Nevin's Data "Points"

  A brand new year awaits us – and with the New Year comes an opportunity to assess and reassess – for some when, resolutions for the cessation of bad behaviors and the beginning of better ones are in vogue. Here are some for plan fiduciaries for 2024 – that could benefit plan outcomes for years to come.  See if your target-date options are over-weight(ed)     Flows to target-date funds have continued to be strong – and little wonder, what with their positioning as the qualified default investment alternative (QDIA) of choice for most 401(k)s. That said, the vast majority of those assets are still under the purview of an incredibly small number of firms – nearly all of which (despite marketing brochures to the contrary) appear to share very similar views as to what an appropriate glidepath is supposed to look like – and nearly all of which have embraced the notion that a target-date is little more than a speed bump along the “through” target-date gli...

“You better watch out, you better not cry, you better not pout…” Those are, of course, the opening lyrics to that holiday classic, “Santa Claus is Coming to Town.” And while the tune is jaunty enough, the message—that there’s some kind of elfin “eye in the sky” keeping tabs on us—has always struck me as just a little bit… creepy. That said, once upon a time, as Christmas neared, it was not uncommon for my wife and I to use those images to caution our occasionally misbehaving brood that they had best be attentive to how their (not uncommon) misbehaviors 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 stumbled across an ingenious website that purported to offer a real-time assessment of their “naughty or nice” status. Indeed, nothing we said (or did, or threatened) ever had the impact of that website—if not on the...

My wife and I are in the process of moving to a new home—and it occurs to me that the process of changing homes is a lot like changing recordkeepers. Here’s how. Know What You’re Looking For We’ve made about a half dozen moves during our 37-year marriage—all driven by work, anchored by commuting concerns, and—in all but the first and last—school considerations. However, this particular move (my wife swears it’s the last one) literally started with a blank sheet of paper and a “so where would you like to live” conversation. Several conversations, actually. For this move, our high-level priorities involved climate (we’re not fans of snow, hurricanes, wildfires, or earthquakes), ready access to good healthcare (we’re not getting any younger), and proximity to cultural activities/things to do (we’re not THAT old). Indeed, with no particular ties to our current residence, and no external anchoring factors like grandchildren to consider (those with four legs don’t really “co...

Over the years, so-called personal finance experts have provided valuable information—but also a smattering of misinformation—but I can think of none quite as egregious as some remarks recently made by Dave Ramsey. By now I’m sure you’ve heard—or heard about—his “counsel” with regard to acceptable retirement withdrawal rates—and his disparagement of the “supernerds” who would dare to disagree with him. As for that counsel, at a high level, Ramsey maintains that an 8% withdrawal rate is not only doable, but sustainable. All you have to do is be invested 100% in equities—oh, and assume a 12% return. [i] Of course, such machinations have always been predicated on assumptions—about inflation, about market returns and, most notably, about the length of life itself. That said, this didn’t become a specific focus—a so-called “rule of thumb”—until 1994, whe...

Like many of you, I have spent a fair amount of time over the past couple of weeks reading and analyzing the impact and import of the new fiduciary rule proposal—not to mention the legal pundits who seek to tell us what they think it means, or might mean, regardless of what the proposal actually says. At a high level, it seems to me (and several well-regarded ERISA attorneys) that retirement plan advisors who are today operating under the auspices of PTE 2020-02 should have little to worry about under the new proposal. Indeed, the biggest controversies around the proposed rule seem to be extending the reach of PTE 2020-02 to organizations and entities that hadn’t previously had to adhere to those requirements.  But if you’re already doing so—and surely if you’re a retirement plan advisor you are—there’s little of concern in the proposal. In fact, you might well draw comfort from the possibility that entities and advisors that have competed with you for rollover bus...

Thanksgiving has been called a “uniquely American” holiday—and so, even in a year in which there has been what seems to be an unprecedented amount of disruption, frustration, stress, discomfort and loss—there remains so much for which to be thankful. And as we approach the holiday season, it seems appropriate to take a moment to reflect upon, and acknowledge—to give thanks, if you will. While it’s the celebration following a successful harvest held by the group we now call “Pilgrims” and members of the Wampanoag tribe in 1621 that provides most of the imagery around the holiday, Thanksgiving didn’t become a national observance until much later. Incredibly, it wasn’t marked as a national observance until 1863—right in the middle of the Civil War, and at a time when, arguably, there was little for which to be thankful. Indeed, President Abraham Lincoln, in his proclamation regarding the observance, called on all Americans to ask God to “commend to his tender care all tho...

A week or so ago, I came across an announcement that IBM was making changes to its 401(k). More specifically that, effective next year they were going to replace their matching contribution in their 401(k) with an employer contribution to a cash balance plan. [i] In the days that followed, the news was picked up in a couple of different trade publications—the implication being that this might be signs of a new shift in plan design. Heck, even Teresa Ghilarducci weighed in , championing the “evolution” to a defined benefit structure from the “flawed” 401(k). She never misses an “opportunity.” Readers here are likely familiar with the basic concepts of a cash balance design. Technically a defined benefit plan, it’s generally referred to as a “hybrid” because it also has a number of participant-friendly aspects that it shares with a defined contribution plan, notably an account balance (though it’s a “notional” one) that is shared with participants. The benefits accumulate ...

Daylight saving time doesn’t really live up to its name—but as you’re resetting clocks, anxiously awaiting the realignment of circadian rhythms and changing smoke detector batteries, it might be a good time to (re)consider the following. Do you have fiduciary liability insurance? I’m NOT talking about the Fidelity Bond required of every ERISA plan (this protects the plan and its participants from potential malfeasance on the part of those who handle plan assets. In fact, the plan is the named insured in the fidelity bond). I’m also NOT talking about the corporate governance policies that many organizations have in place for actions undertaken by organization officials. These may not cover you, and they very likely won’t cover actions taken as an ERISA plan fiduciary even if you are covered.  What you need to check for is something called Fiduciary Liability Insurance. This policy typically protects the plan’s fiduciaries from claims of a breach of fiduciary responsi...

A recent analysis of world pension systems gave America a passing grade, but not a good one. The latest—the Mercer CFA Institute Global Pension Index [i] —gave the United States a C+ (though a B in adequacy!) ranking our retirement “system” well down (22 nd ) in the list of 47 retirement income systems around the world.  This particular index is comprised of three sub-indices: adequacy, sustainability and integrity, which the authors say are used to measure each of the retirement systems against some 50 “indicators.” [ii] Of course, people are entitled to establish whatever criteria they think is reasonable in such matters, but those who would accept their grading at face value would be well-advised to consider both the assumptions and weighting applied to derive those outcomes. To the sponsors’ credit, the 144-page document provides lots of opportunity to do just that. Perhaps the biggest challenge of a system like ours matched up against some of these other systems i...

It might not have made it to your calendar, but last week (October 17) was National TPA Day.  The timing is no accident—yesterday would have been for many calendar-year ERISA plans the (extended) deadline for filing the annual ERISA 5500 form. [i] Like April 15 for CPAs, that date—and timing—are of enormous consequence. And with that annual deadline in the rearview, third-party administrators everywhere can, perhaps, heave a huge sigh of relief. Maybe even throw a little “party.” The relationship between advisors and TPAs is complex , and one in which there seems to be little middle ground. For every advisor that tells you how many times their TPA partner has gotten them out of a real mess—and for every TPA that applauds the leadership demonstrated by their advisor teammate—well, there seems to be one that either dismisses the TPA’s propensity for a mistimed focus on minutiae that is the essence of being a dutiful TPA, or one that frets that an advisor’s focus on th...

Social media routinely reminds me that I’m teetering on the brink of overlooking key remembrances—days in the year to honor sons, daughters, puppies, dogs, kittens, and…well, you name it. And we have whole months set aside to acknowledge the contributions of women, black history, and Hispanic heritage—but there’s another you might have missed… As it turns out, October is National Retirement Security Month—a “national effort to raise public awareness about the importance of saving for retirement.” More specifically, to provide an opportunity for employees to reflect on their personal retirement goals and determine if they're on target to reach those goals—and for those who work with those employees to help them do so. Now, while the need isn’t new, the calendar acknowledgement is, at least relatively so. The notion was raised in 2006 by then-Sens. Gordon Smith (R-OR) and Kent Conrad (D-ND)—though at that time it was “just” a week. However, in 2020, the  National Ass...