls today.  Of course, our nation has been “going” to the polls—or at least casting votes—for several weeks now. And while some states (and voters) have done so in elections past, a combination of factors (not the least, concerns about the current pandemic) means that the process of voting, like so much of our lives this year, is going to be “unprecedented,” both in terms of the breadth and volume of votes cast prior to election “day”—and perhaps on that day itself. And yes, it’s been a particularly nasty—one feels compelled to say “unprecedented”—election cycle.  In that regard, I recently came across this:  “Certainly, politics has never been a pretty business, but I doubt that I would get much argument in stating that this p...

 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. And sometimes it’s just a good time to think about the things that give us pause—that cause a chill to run down our spine.  In that category, here are three things to ponder… 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—the pandemic has, if anything, seemed to accelerate the pace. 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. It's not that the fear is unfounded—plan fiduci...

A reader recently commented, “Nevin: You are continually berating those who question various aspects of 401(k) plans as if the current structure is ‘perfect.’ It isn’t.” That comment was inspired by a recent column of mine critical of a proposal rumored to be under contemplation by the Biden campaign—one that would “trade” the current tax preferences of 401(k) deferrals for a flat government tax credit. It’s a proposal that is intended to direct more of the same amount of government expenditure (when the government doesn’t take money from your pay, it’s considered an expense) to lower income individuals, in that a flat dollar credit would ostensibly be worth more to lower income individuals than the deferral of taxes under the current system.  Now that reader went on to offer a comment  in support of that intent, explaining that  “…one of the biggest challenges we face is getting lower paid people to participate. Credits will give bigger benefits to...

 Another week, another Bloomberg op-ed bashing 401(k)s—but this time the target is fees—and advisors. The most recent “shot” is found in an article [i]  titled “ 401(k) Fees Are Eating Your Retirement Savings .” The author, one Ethan Schwartz, [ii]  without citation (beyond “various estimates”), tosses out claims as to the “average” fees in 401(k)s (and we know the value of “average” in such matters), states that those fees are “much higher” for then claims to know of “annual expenses well under 0.1%, and often near zero, offered by widely available stock and bond index funds and ETFs in many flavors and stripes outside of 401(k)s”—and then does the math to show how much it all adds to individually, and then he extrapolates it to the whole universe of 401(k) savers to assert that “more than $20 billion annually” is being “taken” from the nest eggs of retirement savers. Better still, he cites the example of a “close friend” who asked for his help—only to find ...

Early on a bright Tuesday morning in 2001, I was in the middle of a cross-country flight, literally running from one terminal to another in Dallas, when my cellphone rang. It was my wife. 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 on Sept. 11. I thought she had to be misunderstanding what she had seen on TV. Would that she had… That day, when family and friends were so dear and precious to us all, I spent 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 at that Dallas hotel. There were no planes flying, no rental cars to be had—and so I was stranded—separated from home and family by hundreds of insurmountable miles for three interminably long days. As that week drew to a close, I was finally able to get a rental car and begin a long two-day journey home. While...

 For reasons that elude me—other than perhaps because it has a “click bait” headline—the folks at Bloomberg recently published an “op-ed” titled, “401(k) Plans No Longer Make Much Sense for Savers.” Sadly, it’s gotten some attention, aided and abetted even by industry publications, some of which incredibly reported on it as a straight news item.  Much as it pains me to give more “oxygen” to this , the author, a “former risk manager” (he now apparently writes books), basically makes a tax argument. His essential premise is that once upon a time, the tax benefits of 401(k) made that investment worthwhile, but that tax rates have dropped, and they’re not likely to be lower in the future, so you’d be better off taking that money and investing it elsewhere (more on that in a minute). Oh, and he wants the federal government to forego its deferred taxation on those 401(k) monies so that you can pull that money out and invest it elsewhere without pause (we’ll not hold ou...

It seems trite, almost unnecessary, to comment that we are living in and through extraordinary times.  I’m a student of history, and I have often found comfort, if not guidance, from what has gone before. As often as not, however unique and extraordinary the times seem (or are portrayed in the headlines), there’s inevitably a comparable, and almost always, an even more extreme example, of such times in decades past. [i] And while there’s been a renewed interest in, and awareness of, the pandemic of 1918 (though I’m told the pandemic of 1957-58 is a more apt comparison to COVID-19), as the anniversary of our nation’s declaration of independence nears, I’ve been drawn to the events of 1776. As it turns out, the newly declared (but not yet formal) nation was confronted not only with the struggle for independence (and no small number of voices that simply wanted to preserve the status quo), but with the scourge of smallpox. Just as the close quartering and movement...

As Father’s Day approaches, I’ve been thinking about my dad, the life he led, the choices he made, and the legacy he left behind. I’m not talking about money. In fact, I didn’t learn anything about finance from my dad—he avoided big purchases with the fervor of Ebenezer Scrooge, though he’d spend that much (and more) on small things (mostly books). Like many in his generation, my dad wanted to hold the checkbook, but it was Mom who always made sure that there was money in the account. Dad tithed “biblically,” but Mom was the one who started setting aside money from her paycheck in her 403(b) plan at work—and continued to do so, even when my father was convinced they couldn’t afford it—and made no secret of that opinion. Or did until he got a glimpse of the statement that showed Mom’s retirement account growth—and then, inspired by that example—he began setting money aside for retirement as well. My dad was a man of few words—spoken words, anyway. At 6’ 5” he was an ...

Back when I was in school (OK, so it was  way  back), there were these little red fire alarm boxes strategically placed throughout the building. Their purpose was clearly indicated in big white letters… but, inevitably, as the school year wound to a close…   Well, it seemed that someone was always pulling those levers, and no, not because of any actual fire—but rather because some hapless soul had been pressured to create a nuisance, but more commonly just because some upper classman was looking to avoid a test for which they weren’t prepared, or wanted to get outside and enjoy the fresh air. Initially these emergency calls got the expected response, and we all dutifully filed down the stairs and out to our designated areas. And, sure enough, by the time the building was evacuated, the premises sufficiently investigated, and the student body returned to our respective classrooms—well, it left little time for actual instruction, for a period, at leas...

As the nation enters its third month under the constraints of the COVID-19 pandemic, it seems a dramatic understatement to say we are living in uncertain times. Let’s face it, even as the nation begins to (re)open, concerns about the coronavirus remain widespread, and the markets, though stabilizing, remain volatile. Unemployment rates, though optimism remains that they will be short-lived, are at levels not seen since… well, at levels never seen before. And then, in the midst of all this, as a nation, we are reeling from a fresh wound—the tragedy and implications of George Floyd’s death—and while many are hopeful that meaningful change can finally come from this, there’s sadness—and anger—that the protests calling for that change have been accompanied by acts of violence. Amidst all this worry and uncertainty, it’s hard to believe that the CARES Act —and the Payroll Protection Program —have only just been drafted, executed, and implemented to help stave off at least ...