Nevin's Data "Points"

All too often the innovations honored with a Nobel Prize fly under the radar of “regular” Americans. But that wasn’t the case last week when the work of University of Chicago’s Richard Thaler was acknowledged. Thaler was, of course, recognized by the Royal Swedish Academy of Sciences, who said that his focus on limited rationality, social preferences and lack of self-control has “built a bridge between the economic and psychological analyses of individual decision-making.” More plainly, to my reading, Thaler (finally) managed to prove to economists that human beings don’t (always) act rationally and/or in their own self-interest. Now, anybody who has ever actually interacted with human beings knows this. Indeed, in some ways the most amazing thing about Thaler’s insights of this reality is that it is seen as being innovative by economists. 1 I still remember reading the report that Thaler and Schlomo Benartzi authored way back in 2004, “ Save for Tomorrow: Using Behavioral Economi...

Advisors and providers often talk about the “ideal” plan — but ideal for what? That’s a rhetorical question of sorts — generally it means “ideal” in terms of providing a better retirement savings outcome. Indeed, I routinely see articles and commentaries (and panel presentations) that self-righteously take employers to task for not “caring” enough about their workers (or their retirement outcomes) to do the “right” things. While I think our industry views such observations as a challenge, a call to action, all too often I think policymakers and regulators — and certainly the 401(k) “haters” — hear a different message. While I suspect that one-on-one, most advisors allow for a more nuanced perspective on such things, at the risk of stirring up a little controversy, let me offer a different perspective on that “ideal” plan. Extending Automatic Enrollment to All Following the passage of the Pension Protection Act of 2006, with its automatic enrollment safe harbor, many likely ass...