Nevin's Data "Points"

The winner of the year’s most ridiculous 401(k) headline may well be one that ran just last week. The post was titled, “Did Your 401(k) Balance Increase $50,000 This Year? If Not, You May Be Falling Behind.” Or, as I am inclined to think when I see such nonsense, “you may not.” The article was mostly a simple recycling of information just released by BrightScope on their determination of the “ Top 30 401(k) Plans of 2014 .”  In looking at those 30 plans, BrightScope chose several data points to highlight — including the point that, among those 30 plans, the average account balances have increased nearly $50,000 since the top 30 list of 2013 was compiled. In drawing insights from those results — specifically the $50,000 increase in average balance — the article’s author (a Certified Financial Planner, no less) opined: That may be a good benchmark to determine just how effective your retirement savings plan is working for you. If your balance has grown an amount equal to or gr...

Over the past couple of years 401(k) evaluation service BrightScope has made quite a splash. Early on, most folks I spoke with were quite keen on what was being undertaken by the firm. 401(k) fees were unfortunately still mystery meat to many plan sponsors, and thus a service that purported to help them make sense - not only of what they paid, but how it compared to other programs - looked to be a godsend. As time has worn on, there have been questions and concerns. The data that underlaid Brightscope’s computations was drawn from government files – and while that made it “official”, it apparently didn’t always mean it was accurate, and it surely didn’t make it timely (though the latter is getting better all the time). Moreover, BrightScope employs a proprietary methodology that relies on certain weightings and assumptions that not everyone would agree with – but then, it’s a proprietary methodology, after all. If you don’t like it, or don’t think it does a fair job of representin...